Routes of funding, roots of trust? Northern NGOs, Southern NGOs, donors, and the rise of direct funding

This paper, based on a review of SIDA's funding of NGOs in Bangladesh, explores the changing relationships between bilateral donors, Northern NGOs (NNGOs), and Southern NGOs (SNGOs). It compares direct and indirect funding routes between donors and SNGOs. Most SIDA funding of SNGOs was previously undertaken through Swedish NGOs. As SNGO competence and capacity has increased through their own efforts at professionalisation, through wider recognition and support from government and by the provision of 'capacity building' partnerships with NNGOs, these Southern organisations have taken up positions within the burgeoning 'third sectors' of aid-recipient countries alongside the governmental and business sectors. SIDA has increasingly funded SNGOs directly through its Dhaka office. The paper sets out to address two main themes in the context of Swedish aid to NGOs in Bangladesh. Firstly, as bilateral donors provide an increasing proportion of their resources to NGOs, how can sound and responsible funding relationships based on mutual trust be built between bilateral donors and NGOs? Secondly, how can NNGOs work usefully in contexts where the number and capacity of local SNGOs has expanded significantly?