Over the years, European governments and the European Union have created new funding possibilities for NGOs in developing countries. Among these donors, there is an increased awareness of the important role local NGOs play in development processes, and a general improvement in their status. However, the existence of different kinds of funds has not meant an overall improvement in accessibility for NGOs.

The international donor market contains many players and is, by nature, complex and less than transparent. As a supplier of funds, the donor holds a stronger position on the market than the NGO, as is illustrated by the long list of project and organisational criteria that must be fulfilled before any deal can be made. Many donors still base funding eligibility on political, socio-economic and religious conditions. Moreover, with the demand for finances being considerably larger than the supply, good funding prerequisites are often seen as a necessity.

This, unfortunately, has led to a tendency among many NGOs to develop project proposals geared to donors’ criteria rather than to local needs. This presents a threat to an often already fragile relationship between the donor and the NGO, one which should really be built on mutual trust and respect. It also poses a danger to the antenna-function of NGOs, to identify community concerns about local environmental problems.

While NGOs are looking for reliable sources of funding, donor agencies are looking for accountable NGOs capable of successfully implementing projects. The conventional donor market is, in essence, one in which NGOs demand finances and donors supply these. But there are signs that this relationship is slowly changing to allow for more mutual respect and interest. With increased demands for accountability by both the donors and the NGOs, the effectiveness of NGOs now relates more directly to donor effectiveness.

As their expertise becomes recognised, NGOs are simultaneously becoming more involved in project implementation on a national level and are being hired more frequently to provide consultancy services. The recognition of the important role NGOs play in development processes creates a wider scope of financial and non-financial resources for them, which decreases the distance between themselves and the Northern donor organisations. The question of accessibility of financial resources remains, however, a thorny issue. This publication intends to address it through assisting NGOs directly in their search for finances by providing information on the policies, criteria and priorities of European donors.

Donor fashions represent an uncertain factor on the market (themes or concepts like gender issues, indigenous peoples, sustainable development, etc.). New visions within a development approach are favourable when they focus on a previously underattended issue, yet they can easily be replaced by the latest fashion.

There are no signs that the increased attention to urban issues will be just a donor fashion. With the deteriorating quality of life in the world’s cities, especially in developing countries, donors are turning their heads in the urban direction. The relationship between rural and urban problems creates a number of challenges and opportunities. Projects which focus on urbanisation and the minimising of urban migration concentrate on the viable and sustainable development of both areas as alternatives for each other. The inter-relatedness of rural and urban problems is becoming more accepted within development co-operation.

A number of donor organisations in Europe have started to assess their available resources in order to include a specific urban focus. The setting up of special urban units within government departments and the formulation of policies aimed at promoting sustainable urban development are other signs of an increased desire to become involved in urban development co-operation. In the meantime, funding agencies which already have experience in supporting urban activities, are expanding their policy, in some cases with budget increases.

The inclusion of a new priority theme into existing donor policies takes considerable time (especially when real integration is targeted, which, is the only guarantee that the theme cannot be easily dropped when finances run low). A well thought out structural change in funding direction is time- and energy-consuming, but can be very productive in the long run. The general focus of international donors and funding agencies, however remains on rural issues.

This document describes finances available at the European level for NGO-projects in the field of urban development and environment. Although the financial resources are not huge, it is important that urban issues are being discussed, that grantmakers are looking more closely at urban problems and that they are slowly generating finances through reallocations and structural changes within funding arrangements. The financial resources have not yet reached a level to prove it, but international urban development issues are gaining interest in Europe.

This publication shows that there is interest among financiers to support NGO-projects in urban areas.However, as is mentioned earlier, many donors are hesitant to distribute information about their activities, due to their limited financial resources. Some have had negative experiences as a consequence of being exposed in funding directories, and have seen a flood of proposals submitted by Southern NGOs that, in some cases, were not appropriate or did not match their criteria. This is why the information about European development organisations in this publication is presented as a first introduction to the organisations and their interest in environment and urban development. Almost all organisational descriptions and most of the information on government policies have been checked with the parties concerned.

Bilateral and multilateral attention to urban issues is developing, as is non-governmental interest in this field. This is expected to lead to not only a reallocation but also to a mobilisation of new resources for urban development in the future. More than twenty years after the Habitat I conference took place, things finally seem to be moving.

One of the most striking aspects of European development co-operation is that it has changed enormously over the last decade, both in terms of available financial resources and policy orientation. Development co-operation has never been so much under review as in the 1990s. Economic and political developments within and outside Europe, have led many countries to review their development co-operation policies, redefine main recipient countries and adjust their financial strategies.

