Introduction

In Yemen, local nongovernmental organizations (LNGOs) are crucial in delivering essential services, especially in areas where governmental capacities have been weakened by the ongoing conflict since 2015 (Elayah et al., Reference Elayah, Gaber and Fenttiman2022). Their importance lies in their alignment with grassroots needs (AbouAssi & Trent, Reference AbouAssi and Trent2016). However, their financial sustainability and therewith their effectiveness is limited by financial constraints (Elayah et al., Reference Elayah, Gaber and Fenttiman2022). Global crises have worsened this funding crisis, with donor support from advanced economies to Yemen significantly reduced (Dautriat, Reference Dautriat2022), while demand for funds continues to increase, especially in conflict zones where conditions are deteriorating (Pack, Reference Pack2022). Reports from the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) indicate a sharp decline in funding for Yemeni NGOs, dropping from $436.7 million in 2021 to $167.8 million in 2022 (Elkahlout et al., Reference Elkahlout, Milton, Yaseen and Raweh2022). Besides, although LNGOs now receive a larger portion of these vastly reduced funds, INGOs often act as intermediaries. Despite partnerships and training efforts, donor funding for INGOs still triples that allocated to local and national NGOs, endangering the financial sustainability of LNGOs (ICVA, 2021; OCHA, 2022). This limits LNGOs' direct donor relationships and growth which is further impacted by certain dominant LNGOs, termed ‘Sheikh’ organizations here, controlling much of the available funding. Yet, research on the financial sustainability of LNGOs in conflict-affected regions is limited. Studies by Tran and AbouAssi (Reference Tran and AbouAssi2021), Suárez and Marshall (Reference Suárez and Marshall2014), Stiles (Reference Stiles2002), and Bebbington (Reference Bebbington2004) have explored aspects of this topic, yet gaps remain, particularly concerning the role of influential ‘Sheikh’ LNGOs—large, well-funded local organizations backed by powerful individuals. Little research has examined how these ‘Sheikh’ organizations affect the financial sustainability and autonomy of other NGOs in conflict zones. Bridging this gap is essential to understand how ‘Sheikh’ LNGOs leverage resources and connections to secure funding and shape decision-making, impacting other local and international NGOs. Further research on this power dynamic is crucial for developing policies and interventions that promote financial equity within the NGO sector in conflict-affected regions (Bebbington, Reference Bebbington2004; Stiles, Reference Stiles2002; Suárez & Marshall, Reference Suárez and Marshall2014; Tran & AbouAssi, Reference Tran and AbouAssi2021). This study focuses on Yemen's conflict zones, investigating how ‘Sheikh’ LNGOs influence the financial sustainability and autonomy of smaller NGOs. The main research question is: To what extent do ‘Sheikh’ organizations impact LNGO financial sustainability in Yemen, and what are the broader implications for equitable donor funding? By analyzing power imbalances and funding disparities, this study aims to propose strategies for a more equitable NGO sector, contributing to policy discussions on the need for direct funding mechanisms that support smaller NGOs' autonomy and sustainability.

This research uses a qualitative exploratory approach, drawing on two data sources. Primary data were collected through interviews with 45 administrative staff from a United Nations agency and various NGOs, supplemented by a thorough review of relevant literature and publicly available reports. The study is organized into five interconnected sections. The first section reviews the relevant literature and theoretical frameworks on NGO financial sustainability, introducing the concept of ‘Sheikh’ organizations and analyzing their influence on local entities. The second section provides a contextual overview of Yemen’s NGO landscape, focusing on the unique financial sustainability challenges faced in this setting. The third section outlines the research methodology, followed by an in-depth analysis of the interview findings in the fourth section. Finally, the fifth section concludes with a discussion of key observations and practical recommendations, synthesizing the study’s insights and implications.

