Helping NGOs do more with their money

Too important to fail - it’s a question of trust

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.
 

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.

Tim Boyes-Watson, Executive Director, said “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.” 

-ENDS-

 

Contact

For further information, please contact Tim Boyes-Watson: tbwatson@mango.org.uk  +44 (0)7976 406 682.


Notes to editors

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. 
 

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