Exit Strategies

(Illustration courtesy of WaterSHED)

When is it time for an NGO to exit? Trick question: It's always time. Of course, I don’t mean every NGO should close its doors immediately; I mean that every foreign-funded development NGO should be planning for—and working towards—its eventual exit, every single day.

Ten years ago, I cofounded an NGO in Cambodia, WaterSHED. Back then, less than 20 percent of families in rural Cambodia used toilets, even after countless NGOs, bilateral agencies, UN agencies, and multilateral organizations had spent astronomical sums delivering free toilets and awareness campaigns about using toilets. The health consequences were immense, and there were few signs of improvement. WaterSHED honed in on a set of key market failures that prevented the sustainable delivery of the services that households needed, but from the outset, we tried to solve the underlying problems in such a way as to permit our eventual exit (and if we couldn't make headway, we figured we should exit anyway and stop wasting time and money).

Today, toilets have become affordable and accessible across the country, the second-fastest improvement in sanitation in the world, owing largely to market-based approaches. Nearly 80 percent of Cambodians in rural areas use toilets and the local government leads the effort to further extend services.

In June 2021, having accomplished what we set out to do, WaterSHED permanently closed.

Exit-Planning Is Useful in Its Own Right

Imagine you wanted to establish an NGO to tackle a specific problem: a lack of clean water. Knowing that you're not able to deliver clean water to people indefinitely, you look for a more durable solution: you drill a well and install a hand pump. But after a few years, you see that steel hand pumps don't last; you need to tackle the more systemic issues preventing sustainable service.

If you continue supplying clean water or new hand pumps without tackling the underlying issues, you would almost certainly be consigned to a forever war on the lack of access to clean water. 

You might recognize, in theory, that you're supposed to be working yourself out of a job. And you might promise to stop, as soon as there's no more need. But in the meantime, an ever-growing number of people is depending on you for their water; you’ve displaced public funding that has now been reallocated; your funders are counting the “number of people gaining access to water” as a result of your program; and your fundraising manager is showing pictures of those people, promising to grow future impact.

But set aside those forever-escalating commitments. Had you instead set a compulsory endpoint, then you would have gone about everything differently: You would have begun by tackling the issues that matter most for sustainability from the outset (e.g. local ownership, government budget allocation, and leadership of local officials) despite the trade-offs in apparent progress and attributable results.

For this reason, people in the development sector should think as much about how to close their NGOs as they do about how to start, manage, and grow them. Otherwise, NGOs and their programs will overwhelmingly continue to alleviate symptoms rather than strengthen underlying systems.

A Touchstone for Strategy and Discipline

Planning our exit not only forced us to address the big questions, it also served as a guide when making day-to-day decisions about program implementation, enforcing the discipline to avoid offering direct services (which is a tantalizingly simple way to achieve short-term results).

Because WaterSHED’s eventual exit was ever-present in our minds, it served as both the backdrop and impetus for a robust strategic review process every three years. Having a 10-year end-goal compelled us to break the organization’s lifespan into phases and guided our selection of metrics and tactics, which in turn were easier to explain within the context of our exit. Without a north star, we wouldn't have been able to check if we were on course; common NGO goals like “help people live with dignity,” “ensure children reach their full potential,” and “grow our impact” offer very little practical, directional support. By contrast, WaterSHED’s goal was to ensure the services that underpin access to safe sanitation for everyone could be sustained by the time we shut down.

Having an exit plan was also like erecting a guardrail to prevent us from doing direct service provision. My colleagues used to joke about how we should “get into that business,” meaning we should deliver products or services directly to beneficiaries and be measured on value-for-money. “How much simpler that would be!” But our team knew that we always had to answer two questions: how our job would be done, and by whom, after WaterSHED was gone.

The Value of Communicating Your Exit

A transparently planned exit strategy creates an opportunity to telegraph intent. We found tremendous value in simply sharing the exit goal with our partners.

Because very few NGOs voluntarily plot their own demise—and everybody knows that NGOs continue until they run out of funding—few took us seriously when we first declared our intention for WaterSHED to exit within a defined period. Even some staff doubted it! Most stakeholders and observers initially thought that we meant it metaphorically, or as some kind of lofty, long-term goal that would always be just over the horizon.

The problem is that, since exiting is rarely pursued as a goal, the default expectation among stakeholders is that NGOs offer an open-ended commitment. Without a defined endpoint or a metric that triggers the end, the NGO is implicitly locked in a permanent role that is performed with resources provided from abroad. This contributes to a dependency mindset among local partners. And among the many problems of this dependency mindset is, of course, the inevitable fact that foreign funding is never sustainable.