Theoretical and Conceptual Framework

This study’s theoretical and conceptual framework draws on various perspectives to address the financial sustainability challenges NGOs face in conflict-affected regions. Financial sustainability, as defined by Lewis (Reference Lewis2011), refers to an NGO’s capacity to consistently secure resources or funding to sustain operations. Stable funding is essential for NGOs to meet community needs and achieve development goals (Bowman, Reference Bowman2011). Scholars like Shava (Reference Shava2021), Karanja and Karuti (Reference Karanja and Karuti2014), and Omeri (Reference Omeri2014) emphasize that NGOs must diversify funding sources to ensure long-term impact and resilience. In regions affected by conflict and economic instability, financial sustainability is even harder to achieve due to heightened security risks, disrupted infrastructure, and shifting donor priorities (Elayah & Verkoren, Reference Elayah and Verkoren2020). These NGOs operate in volatile funding environments that necessitate adaptive strategies, resilience, and innovative fundraising to stay viable. Traditional funding models often fail in such settings, forcing NGOs to seek alternative resources and local partnerships to manage resource constraints effectively (Bowman, Reference Bowman2011). Understanding these dynamics is crucial for creating strategies that allow NGOs to survive financial instability while fulfilling their social objectives.

In conflict zones, NGOs often rely heavily on foreign aid, which significantly impacts their financial stability. Dependency on external funding leaves NGOs vulnerable to donor priority shifts and external shocks (Lewis, Reference Lewis2011). Donors frequently prefer well-established organizations, seen as more reliable and accountable, which centralizes funding within a select group of influential ‘Sheikh’ NGOs—large, powerful local entities with established donor networks and connections. This preference allows ‘Sheikh’ NGOs to capture most foreign aid, leaving smaller NGOs with limited access and increasing their dependency on these intermediaries (Gedeon, Reference Gedeon2021). The gatekeeping role of ‘Sheikh’ NGOs worsens this dependency. These organizations determine which smaller NGOs receive funding and under what conditions, wielding significant control over resource distribution. This intermediary function mirrors larger power dynamics in the NGO sector, where well-established organizations dominate resource flows, restricting smaller NGOs’ autonomy (ICVA, 2021; OCHA, 2022). The gatekeeping perpetuates a dependency cycle, inhibiting smaller NGOs from developing direct donor relationships and weakening their financial independence (Waiganjo et al., Reference Waiganjo, Ngethe and Mugambi2012).

This centralization of funding among a few dominant players creates substantial obstacles for smaller LNGOs. Limited funding restricts their autonomy and capacity to address specific community needs, forcing many to operate as subcontractors under larger NGOs, whose programs may not fully align with local priorities (Elayah et al., Reference Elayah, Al-Sameai, Khodr and Gamar2024). Without direct funding, smaller LNGOs struggle to establish sustainable financial models, retain skilled personnel, or expand their capacity to address Yemen’s growing humanitarian crisis.

The funding imbalance perpetuates a cycle of dependency, with smaller LNGOs reliant on intermediaries to access resources. This reliance limits their autonomy and undermines the goal of aid localization—a central aim of global humanitarian frameworks seeking to empower local actors to lead relief efforts. Without equitable funding, Yemen’s NGO sector risks continued domination by a select few, hindering the diversity, innovation, and resilience needed to address the country’s complex humanitarian challenges. Established international NGOs, which benefit from longstanding donor relationships, capture a disproportionate share of funding, overshadowing local organizations (Tamdeen Youth Foundation, 2022). Additionally, donors favor NGOs with six to ten years of establishment, further disadvantaging newer organizations that lack the resources to navigate complex application processes (Ahmed et al., Reference Ahmed, Zainol and Mokhtar2022; Alqatabry & Butcher, Reference Alqatabry and Butcher2020). Despite global initiatives to direct resources to LNGOs, intermediaries often manage these funds, distancing LNGOs from direct donor support and reinforcing dependency on established gatekeepers (ICVA, 2021).

