Indonesia’s civil society is facing growing challenges due to limited access to core and overhead funding, with multilayered intermediaries between funders and local organisations contributing to inequitable funding practices. A report by Planet Indonesia, a funder supporting Indigenous Peoples and local groups, highlights that 75 percent of civil society organisations (CSOs) in the country have little access to essential financial resources. Larger CSOs often rely on international philanthropic donors and INGOs for up to 70 percent of their funding, leaving smaller local organisations at a disadvantage.
The report describes intermediaries as part of a chain that diminishes funding as it moves from source to local organisations. Funding often starts robustly at the donor level but gradually reduces through multiple layers, leaving only minimal resources for grassroots CSOs. This “waterfall effect” restricts the ability of local organisations to operate effectively and limits their capacity to plan and implement programmes independently.
CSOs in Indonesia have expressed a clear preference for more core, unrestricted, or flexible funding, as well as multi-year funding arrangements. They also favour grants that prioritise impact and outcomes over strictly project-based approaches. Currently, donor support often covers only a portion of operational needs, forcing organisations to self-fund significant parts of their work. These constraints create ongoing financial instability and hinder the sustainability of local initiatives.
The report also highlights how performance-based payment structures imposed by intermediaries exacerbate financial pressures. Payments are frequently contingent upon report reviews and approvals, causing delays that disrupt operational cash flow. Furthermore, CSOs report challenging power dynamics, particularly the centralisation of wealth and influence in Java, which intermediaries can reinforce. These dynamics perpetuate inequities between urban and rural areas, and between national and local organisations, further complicating equitable access to funding.
Planet Indonesia’s publication aims to shift this paradigm by advocating for local organisations to be recognised as equal partners rather than mere beneficiaries. It proposes frameworks for philanthropy to reorient funding practices, prioritising local ownership, flexible support, and the enabling conditions necessary for a thriving civil society in Indonesia.