There are many reasons to review development co-operation. The end of the Cold War changed the face of international co-operation. The disintegration of the Soviet Union and the opening up of Central and Eastern European countries and the Central Asian Republics (CEECs/NIS) created a new interest in these countries and a subsequent allocation of financial resources.

Peace operations for ex-Yugoslavia pulled away resources from development aid budgets as did other UN peace operations, relief and emergency assistance programmes. Assistance for refugees in the European countries is financed in many cases by the budget for development co-operation. Meanwhile, during the 1980s and early 1990s, economic prospects for many developing countries worsened , while others, especially in Southeast and East Asia, experienced rapid economic growth.

The establishment of the World Trade Organisation (WTO) and the liberalisation of trade are also having effects developing countries. Efforts to assist them are being integrated into new trade structures that arise from new agreements within development co-operation.

Most of the reviews and evaluations of development co-operation took place in the early to mid 1990s, like the ‘Herijking’ in the Netherlands (1995/96). This resulted in a decentralisation of Dutch development aid, the identification of a new group of recipient countries, and the creation of new policies regarding aid and trade relations.

Other examples are ‘Finland’s Development Co-operation in the 1990s’ (report presented in 1993 and adopted by the government in 1994), ‘A Developing World; Strategy for Danish Development Policy towards the Year 2000’ (presented to the government in 1994) and ‘Irish Aid: Consolidation and Growth’ which lays out a Strategy Plan for 1993-97 for Irish Aid.

There are a number of general trends in all these reviews and new approaches. One is a geographic relocation of aid. Although many donor countries still concentrate on a number of priority countries, the focus is shifting away from low income countries to the low to middle income range.

A second general trend is the attempt of some European countries to create more coherence in the aid system, to allow them to respond more flexibly to new economic and political challenges and to make development aid administration and management more effective and efficient. Development co-operation is now much more part of a country’s international co-operation approach. This alignment of development aid policy within economic, trade and political relations means a necessary restructuring of development aid administration. Agencies responsible for administering and implementing bilateral and multilateral assistance programmes have been reorganised and (further) integrated within Ministries of Foreign Affairs.

Increased co-operation between government and non-government parties is a third trend of current European development co-operation. Many governments are recognising the significant role of Southern and Northern NGOs in the development process and are expanding their financial and non-financial support to NGOs. The majority of government aid to Southern NGOs is channelled through national NGOs in the countries described here, often through co-financing. Governments’ development co-operation guidelines give a general indication of the kind of programmes and NGO-projects that are supported. National NGOs in European countries involved in co-funding of projects in developing countries, however, are not always bound by these guidelines, especially with regard to geographic focus.

Direct support to Southern NGOs is increasing, mostly through small projects support facilitated by embassies and international donors in developing countries. As NGOs are becoming more and more involved in the implementation of official aid programmes, partnerships between NGOs and local and national authorities are evolving. This is especially the case in the field of environment, where community participation is often the key factor for successful projects. It also holds true for urban development projects where the type and level of co-operation between local authorities and NGOs and CBOs has a direct influence on the sustainability of urban development and environment projects.

In a number of European countries co-operation between NGOs and governments has also been subject to the reviews and evaluations. Examples are the evaluation of the Finnish Non-governmental Support Programme (NGO-SP) in the early 1990s and the study of the impact of the Dutch Co-financing Agencies in the same period. In general, these evaluations reveal that co-operation could be improved, so as to become more efficient and effective, and that there should be more emphasis on evaluation and monitoring of projects and programmes. Apart from mobilising public opinion and reflecting the concerns of people in developing countries, it is their working relationship with organisations in developing countries that has proven that these NGOs are invaluable in development co-operation.

Although the level and extent of government-NGO co-operation in European countries intensifies, NGOs remain critical of government policies. During the 1990s, there were many NGO campaigns against the shrinking of official aid budgets (Netherlands), fraud and corruption within departments for development co-operation (Italy, Belgium) and the 1% Campaign in Sweden which protested against government plans to cut Swedish ODA to 0.7% of GNP by 1999. The Swedish campaign was supported by over 45 national organisations, including the Swedish Christian Council, Swedish Red Cross, Church of Sweden Aid, DIAKONIA and Save the Children.

A fourth trend is a widening of the focus of development co-operation. Most noticeably this includes a move towards a sustainable development approach through attempts to integrate environment and development issues. The Report of Rome (1972), the Brundtland Report, the UN Conference on Environment and Development (1992) and successive UN Conferences helped to increase global awareness on the interlinkage between environment and development. The incorporation of UNCED’s recommendations and those of the heavily negotiated agreements like the Climate Convention and the Convention to Combat Desertification, (hopefully) result in a stronger environmental commitment of governments in North and South.