Research shows that ‘Sheikh’ NGOs dominate aid distribution in conflict zones, putting smaller organizations at a disadvantage. Elkahlout et al. (Reference Elkahlout, Milton, Yaseen and Raweh2022) observe that international donors prefer ‘Sheikh’ NGOs for their established grant management systems and risk mitigation capacities, relegating smaller NGOs to subcontractor roles that limit their agency. These smaller NGOs often end up working on projects set by ‘Sheikh’ NGOs rather than initiating their own (Davis & Swiss Reference Davis and Swiss2020; Saungweme, Reference Saungweme2014). The competitive imbalance between ‘Sheikh’ NGOs and smaller organizations has substantial implications for the latter’s financial sustainability. Without resources to meet operational standards set by larger entities, smaller NGOs struggle to qualify for direct funding. Davis (Reference Davis2019) highlights stark disparities in compensation and resources between ‘Sheikh’ NGOs and smaller local entities, which exacerbates inequalities in the sector. These disparities reduce smaller NGOs’ capacity to attract skilled personnel and develop the internal infrastructure needed to secure independent funding.

The reliance on ‘Sheikh’ NGOs and foreign aid severely impacts smaller NGOs' financial independence. Most LNGOs cannot secure independent funding, forcing them to operate within the frameworks of ‘Sheikh’ NGOs and align their objectives with those of larger organizations. This alignment restricts smaller NGOs’ capacity to address community-specific needs, marginalizing their role in local development (Lewis, Reference Lewis2011). Furthermore, the concentration of resources among a few large organizations reinforces power imbalances, making it challenging for smaller NGOs to compete for funding and limiting the potential for aid localization and equitable resource distribution (OCHA, 2022). Studies indicate that the gatekeeping role of ‘Sheikh’ NGOs presents risks to the diversity and adaptability of the NGO sector. When resources are concentrated in a few organizations, grassroots initiatives and innovative approaches often remain underfunded, limiting the sector’s responsiveness to community needs. In conflict-affected regions, where localized responses are essential for addressing pressing humanitarian challenges, the dominance of ‘Sheikh’ NGOs stifles the emergence of a diversified, resilient NGO ecosystem. This centralization limits the sector’s capacity to adapt and respond effectively to local issues (Elkahlout et al., Reference Elkahlout, Milton, Yaseen and Raweh2022; Adem et al., Reference Adem, Childerhouse, Egbelakin and Wang2018).

The structural inequalities created by the dominance of ‘Sheikh’ NGOs resemble the authority held by traditional tribal leaders, where influential NGOs leverage their reputation to attract donor support and act as intermediaries (Elayah et al., Reference Elayah, Abu-Osba and Al-Majdhoub2018). However, this dominance marginalizes smaller NGOs, as resources predominantly flow to entities with robust financial and managerial systems (Amegboh, Reference Amegboh2021). This setup creates an environment where a few organizations control donor funding, restricting equitable sectoral growth and diversity. Donor biases in favor of ‘Sheikh’ NGOs and international organizations disadvantage LNGOs due to differences in capacity and reputation (Davis & Swiss, Reference Davis and Swiss2020); Zuka, Reference Zuka2022). Addressing these imbalances requires strategies that support the financial sustainability of smaller NGOs, enabling them to operate as equal partners rather than subcontractors (Waiganjo et al., Reference Waiganjo, Ngethe and Mugambi2012). This shift would involve creating pathways for LNGOs to access direct funding, build capacity, and become competitive players in the NGO sector.

This theoretical and conceptual framework provides insights into the financial sustainability challenges of LNGOs in conflict-affected regions, focusing on the role of ‘Sheikh’ NGOs as gatekeepers. This study shows how the dominance of larger organizations perpetuates dependency, limiting smaller NGOs’ financial autonomy and stifling innovation. In integrating dependency theory and collective impact theory, this study calls for a reconfiguration of roles in the NGO sector, advocating for a shift from gatekeeping to collaboration. To foster a more equitable and resilient NGO landscape, donor strategies should prioritize direct funding and capacity-building initiatives that empower local organizations, allowing them to effectively address complex challenges in conflict-affected regions like Yemen.

