Too important to fail - it’s a question of trust
Tim Boyes-Watson
Systems change innovator and advocate. Co-creating practical ways to make non-profit funding equitable and locally led.
Today marks the launch of a groundbreaking report “Too important to fail – addressing the humanitarian financing gap” urging the global community to rethink the way they finance, distribute and document spending on humanitarian aid.?Commissioned by the UN Secretary-General ahead of the World Humanitarian Summit in May, it details the drivers behind a diverse array of proposed changes in the status quo and lays out key recommendations for increasing effectiveness, efficiency and transparency.
The report calls for what Mango is already campaigning for:?
International financial standards for funds given to NGOs
Create simple internationally accepted accounting and grant?management standards so that national and local NGOs who are first responders can
be trusted with a much higher share of humanitarian funding.?This will?also increase efficiency and radically reduce the costs and challenges of fulfilling complex and different funder requirements.
The danger is that this key innovation will not get the attention it deserves because it will be seen as technical and boring.?
Let’s focus on closing the most important funding gap – which is about where the money goes
Despite the focus on the humanitarian financing gap, the real wake-up call is that “only 0.2% of reported humanitarian funding was channelled directly to national and local NGOs in 2014”.
Mango believes we will make a much bigger impact, faster, if we exponentially increase the amount of money flowing directly to those NGOs working directly in affected communities.
The report adds to the mountain of evidence that national first responders are highly efficient and effective.?It also continues to call for the revolution in participation, (i.e. asking affected people what they actually need), that many NGOs and Mango have been trying to achieve for years.
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Are the barriers that created a need for middle-men about to disappear?
There should be more focus on the deep-seated barriers that have prevented more direct funding and more effective participation of those within affected communities.?Ultimately these barriers are about ‘trust’.??Our current humanitarian system has built up a system of middle-men to act as guarantors of trust down an ever lengthening aid chain.?This is inefficient and expensive and increases the risk that insufficient funding and decision-making power is given to the affected people who are the last link in the chain.?
The integration of the internet with mobile technologies is rapidly rolling back these barriers.?The majority of national and local NGOs workers have access to mobile devices and the internet.?If the funders’ reporting requirements were simpler and more support was given to national NGOs on key skills like financial management, they could do real-time reporting on funds.??Rapid access to reliable reports would create effective accountability and therefore create trust.?This would be a big improvement in transparent reporting than is being delivered by the existing long, slow and??complicated aid chain.
The international agencies, which are currently being forced to act as middle-men, could then be freed up to focus on improving the quality of aid, sharing knowledge and providing capacity building.
Cash is king
The report cites a 2014 analysis of an Ethiopian programme which “found that giving cash at the same monetary value as the distributed food cost 25-30 per cent less to implement.”?Not only does cash meet their needs more effectively, it stimulates local markets and livelihoods rather than destroying them, which enables faster and more sustainable recovery. Again despite the mounting evidence, the report reveals another startling statistic: “only 6 % of all humanitarian aid is currently provided through cash or vouchers.”
Once again it is a lack of trust and fear that cash might fall into the wrong hands that holds us back.?Mango believes that international standards and full and transparent internet-based reporting will achieve the breakthrough needed to build trust in local NGOs.?These NGOs are crucial in enabling communities to resolve conflicts and take decisions together, which are essential for longer-term recovery and resilience.????
In my view “The most important gap in humanitarian financing is not about money – but trust.??Mango believes an international standard that enables national and local NGOs to show they can be trusted with money could be one of the most significant breakthroughs that this report recommends.?This simple innovation will increase efficiency and get more funds and cash transfers directly to the people and NGOs working in affected communities. That is the sort of radical change needed to meet the rapidly growing humanitarian needs in an increasingly complex world.”
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Notes?
Mango is a UK-based NGO dedicated to strengthening the financial management and accountability of NGOs and their partners worldwide. They deliver award-winning financial management training, recruitment and consultancy services across the globe. They offer a wide range of free online tools, as well as a training bursary scheme for national NGOs. Mango also play a key role in thought leadership and advocacy on sector-wide financial management issues.
