Civil Society Should Break Addiction to Foreign Aid

Civil Society Should Break Addiction to Foreign Aid

Apr 25 , 2026. By Belete A. Yemata ( Belete A. Yemata (byemata@student.unimelb.edu.au) is a PhD candidate researching the regulation and tax treatment of non-profit organisations in Ethiopia at Melbourne Law School, University of Melbourne. )

The Ethiopian Civil Society Organisations Council (ECSOC) and the Authority for Civil Society Organisations (ACSO) are now advocating for the establishment of a Local Resource Mobilisation Taskforce. A mindset where one organisation's gain is viewed as another’s loss has historically undermined the sector's growth. By pooling money, staff, and ideas, smaller organisations can overcome the barriers posed by high rent and overhead costs that eat into limited budgets. Partnership, rather than isolated competition, offers a more realistic path toward building a sustainable domestic funding base.

Civil society organisations (CSOs) cannot keep building their future on money that mostly comes from foreign funders, because the model has always been fragile. It is even more so when official development assistance dropped sharply, while the shutdown of USAID and the suspension of many American-funded programs, especially those in Ethiopia’s CSO sector, hit hard.

This is why resource mobilisation from local sources is no longer simply a good idea but a necessity. Foreign support may still matter for some time. But domestic CSOs need a stronger home base if they want to withstand funding shocks and continue serving the public.

Even the regulator, the Authority for Civil Society Organisations (ACSO), now speaks more openly about the need for local resource mobilisation and corporate social responsibility. More recently, it also announced the establishment of a Local Resource Mobilisation Taskforce, working with Siiqqee Women’s Development Association (SWDA). In 2019, the law governing the conduct of civil society organisations opened an important door, allowing CSOs to raise income through lawful business and investment activities.

That was a welcome step, for it recognised a simple truth that a sector that depends too much on donors will always remain exposed. But allowing income to be generated on paper is not enough. The harder question is whether the wider policy environment is helping CSOs make real use of that opening. The answer, so far, is not enough.

One clear lesson is already evident at home. Mekedonia Humanitarian Association (MHA) has shown that Ethiopians are willing to give to a secular institution when they can see the work, trust the organisation and feel connected to the cause. Its fundraising success carries two important messages. One is that the culture of giving remains, and public trust does not come out of nowhere. It grows from visible work and visible impact. The more CSOs do work that people can see and value, the easier it becomes to mobilise support.

But Mekedonia’s model should not be copied without care. Copy-and-paste ways of resource mobilisation from the public on its own are not a strong long-term answer. If an organisation keeps collecting money, spends it all, and then returns to the public again and again, donor fatigue will eventually follow. Public fundraising can be a starting point. It should not be the whole strategy. Part of the money raised should be used to build assets or activities that can generate income later.

That is where income-generating activities matter, and CSOs should start with what they already have. They should ask which part of their work, skill, service, or asset can lawfully generate income without losing sight of the mission. They should also learn from local organisations that are often seen as relatively stronger in this area, such as Marie Stopes Ethiopia, Mary Joy Ethiopia and Abebech Gobena Charity Association. Not every CSO can do the same thing, but they do not need to start from zero either.

At the same time, many CSOs will find it hard to build income-generating activities on their own. Initial capital is one problem. Business know-how is another. Weak coordination inside the sector is also part of the problem. Too often, organisations compete over very limited resources as if one group’s gain is another group’s loss, a mindset that has to change. Where one CSO cannot do much alone, several CSOs may be able to do something together. They can pool money, staff, ideas, and assets, and joint efforts may be more realistic than isolated efforts.

This is also where public institutions should step in more seriously. The Authority and the Ethiopian Civil Society Organisations Council (ECSOC) should not limit themselves to general encouragement. They should actively support the shift toward local funding. That means training, capacity-building, practical guidance, and forums where CSOs can learn from one another’s experiences. It also means helping the sector think beyond short-term fundraising toward long-term sustainability.

The private sector matters too. Much more can be done on corporate social responsibility. Government influence still carries weight in shaping how the private sector sees public issues. Clear public encouragement from the government can help businesses see support for credible CSOs as part of their social responsibility rather than something to avoid.

Another issue, the stigma against advocacy CSOs, needs honest attention and needs to be challenged. Public support should not be reserved only for organisations that provide direct services. Groups working on rights, accountability, law reform and public debate also serve the public good. People should be able to support such organisations without fear, as a healthy civil society needs both service organisations and advocacy organisations.

Then there is the tax problem, which is notorious for sending mixed signals. On the one hand, the CSO law enables business and investment activities, allowing organisations to build a stronger local funding base. On the other hand, income from those activities is taxed in the same way as income earned by ordinary for-profit businesses. That creates a real contradiction. CSOs are told to become more self-reliant, but when they try, the tax system treats their efforts as if there were no public interest behind them.

This matters because taxes can shape behaviour. If the income from a CSO’s lawful business activity is fully taxed like ordinary commercial profit, some organisations may decide that the effort is not worth the burden. That would hurt the very move toward local resource mobilisation that the law was supposed to support. However, this does not mean every business activity by a CSO should be tax-free. It does mean the law should be more careful and more sensible.

Tax relief, where given, should be tied to clear public-benefit conditions, proper accounting, and ongoing compliance. The aim should be to support genuine mission-linked income, not to create a back door for misuse.

Government support can also be practical, offering shared workspaces, common facilities, and other basic services that make a real difference. Many CSOs spend too much of their limited income on rent and overheads. Money saved there could instead help build sustainable, income-generating efforts.

The larger point is simple. Local resource mobilisation should not be about asking for money. It is about trust, visibility, planning, law, tax and collaboration. CSOs need to become more visible to the public. They need serious resource mobilisation strategies. They need staff who focus on this work. They need to learn from stronger examples. And they need to work together more.

The old funding model is becoming less secure. The local CSOs can either wait and grow weaker each year or slowly build a stronger base at home. That path will not be easy, but it is the most realistic one. In the long run, a stronger civil society will be one that is funded more closely by the people it claims to serve.

PUBLISHED ON Apr 25,2026 [ VOL 27 , NO 1356]