When our partners internalized that we really would be exiting, it instantly, palpably changed the way they thought about our respective roles. For one thing, it forced them (and us) to think about how things would be done afterward, longer-term. That simple shift provoked an immensely powerful new mindset that I believe is necessary for successful development: a focus on sustainability. Without it, the difficult considerations (who should pay, who should do, and who should own in the long term) can be forever deferred, despite nice-sounding commitments to sustainability.

Stakeholder Perceptions

We encountered a multitude of reactions over the years. But how the partners react will make or break the success of the exit and ultimately determine the long-term sustainability of impact.

When it came to private-sector partners, WaterSHED had provided market data, training, technical guidance, and general business development support so that local companies would enter the sanitation field. Many companies perceived WaterSHED’s exit as a risk because it meant an end to that support. But one initiative that helped manage that perceived risk—and even to leverage it positively—was a ‘graduation' scheme, in which we openly shared our exit plan along with metrics of enterprise viability so that partner businesses could monitor their own levels of attainment in preparation for graduation. With pomp and ceremony (provided by government counterparts), successful rural sanitation enterprises were celebrated for their achievements and ‘graduated’ from NGO support.

As for government, it's difficult to summarize the reactions of local, provincial, and national governments, but a common concern about our exit was the accompanying reduction in resources flowing to Cambodia. To proactively address that concern, we sought allies at each level of government who could champion a perspective that was not resource centric. Some began thinking about WaterSHED's exit as linked to Cambodia's growing independence and sense of national pride. At a provincial government meeting in 2019, when a senior official expressed concern about WaterSHED’s exit, the Deputy Provincial Governor responded firmly: “We are not children. We can lead this now.” These political leaders were more numerous than I initially imagined.

When it came to funders, we observed a divide: prospective funders either deemed the exit concept to be “not a fit,” or they found it intriguing. Members of the second group were more rare.

Without knowing their exact motivation, I speculate that the first group mistook sustainability of an organization with sustainability of impact. They congratulated us on the noble aim to work ourselves out of a job—the familiar cliché that always sounds good in theory. But they expressed concern about investing in an organization that would soon be gone, as though it would be a waste.

It may be that these funders were inexperienced in funding systems-change, having focused instead on funding outputs. They tended to view grantees essentially as machines to generate outputs such as “number of people gaining access to clean water.” While they provide some capital to build and maintain the machine (as overhead), they expected most funds to be used as fuel. The emphasis was therefore on efficiency, measured with value-for-money and overhead ratios. Through that lens, WaterSHED was not even offering to be a machine. It was only promising to be a dead end.

The funders who backed WaterSHED had to take more risk supporting an NGO that would exit as compared to funding a predictable output machine. They tended to be experienced development professionals who had seen the pitfalls of conventional aid for themselves, and they studied our program and our context closely. They saw our exit plan as the logical conclusion of our program, and as a signal that we were very focused on our mission rather than continuously searching for new areas of work. Invariably these donors did not expect recognition. In fact, it was a sign of misalignment if a donor needed a plaque or banner to thank them—not least because our system-strengthening work generated few things on which a plaque could be placed.

Building WaterSHED as an institution was never one of our goals. Many NGO leaders believe such ends to be important to elevate their organizational credibility and convening power, all in service of greater effectiveness. Such organization-building goals may be very appropriate for certain groups—for instance, locally funded civil society organizations (CSOs) can justify investing in themselves as institutions (and not having an exit plan) if they persist at the behest of local constituencies and are locally funded. But international NGOs funded with foreign aid are not local CSOs. I’m convinced development would be stronger if convening power were derived much more from ideas than from budget. Donors could help lead that change.

For WaterSHED’s staff, understanding that their tenure was time-bound undoubtedly had the potential to create anxiety. After all, our jobs would be gone. With the exception of a minority who considered this appealing, most had to be persuaded that a successful exit was a rare accomplishment of which we should collectively be proud. The WaterSHED HR team did an excellent job of proactively supporting staff in their career planning. They offered CV and job-interview training and brokered connections with companies and other organizations that could leverage the talent and experience of our staff. Notably, owing partially to their experience at WaterSHED, several staff went on to be entrepreneurs themselves, to work in government (some even on programs handed over from WaterSHED) and some were recruited explicitly in part for their experience in having contributed to a successful NGO exit.

Why Don’t More NGOs Plan Their Exit?

NGOs—and their donors, staff, suppliers, service providers, and beneficiaries—all have incentives that conspire against and inhibit proactive thinking about the endgame.

In my experience, many implementers can be persuaded by the logic of exit-planning—in theory—but myriad exceptions lead them to think it is either impractical or inappropriate in reality. The exceptions are often related to two problems: 1) confusing development with relief; and 2) equating “absence of need” with local readiness and capability.

