When “re-funding” becomes the new global norm in philanthropy: why has intermediary expansion instead amplified the accountability crisis

The money has not disappeared; it has simply been re-layered

One of the most notable changes in global conservation and climate philanthropy over the past decade is not how the total amount of money has fluctuated, but how the funding pathways have changed. More and more foundations are no longer giving directly to local organizations; instead, they distribute funds through re-granting institutions, coalition platforms, or “pooled” intermediary networks. On the surface, this model seems more efficient and more aligned with the compliance requirements of large-scale funding; in reality, it is reshaping philanthropy into a more complex layered structure.

The significance of this shift goes far beyond environmental philanthropy itself. It points to a broader trend in global resource allocation: in an environment of rising risk, tighter regulation, and converging language and financial standards, those who are truly able to penetrate institutional barriers are often no longer the people closest to the community, but the people most recognizable to the international system.

In a multi-island country like Indonesia, this shift is especially clear. Local community organizations have to deal simultaneously with legal registration, cross-border funding rules, audit requirements, international financial standards, and multilingual reporting pressures. For small organizations, entering the international funding system directly is not merely a matter of “lacking resources,” but of lacking the format recognized by the system. As a result, the emergence of intermediaries has seemed like a solution: they absorb compliance costs, assume risks on behalf of others, and then channel funds to grassroots partners.

But the problem is that this kind of “absorption” does not naturally mean “transfer of power.”

The real driver of intermediary expansion: not trust, but manageability

From the perspective of foundations, it is not hard to understand why re-granting mechanisms have expanded so rapidly. They make funds easier to aggregate, easier to audit, and easier to explain to boards, regulators, and the public. They turn dispersed local projects into manageable portfolios and compress complex social relationships into reportable chains of performance.

This is precisely one of the core logics of the contemporary international funding system: it is not necessarily those closest to the problem who are most likely to receive funding; it is those most easily read by the system who are more likely to receive resources. As a result, “readability” has become a new kind of infrastructure. English-language reports, log frames, monitoring and evaluation systems, risk registers, accounting standards—these things, which once belonged to management tools, are becoming gatekeeping conditions for entry into global capital and philanthropic networks.

This shift is not limited to conservation and climate. Whether in humanitarian aid, local development, public health, or transnational education projects, there is increasing dependence on “intermediate organizations” to reduce transaction costs. But while costs go down, barriers can go up: small organizations that cannot bear the burden of compliance are, in fact, even less able to access funds directly.

This helps explain why intermediary models often appear “decentralized” in name, yet may become “recentralized” in reality. They do not simply devolve power; they repackage power in a more professional, more neutral, and more technical form.

“Capacity building” sometimes just makes local organizations more like donorsOne of the most common defenses of funders is that intermediary mechanisms can help local organizations build capacity and ultimately achieve direct financing. But there is a paradox here that is often overlooked: capacity is often defined as the kind of capacity funders can understand, rather than the capacity communities actually need.

When local organizations are asked to learn budget tables, performance frameworks, English-language narratives, and complex monitoring systems, what may be improved is not necessarily their governance capacity, but more likely their ability to adapt to external institutional language. In other words, much of what is called “capacity building” is closer to compliance training than to strengthening organizational autonomy.

This is not just a language issue; it is also a power issue. Once the criteria for what counts as a “mature organization” are monopolized by external systems, local organizations are forced to evolve toward the same template. The result is that organizations that fit international funding logic more closely are more likely to keep receiving money, while those that are more aligned with local practice but express themselves differently become harder to see.

This is precisely the most alarming aspect of intermediary systems: they may unintentionally select for “local organizations that look more like international institutions,” rather than “local organizations better suited to local governance.”

The problem is not the intermediary itself, but whether it is willing to step aside

If re-granting mechanisms have a practical necessity, then the real question is not “whether to have intermediaries,” but “whether intermediaries have an exit mechanism.” At present, the incentive structures of most institutions favor growth: more partners, more regions, more projects, more budgets. Very few funders set “reducing the intermediary role” as a performance target, and even fewer require grantee institutions to publicly explain when they will reduce their own pass-through share and when they will transfer relationships directly to local organizations.

This makes intermediaries very easy to turn from transitional tools into permanent infrastructure.