Grants Management and Compliance Specialist
9 年Interesting article Tim. I think there is a definite need to separate humanitarian from development work in terms of providing funding for local NGOs. If trust can be built up between donors and LNGOs over a period of stability then this would certainly help. The major issue here is one of risk - at present donors are happy to pay additional costs to INGOs knowing that they undertake the risk of LNGOs performance. This may well be because International HQs are close to international donors and therefore relationships are formed at all levels - HQ, Regional and Country - something which is not possible for LNGOs and CBOs. Decisions over the funding of projects may well not reside with donor representatives in country but rather with more remote, more senior managers who will have no knowledge of local organisations. If this is the case then a cultural rethink among donors is required and a higher level is decentralization needs to be introduced. On the humanitarian / development divide there is even more risk attached to emergency funding - the need to get money out quickly, to be able to interpret rather than simply follow financial policies and to engage compensating controls increase the dangers of fraud and theft and give more opportunity for corruption - hence donors may be even more reluctant to release funds to 'unknown' actors. Outside of the finance sphere and on an overall note, my experience in humanitarian responses is that LNGOs struggle to expand and increase programme delivery during a crisis. This is partially due to the fact that INGOs have considerable resources which can be diverted from other countries in order to provide surge capacity - a luxury not available to LNGOs. In addition, the traditionally higher salaries of INGOs may lead to the decimation of LNGO staff who switch jobs in order to add the prestige of INGOs to their CVs. I have been witness to a couple of emergencies where LNGOs have been provided with more money (through INGO partnership arrangement) but have been unable to deliver due to high staff turnover. Obviously there is some kind of chicken-egg scenario here but to give money to LNGOs under these circumstances may actually be counterproductive no matter how effective their financial management. I do think an international standard for NGO finance is long overdue - as is a simplification of donor auditing with more emphasis on outputs and outcomes and less on reviewing the cost of office consumables - but I feel that in isolation it will not work. There needs to be an overall comprehensive review of why donors don't fund LNGOs as finance is only part of the problem.
Consultant / educator in development project work
9 年Tim, thanks for your response to my last comment. I hope you don't mind another comment/question. Are you going to link this with the Common Humanitarian Standard / CHS Alliance? You say it's important to keep a grant management standard as simple as possible. Well, I suppose CHS Article 9 is an extremely simple one. You are probably thinking of something a little more detailed than that. It might seem hard to know how to join them together, but it would seem messy to have separate standards. Another set of thoughts is about the problem of audit regimes. Standards need audit regimes, don't they? CHS in itself is very new, so it's audit regime is unproven. One of its progenitors, HAP, used to have a much more detailed (read auditable?) standard. But so far as I could see, its audits were not at all transparent to the public; they could not overcome agencies' sensitivity to possible public criticism. So it was hard to know how the system working as a whole. What are your/MANGO's ideas about that? By the way, I teach development project management on a Masters programme in Bangkok, and I largely use MANGO materials for the financial part. They're great.
Consultant / educator in development project work
9 年I, too, broadly agree. But I suggest that the humanitarian sector isn't the best place to pioneer new techniquest for trusting local organisations. It is the most chaotic and unstable environment. These things should be established first in the calmer waters of developmental aid. For the humanitarian sphere we should be more demanding of the big agencies which - with far greater resources - mostly provide only the sketchiest accounts of what their aid actually does in the field.
Humanitarian expert in operations & finance, from the field to CFO. Management of diverse and high-profile teams. Expertise with Donor management, Risk Assessment, Fraud, Organizational assessment , Currency risks.
9 年I cannot agree more on this, and I'm ready to be part of this change. I want for the next decade that a big Donnor like ECHO can finance "Local" NGO and not only "european" NGO. We, at ALIMA are an "european" NGO with HQ based in Dakar, projects in western and central Africa, in co-management with "Local" Ngo and 75% of African Staff in HQ and Coordination. One word to cut this barrier of nationality and to focus on quality, ability and then TRUST : "Organisational Assessement" of NGO as a criteria to give fund and define the way funds are given and must be managed.
Systems change innovator and advocate. Co-creating practical ways to make non-profit funding equitable and locally led.
9 年Hi Chris, the Report from the High-Level panel talks more about developing harmonised reporting requirements for grants (p.30) and also shared reliance on due diligence assessments (p.28). This could be covered quality standards for grant management of the kind African Academy of Sciences is developing for Africa. International accounting standards would make this all easier - as it would help harmonise accounting requirements and formats for financial reporting in general - but it doesn't have to wait for that as that may take some time...