Right after major man-made or natural disasters, large NGO are often highly visible in the media with their calls to donations. These emotional campaigns often work quite well. But in the donors’ point of view, some doubts also often persist: Where is my money going? Is it really used for the causes I want to support? How can I make sure it is used properly?
For all NGOs that call upon public generosity, it is essential to show a high level of transparency. While resources allocated by institutional donors are justified through detailed (and often audited) financial reporting, there are no commonly adopted rules concerning the use of private funds. It is therefore up to the ethics of each organisation.
One of the key documents aimed at members and donors is the annual report, which must be published on the organisation’s website and contain a financial report. One important element that private donors can check is the repartition of annual expenses. They are most of the times divided between « social missions » (or an equivalent phrasing: field expenses, direct costs, etc.), fundraising costs and functioning costs (or indirect, support costs…). An important indicator is the proportion between these different types of expenses. Obviously, a high percentage of expenses directly affected to programme implementation is more flattering. However, we need to take into account that the allocation of many types of expenses is open to interpretation: Are some of the salaries (in the headquarters, but also for support positions on the field) direct or indirect costs? What about office or administrative costs on the field? Plane tickets? This list is almost endless, and it is important to keep in mind that their classification is a matter of interpretation, and thus of the level of transparency of each NGO. Some structures also manage aspects of research, or advocacy, with important impacts, although they are not visible immediately. So do not hesitate to ask questions!
On the other hand, the mistrust of donors, or of the general public, is also sometimes directed to remunerations of NGO staff. Regularly, we hear heated debates about remuneration that seem high, as there seems to be a common conception that international aid workers should not be perceiving salaries even remotely similar to the private, or even the public sector. Remunerations can become a real taboo, which often leads to misconceptions (I still get asked regularly how I manage to survive, having worked as a volunteer for over twelve years…)
Yet, the professionalization and increasing complexity of practices (the era when the first French Doctors left on their donkeys to Afghanistan for six months uncommunicated seems ages away!), the increasingly challenging security situations, the variety in the fields of intervention… justify the fact that staff must be competent, experienced, must spend time in a position, or at least in an organization, and even more importantly, must take enormous responsibilities. In any case, it is obvious that we can no longer implement programmes with a high level of quality, in complex contexts, only on the basis of good will. Professionalization, unanimously requested by all donors, both institutional and private, has a cost, and it should no longer be a taboo. It is thus our role, as NGOs, to include these in our project budgets, to explain it again and again, to argument, and to be accountable in a clear, realistic and honest way.
So how can we concretely be more transparent on our financial management?
-We have talked about financial reporting in annual reports. Too often, the only repartition that is made is between “field” or direct costs, as opposed to indirect, with sometimes fundraising costs apart. It is obvious that reading these reports requires a certain level of expertise from the general public. This means they need to be formulated in a way that is easily understandable, by adding comments and explanations on the most important points.
-Be clear on affectations of donations: If your NGO makes a fundraising appeal for a disaster which received a great deal of media attention, and you then decide to affect part of these donations to other programmes, you must imperatively inform your donators, in a visible way, for example with a short sentence on your donation page reserving the right to reallocate donations in case the needs for this specific programme are covered. This is about maintaining trust with your donors, which is priceless. The same applies to functioning costs: you can for example mention on your donation page which percentage of the donation will go directly to the programmes.
– Your accounts can be certified by an external organism, which might be compulsory according to the country you work in, starting from a certain level of annual budget. In any case, it is interesting to publish these external audits, which will contribute to giving your NGO a label of quality.
Even if these measures request a certain level of investment in time, and sometimes financial, it is imperative to take them into account. This is not communication measures, but about establishing a trust relation in a highly competitive context, with increasingly informed donors.
This is the only way we will be able to continue implementing useful actions on the long term, in true transparency.