However, the overall, main priority of development co-operation remains poverty alleviation through economic growth. There is a strong realisation though that this can only be achieved in the long term through sustainable development which is socially balanced and characterised by participation of local people.

Environmental preservation is certainly a new interest area of European donors in the 1990s. Although in the early 1990s it was feared that this attention would not be a lasting one, the efforts undertaken since then to integrate environment and development issues seem to suggest a long term commitment to sustainable development, at least within development co-operation policies. This is especially so for the Nordic countries (Sweden, Norway, Finland and Denmark) and the Netherlands, where a considerable proportion of the aid budget is reserved for international environmental assistance, and where special structures have been set up to channel finances to governmental and non-governmental bodies in developing countries.

The almost exclusive emphasis on rural development in European development co-operation is making room for a more integrated approach to a country’s development in both rural and urban areas. The strong rural bias of development co-operation was partly due to a lack of requests received from recipient countries for assistance in the field of urban development as well as little international attention for urban issues. Because of limited resources, urban issues were not prioritised and were seen as more of a national affair.

Rapid rates of urbanisation in almost all parts of the world, which affect the use of available resources and the global environment, is forcing the world’s attention towards urban issues. The two Habitat conferences have certainly mobilised interest in urbanisation problems. Switzerland, for instance, reconsidered the predominantly rural emphasis in its development co-operation policy after Habitat I (Vancouver, 1976). This led to the creation of Urban Development Guidelines in 1980 which were based on the interdependence of rural and urban development and a reformulation of Swiss Urban Development Policy between 1992 and1995.

Incorporation of the rural-urban link in development aid policies is a long process, but one that has started in many European countries. Whereas some countries have a general approach to urban development, defined in relation to rural development (Germany, Norway), other countries have identified urban areas as specific targets for their development aid (Denmark, France, Switzerland)

It seems that academic institutes, private foundations and community-based organisations have a more developed approach towards urban problems. Through a range of services, research, and concrete projects, they try to address the problems related to rapid urbanisation and its impact on the environment. This includes programmes on pollution prevention, waste recycling and reduction, but also training and public awareness-raising on urban environment and health problems.

Environmental degradation, loss of natural resources and rapid urbanisation are major challenges to international development aid agencies. These may be seen as a test of the extent to which European development co-operation in the 1990s is really moving towards sustainable development. It is, however, too early to discern whether it will pass the test and to what extend the anticipated resources for environmental preservation and urban development will materialise. Only in the 21st Century will the results of Europe’s approach to sustainable development co-operation become really visible. In the meantime, this publication hopes to assist Southern NGOs in their orientation on who is doing what in Europe in the environment and urban development field.

HABITAT II recognises that decentralised co-operation is a significant factor in successful implementation of the Global Plan of Action. Cities, municipalities and local authorities are seen as major actors; community participation is the key phrase.

There are several definitions of decentralised co-operation. Here it includes all government co-operation programmes that are not organised by the central Government, as well as any local initiatives related to development co-operation, Local Agenda 21 and twinning arrangements between cities and municipalities all over the world.

There is a general trend in Europe towards decentralised co-operation. The European Union and a number of European governments are looking at the decentralised approach as a new form of development co-operation in the years after 2000. Decentralised co-operation is regarded as a political instrument which simultaneously creates a new financial approach. The essence of this is that government spending for development co-operation is organised on a local, rather than on a central level. A reallocation of resources to local levels has implications for local governments, who will be assigned greater responsibilities in financing and implementing development programmes, especially regarding the urban habitat.

As community participation is a central element in decentralised co-operation, there are also implications for NGOs. Local authorities need to consult and involve the residential population for a successful implementation of decentralised sustainable development projects. NGOs have a significant role to play in facilitating this participation, and supporting local communities in project-implementation.

Also on an international level will there be greater possibilities for NGOs, although cities and municipalities generally have few resources for local, let alone international, activities. Few direct financial flows are expected to become available for NGOs in developing countries in the short run, but international linkages are providing new opportunities for exchange and co-operation and, at times, for finances.

Local Agenda 21 (LA21) provides a framework for implementing sustainable development policies at the local level. Over the last two to three years, there has been a marked increase in the number of LA21 initiatives all over Europe, although the picture varies from country to country.

International exchange within the context of a LA21 is a logical step. The challenges facing cities and municipalities these days are surprisingly similar in many parts of the world (like traffic congestion, lack of low-cost housing, pollution, waste, poverty, lack of safe drinking water, sewage problems, etc.). LA21 is an instrument to see the global inter-relatedness between all these issues. It provides an opportunity for two communities or cities to work together towards a joint vision for the future.

At the same time, decentralised initiatives like city twinning or linkages play an important role in sensitising (local) politicians to the similarity of problems cities and towns are facing in both industrialised and developing countries.