In the history of international development and climate funding, this is nothing new. Many mechanisms originally designed to be temporary eventually evolved into long-term middle layers: their reason for existence changed from “filling a gap” to “necessary,” and then to “indispensable.” Once that happens, intermediaries gain their own interests, budgets, and organizational inertia, while the grassroots organizations that were meant to be supported are instead trapped in an ongoing relationship of dependency.

In the long run, this structure changes the distribution of power across the entire philanthropic ecosystem. The ones who truly hold the power to define resources are no longer the most direct relationship between funders and beneficiaries, but those who can decide who is seen, who is recognized, and who can pass through the system.

What Global South organizations face is not just a lack of money, but a lack of institutional permeability

Many discussions of “localization” often reduce the problem to insufficient funding. But the deeper reality is that many organizations in the Global South are not lacking ability; they are lacking the ability to penetrate international systems. They may have community roots, local governance experience, and practical implementation capacity, but they do not have the legal structures, audit capacity, or cross-border credit endorsement needed to enter the global funding system.

This is a typical form of global inequality: it is not that Southern organizations are unimportant, but that their organizational forms are not automatically regarded as “fundable.”This is a classic case of global inequality: it is not that Southern organizations are unimportant, but that their organizational forms are not automatically regarded as “fundable.” Intermediary platforms thus become institutional translators, helping local action enter the language of global finance. But the more important the translator becomes, the more likely the original speaker is to be marginalized.

This structure is especially sensitive in the climate and conservation sectors, because these projects have always emphasized community co-governance, Indigenous participation, and local knowledge. Yet the more they stress “getting funds to the grassroots,” the more they expose a reality: the flow of funds itself is still strongly influenced by Northern capital, foundation governance, and international regulatory frameworks.

In other words, localization in philanthropy is not simply a moral issue, but a global governance issue. It involves who is qualified to represent the local, who can define risk, who can explain outcomes, and who has the authority to decide the path of resources.

A new international order is shifting from “direct aid” to “controlled pass-through”

If we place this phenomenon in a broader international structure, it actually reflects a wider change: global resource allocation is moving from direct relationships to controlled relationships.

Whether it is public funds, development aid, climate finance, or corporate ESG commitments, money is increasingly relying on intermediary layers to handle legal liability, political risk, and reputational risk. The global system has not abandoned investment in the Global South, but before investing, it first adds screening, certification, and buffering layers. The result is that resources appear more dispersed, while actual control becomes more concentrated.

This is also why today’s discussion of the expansion of regranting in conservation philanthropy cannot focus only on its goodwill. It reflects a trend of the times: against a backdrop of declining global trust, geopolitical tensions, and tightening regulation, the international system is more inclined to separate “being close to communities” from “being close to risk.” Intermediaries become a buffer against risk and also a filter of power.

This is not just a problem for the philanthropy sector. It belongs to the same structural shifts as supply chain restructuring, regionalization, capital caution, rising cross-border compliance, and the international organizations’ preference for “measurable outcomes.”

The real test: can intermediary organizations prove they are shrinking

The value of a regranting organization should not be judged only by how much money it handles or how many partners it reaches, but by whether it is creating a shorter, more transparent path that will eventually disappear.

If an intermediary organization is still as important ten years from now as it is today, that may not be success; it may mean it has solidified into a new node of power. Conversely, if it can steadily transfer part of the financial flow, data power, governance power, and bargaining power to local organizations, then it is driving structural change rather than merely optimizing processes.

This is also the most important standard for judging the current wave of regranting in philanthropy: not whether funds have passed through intermediaries, but whether local organizations, after passing through them, are closer to receiving resources directly, participating directly in governance, and defining their own agendas directly.

If the answer is no, then so-called “empowerment” is just a more refined form of dependency.

ConclusionToday's conservation and climate philanthropy is becoming a microcosm of changes in global governance. It reveals an increasingly clear reality: international resources do not automatically flow to where they are needed most; instead, they flow to where they are easiest to institutionalize.

The regranting mechanism itself is not the problem. The real question is whether it is repairing fractures in the global system or turning those fractures into a new normal.

In this sense, the philanthropy sector faces not a technical optimization challenge, but a political choice: does it want to build a longer chain of funding, or a shorter chain of power.