1. Development Is Not Relief

That development differs from disaster relief is uncontroversial. But surfaces can be deceiving. Charities—either those founded by someone who witnessed deprivation, or those dealing in poverty sensationalism—are prone to label any pressing need as a humanitarian crisis. It is imperative for them to reflect on how endemic poverty fundamentally differs from the effects of conflict and natural disaster. NGOs need to be diligent about identifying the threshold when they're no longer responding to crisis events, like Haiti's earthquake or Cambodia's genocide, and are instead hindering the establishment of long-term solutions. That threshold likely arrives subtly and incrementally, often obscured by acute, visible needs. And whether the same organization is capable of transitioning from relief to a development assistance model (that addresses the structural, system-level changes and that requires an exit plan) is another question.

2. “Absence of Need” Is Not the Indicator of Sufficient Local Capacity

Listening to NGO leaders, it’s clear that many do place emphasis on improving local capacity rather than solely delivering services. To the extent that this strengthens the local system, it’s a huge step in the right direction for sustainable development.

However, the signal they’re often waiting for—to know that local systems are ready, and their job is done—is the absence of need. This is an enormous flaw. Essentially there’s an implicit assumption that local readiness will be heralded by universal achievement of a development vision. But if that were true, then no government on earth would be considered capable of managing its own social, environmental, health, or any other issues. If governments were deemed ready for development assistance to stop only when social problems were eradicated, then they likely never would be. And since NGO leaders know, deep down, that the eradication of poverty is not a realistic, time-bound goal, they do not bother drawing up credible plans for their exit.

The Goal Is Local Capacity

Aspirational visions for development must be complemented—or even replaced—with aspirational capacity goals. From their slogans and vision statements, most large NGOs aim for a universal condition or an unmeasurable quality: Oxfam’s “a world without poverty,” Care’s “a world of hope, inclusion, and social justice, where poverty has been overcome and all people live in dignity and security,” or Save the Children’s “a world in which every child attains the right to survival, protection, development, and participation.” These goals are noble. But because they are inherently subjective and unattainable, their proponents escape accountability. This type of goal subtly justifies the delivery of services forever; that which is normally expected from an agency of government as the true duty-bearer. Any other organization delivering ongoing social services is effectively acting as an unelected agency of government.

A more realistic set of goals would have a local government attaining sufficient capacity—within a given timespan—to sustainably advance the well-being of its entire population, even in the face of shocks and shifting targets.

In the case of WaterSHED, we had an aspirational goal that everyone in Cambodia should be able to access a toilet. But it was coupled with an explicit commitment to strengthen the local system, and an explicit commitment to exit within a predefined time period, after which the local system would progress towards the goal without WaterSHED’s involvement.

No Conditions

It might seem that I’m advocating that NGOs monitor local readiness in order to identify the optimal moment to disengage. But waiting for a green light, based on a set of prescribed criteria, is neither practical nor desirable:

1. Reliable metrics that are valid across contexts may never emerge. Developing better indicators of the quality of host-country systems is definitely worthwhile and may, over time, offer incrementally better guidance. But the complexity is daunting, and it’s likely that any indicators would be context specific. Continuing business-as-usual in the absence of a perfect assessment mechanism is no better than continuing on until need is eliminated.
2. Conditional exits are tentative and susceptible to spurious delay. Since assessing local readiness is complex and subjective, any set of exit criteria that adequately reflect the nuance will give too much space for wavering on the commitment to exit. Alternatively, simplifying the criteria for exit may be no better. Clear criteria can perversely show how exits can be delayed as much as they show how exits can be achieved. The vested interests that can conspire against NGO exits are real—hundreds of billions of dollars are involved.
3. Conditional exits are less likely to accrue the benefits of planning and communicating described above. Exits that are suddenly triggered can run afoul of donors, beneficiaries, and local government, and even suffer accusations of abandonment. Plan International’s departure from Sri Lanka in 2020 is a case in point. The NGO’s program had displaced public funding and created many dependencies, making its sudden exit highly disruptive. Plan later admitted the exit was badly executed, blaming inadequate stakeholder communication and poor exit criteria.

We set the timeframe of WaterSHED’s exit well in advance and arbitrarily, rather than leave it to be triggered by indicators. But that does not mean we ignored data about the strength of the system around us. On the contrary, we dedicated significant energy to sniffing out clues of readiness, searching for opportunities to phase out interventions and components of programs, and tracking the post-implementation results. Staging our exit over time gave space to learn and be flexible as things inevitably shifted.

Though WaterSHED has closed its doors, I expect there will still be many ups and downs in Cambodia’s progress towards its SDG target of 100 percent safely managed sanitation. But I’m more confident than ever that the government is best placed to lead the effort, with a flourishing private sector as a partner. And while there will be continued debate about the progress of sanitation in Cambodia—Are the resources well allocated? Are the priorities correct? Is the progress fast enough?—the discussion and solutions will hopefully be led by Cambodian public, private, and civil stakeholders.

Read more stories by Geoff Revell.