Setting the Context: Yemeni NGO Landscape

Since the conflict erupted in 2015, Yemen has witnessed a transformation in its NGO landscape, marked by a significant increase in national and local organizations aiming to address escalating humanitarian needs (Elayah & Verkoren, Reference Elayah and Verkoren2020; SIDA, 2018). Prior to the conflict, Yemen had a limited NGO presence, primarily consisting of eight UN agencies and around 34 international NGOs. Following the conflict, over 98 local organizations emerged to meet the urgent demands of affected communities (SIDA, 2018). However, despite this growth, funding remains heavily skewed toward international NGOs and a few powerful local ‘Sheikh’ organizations. According to OCHA (2022), less than 2% of total humanitarian aid in 2022 was allocated directly to LNGOs, with over 75% of that limited pool directed to just four prominent ‘Sheikh’ organizations. Consequently, most LNGOs operate with minimal support, even though they are often closer to communities and better equipped to provide rapid, localized aid.

A shift toward remote management has strained collaborations with LNGOs, favoring international organizations (Alhakimi & Olyan, Reference Alhakimi and Olyan2022). Figure 1 illustrates the power imbalance in financial decision-making, highlighting the challenges to participatory engagement (ICVA, 2021). Most LNGOs depend on donor funds for stability (Elayah, Reference Elayah2023), and although some secure funding from the private sector, their operational stability and capacity heavily rely on external support, making them vulnerable (Elayah & Schulpen, Reference Elayah and Schulpen2016). Addressing these imbalances requires fundamental changes in donor strategies to ensure direct support for smaller LNGOs, reducing reliance on intermediaries. This shift should not only increase direct funding, but also emphasize capacity-building, accountability, and an environment that nurtures long-term growth and autonomy for LNGOs. Empowering Yemen’s LNGOs to manage resources independently and establish direct donor relationships is crucial for their transformation from dependent aid recipients to proactive agents of sustainable change.

Fig. 1

Conceptual framework of financial sustainability and impact dynamics.

Source: the authors

The conceptual framework emphasizes the financial disparities among post-2015 Yemeni NGOs. ‘Sheikh’ NGOs, with significant financial resources, often dominate the funding landscape, raising questions about fund allocation and the broader implications for the NGO sector (AbouAssi, Reference AbouAssi2013). In contrast, LNGOs face considerable funding constraints, highlighting the need to explore the financial sustainability challenges unique to each category (Schulpen & van Kempen, Reference Schulpen and van Kempen2020). In Yemen’s conflict-affected environment, these disparities underscore the critical need to understand the structural and systemic factors influencing financial resource distribution and sustainability (Alqatabry & Butcher, Reference Alqatabry and Butcher2020).

As Table 1 illustrates, the framework focuses on financial capacity as a determinant of operational challenges and strategic priorities for NGOs in Yemen. A nuanced understanding of these dynamics can inform strategies to address financial inequities and strengthen the overall resilience of Yemen’s NGO sector.

Table 1

Elements of the asymmetry in funding

Organization type	Financial resources	Key challenges
‘Sheikh’ NGOs	High	Resource concentration, limited collaboration
LNGOs	Low	Severe funding constraints, operational limitations
International NGOs	High	Dependency on external donors, alignment with local needs

Source: The authors

The table illustrates the financial dynamics and key challenges faced by different types of NGOs operating in Yemen. ‘Sheikh’ NGOs possess high financial resources, which often result in resource concentration and limited collaboration with smaller entities. LNGOs, on the other hand, face severe funding constraints that restrict their operational capabilities. International NGOs, despite their high funding levels, encounter challenges related to dependency on external donors and difficulties in aligning their resources with local needs. This framework emphasizes the need to address financial disparities and foster collaborative strategies among different NGO types. Strengthening partnerships and creating mechanisms for equitable resource distribution are critical steps toward building a resilient and sustainable NGO sector in Yemen.

In fostering partnerships between local and international NGOs, donors can create a more sustainable NGO ecosystem that leverages collective resources and expertise to address post-conflict challenges comprehensively. Collaborative efforts lay a foundation for long-term resilience and positive change, transcending immediate project goals to foster inclusive development. Such partnerships are critical for creating a self-sufficient and resilient NGO landscape in Yemen, promoting enduring progress beyond individual initiatives (Elayah, Reference Elayah2023).

Analysis and Findings

This study’s findings center on three key themes: the financial sustainability challenges and the gatekeeping role of ‘Sheikh’ NGOs, the asymmetry of funding distribution and its implications, and the potential for transformative partnerships to foster collective impact and resilience among Yemeni NGOs. Despite their reliance on ‘Sheikh’ NGOs, some local organizations are working toward self-sufficiency, though these efforts often require first proving reliability under ‘Sheikh’ NGO guidance. Establishing direct donor relationships is gradual and challenging, as smaller NGOs must build credibility through ‘Sheikh’ NGO partnerships before independently approaching donors. "The process mirrors Dependency Theory," explained one respondent…"We start by relying on ‘Sheikh’ NGOs but hope to eventually establish direct ties with donors" (LNGO3). Few LNGOs manage to shift from dependency to self-sufficiency, typically by demonstrating impact within ‘Sheikh’ NGO-funded projects. "The ‘Sheikh’ NGOs give us credibility with donors," shared a respondent, …"but that dependency also keeps us tied to them." (LNGO5). Another added, "It’s a Catch-22Footnote ¹: working with ‘Sheikh’ NGOs opens doors, but also binds us to their approval." This delicate balance reflects a gradual shift toward independence, as observed in Marley’s (Reference Marley2015) study on conflict-area NGOs, where credibility is a key to autonomy. However, breaking the dependency cycle remains challenging, as smaller NGOs are continually pulled back into reliance on ‘Sheikh’ NGOs.

For most LNGOs, true autonomy remains elusive as dependency on ‘Sheikh’ NGOs continues to dominate their operations. “If it weren’t for ‘Sheikh’ NGOs, we wouldn’t survive,” one respondent admitted, adding, “but the cost of that survival is our independence” (LNGO2). This reliance not only ensures financial support, but also cements a hierarchy that prevents smaller NGOs from becoming self-reliant entities capable of meeting local needs without external control. “The dependency system keeps us in their shadow, unable to establish ourselves as independent players,” remarked one participant (LNGO3). This entrenched hierarchy centralizes resources and influence among a few dominant ‘Sheikh’ NGOs, limiting smaller organizations’ growth and impact. The journey to self-sufficiency for LNGOs remains a complex balancing act. While dependency on ‘Sheikh’ NGOs provides short-term stability, it constrains long-term development, leaving most smaller NGOs as subordinates rather than independent agents of change. This highlights the need for donor strategies that support direct funding and capacity-building, enabling LNGOs to build resilience and reduce dependency. Without such shifts, the structural reliance on ‘Sheikh’ NGOs will likely persist, reinforcing a system where only a few achieve financial sustainability, while the majority remain tied to larger entities' agendas.

Discussion and Theoretical Reflection

The findings of this study highlight the critical role of ‘Sheikh’ NGOs as financial gatekeepers in Yemen’s NGO sector, showing how their control over aid distribution reinforces dependency and limits the autonomy of LNGOs. This mirrors global trends in conflict-affected regions, where established organizations dominate funding landscapes, often sidelining smaller, local entities. As one participant observed, “Funding is essentially monopolized by ‘Sheikh’ NGOs, leaving smaller organizations like ours to survive on whatever trickles down” (R1). This statement underscores the barriers LNGOs face in building their own identities and capacities within the broader humanitarian ecosystem. These dynamics align with dependency theory, which suggests that reliance on intermediaries perpetuates power imbalances and dependency among less powerful entities (Elayah & Verkoren, Reference Elayah and Verkoren2020; Lewis, Reference Lewis2011). ‘Sheikh’ NGOs, with their established networks, dominate foreign aid distribution, effectively deciding which organizations receive funding and under what conditions. This gatekeeping restricts LNGOs’ operational flexibility and stifles innovation and responsiveness to community needs. “To secure funding, we have to sacrifice our own mission objectives and adopt the priorities set by ‘Sheikh’ NGOs,” one respondent noted (LNGO9), reflecting how dependency forces LNGOs to align with funders’ goals at the expense of their core missions. This reliance perpetuates financial instability, as many LNGOs struggle to form direct donor relationships, depending instead on ‘Sheikh’ NGOs as intermediaries. “We are almost invisible to international donors unless a ‘Sheikh’ NGO vouches for us,” shared one participant (LNGO3), highlighting how this reliance limits their credibility and autonomy. As a result, local organizations remain trapped in a cycle of dependency, where their survival hinges on ‘Sheikh’ NGOs, reinforcing a power structure that marginalizes their contributions and restricts their growth potential.

For Yemen’s NGO sector to thrive, a fundamental reconfiguration of roles is essential. ‘Sheikh’ NGOs need to transition from gatekeepers to facilitators, actively supporting smaller NGOs in capacity-building and establishing direct donor relationships. As one participant proposed, “‘Sheikh’ NGOs need to help smaller organizations grow, not just keep them dependent” (R1). This shift is critical for fostering a resilient, diverse sector capable of addressing Yemen’s complex humanitarian needs.

The successful partnership between the Youth Leadership Development Foundation and smaller NGOs, such as “Girls of Hodeida,” illustrates the potential of this collaborative approach. “Through this partnership, we were able to showcase our capabilities to international donors directly,” a participant noted (LNGO4), underscoring the impact of ‘Sheikh’ NGOs adopting an empowering stance. Such partnerships reflect collective impact theory, which emphasizes the potential of organizations working together toward shared objectives (Kania & Kramer, Reference Kania and Kramer2011). Through the Foundation’s support, smaller NGOs gained credibility, resources, and direct donor access, demonstrating how a shift from gatekeeping to facilitation could transform Yemen’s NGO sector.

However, these collaborative partnerships are still rare. Many respondents voiced frustration over the continuing dominance of ‘Sheikh’ NGOs, which often prioritize control over empowerment. “If ‘Sheikh’ NGOs were more focused on empowerment rather than control, the whole sector could benefit,” remarked one participant …added, “The NGO sector in Yemen could be much stronger if ‘Sheikh’ NGOs shifted from gatekeepers to partners in development” (LNGO5). This sentiment highlights the need for a role shift where ‘Sheikh’ NGOs adopt a collaborative, supportive approach to strengthen the sector’s resilience and autonomy.

Addressing these structural challenges requires coordinated efforts from all stakeholders. Donors need to reconsider funding strategies to emphasize direct funding and capacity-building initiatives that promote LNGOs’ autonomy. Studies show that fostering local capacity and reducing reliance on international aid are essential for NGO sustainability in fragile contexts (Lewis, Reference Lewis2011; Marley, Reference Marley2015). Empowering local organizations and ensuring equitable access to resources can significantly strengthen the NGO sector’s resilience. Increased collaboration and resource-sharing among NGOs is also essential. “The NGO sector can achieve so much more if we work together instead of competing for the same limited funds,” noted one respondent (LNGO1), echoing collective impact theory, which supports collaborative frameworks to achieve greater outcomes (Francois, Reference Francois2014). ‘Sheikh’ NGOs, by adopting these principles, could transform Yemen’s NGO landscape into a more equitable and effective sector. The future sustainability of Yemen’s NGO sector hinges on shifting from dependency to partnership. Moving from gatekeeping to collaboration would empower local organizations to address Yemen’s complex challenges more effectively, supported by dependency and collective impact theories, which emphasize the importance of collaboration in building a resilient, impactful NGO sector.

This study contributes to NGO discourse in conflict regions by examining the complex relationships among LNGOs, ‘Sheikh’ NGOs, and INGOs. It expands dependency theory, showing how financial intermediaries influence not only funding, but also the operational scope of LNGOs, underscoring the need to reevaluate dependency’s impact on local agency. Additionally, it challenges traditional NGO sustainability models by highlighting the value of collaborative partnerships and shared power, as emphasized in collective impact theory. The study advocates for donor practices that empower LNGOs to lead and innovate within their communities, urging a shift in ‘Sheikh’ and INGOs’ roles in Yemen’s NGO sector. Fostering collaboration, empowerment, and sustainability would create a more resilient framework that enhances LNGOs’ capacity and better meets community needs. Integrating dependency and collective impact theories provide insight into NGO dynamics in conflict settings, suggesting pathways for more effective and sustainable humanitarian action.