InterAction's statement on NGO accountability

Editor’s note: Aid Watch asked InterAction for a contribution to the debate originally sparked by Till Bruckner’s post The accidental NGO and USAID transparency test. See below for a list of all related posts. Statement from Barbara J. Wallace, InterAction’s Vice President of Membership and Standards, on NGO Accountability

Washington, DC (September 27, 2010)—InterAction appreciates the active discussion about NGO accountability and transparency, and has been monitoring the debate. The variety of opinions and information is valuable. This is not a new conversation for us. Our community of U.S.-based international NGOs has been discussing these issues for more than 20 years and they are the basis for development of our Private Voluntary Organization (PVO) Standards. These standards state that each member organization ‘shall be committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.’ The issue at hand is what constitutes relevant information, and to whom specific information should be disclosed.

We deplore the nature of the debate taking place on your blog.  Highly inflammatory accusations have been made against NGOs—now proven to be untrue—using faulty research and questionable methodology. Whistleblowers bring disturbing information to light, but also bear responsibility for sharing accurate information based on fact. Instead of igniting a constructive conversation with a different take on accountability and transparency, this blog chose to smear the NGO community using conclusions from incomplete information that fit the author’s premise rather than engage in constructive discussion about what constitutes sufficient transparency, generating a lot of attention, but little constructive change.

InterAction purposefully does not define in our standards specific mandates for disclosure, nor do we dictate to any organization the details of their organizational management. InterAction’s membership is wide and diverse. Our largest members are worldwide and have total budgets over $1 billion. Our smallest has an annual budget under $60,000, works in one country and has no paid staff. Our members have varying operational models, methodologies and organizational capacities. This makes it almost impossible to compare the raw data from one organization with the raw data of another. The following caution in evaluating comparative detailed financial information may be useful as an example of this pitfall.

The ratio of indirect cost to direct cost or total cost varies and depends on many factors. It will be difficult if not impossible to get a definitive or measurable indicator for cost reasonableness since each organization has a different accounting/allocation methodology. That is to say there are numerous differences in both workforce and accounting classifications as to direct or indirect costs, as well as other variables such as the extent to which subcontractors are used, the structure of an organization, the expanding and declining business base for individual organizations, and the differing accounting methodology of one organization verses that of another. For example: one company may have a large labor overhead ratio to direct labor because it includes vacation and sick leave along with other types of overhead costs directly related to labor, while another organization will have a lower ratio because they direct charge vacation and sick leave. Neither practice is preferred over the other and both are equally acceptable. They are merely different. (www.usaid.gov/business/regulations/BestPractices/pdf)

In our working groups, annual Forum and CEO Retreats ongoing discussions about the responsibility of accountability and definition and value of transparency in a newly technologically advanced world are common themes.  In addition to the request of some donors to keep their financial support private (and the NGOs legal responsibility to honor that request),  organizational capacity, security concerns and other circumstances all have to be taken into consideration when determining whether or not specific information should be made public in part or in its entirety. All NGOs are not the same. That said,InterAction member organizations believe that informed citizens provide important insight, and they value the participation of informed local citizens in project design, implementation and evaluation and have used such insights to improve practices and methodology.

As we become an increasingly technologically advanced and interconnected society, NGOs will need to keep pace with new requests for information, and to balance questions of security, law, individual privacy rights, and proprietary methodology with this ever increasing demand.  InterAction and member organizations will continue to discuss NGO accountability, transparency and the impact of technology on our standards within its communities of practice, and will continue to wrestle with the increasing demands for public information and the reduction of unrestricted funding for operating expenses, which include this kind of public information management.

The discussion about what constitutes accountability under what circumstances and to whom continues. The most important focus of that discussion is what difference the NGO makes to the population it serves.

Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency USAID and NGO transparency: When in doubt, hide the data Response from Mercy Corps on Transparency NGO Transparency: Counterpart International to release budget Transparency International clarifies the debate, deplores attacks on Till Bruckner Statement from CARE on Bruckner FOIA Request Return to TransparencyGate: Humanitarian Accountability Partnership weighs in

Return to TransparencyGate: Humanitarian Accountability Partnership weighs in

Editor’s note: Aid Watch asked HAP for a contribution to the debate originally sparked by Till Bruckner’s post The accidental NGO and USAID transparency test. See below for a list of all related posts. The HAP (Humanitarian Accountability Partnership) Secretariat is encouraged that issues of NGO accountability are being discussed in fora such as this, and in particular that the debate is now going beyond the sector.

While public disclosure of financial information is not a requirement for HAP membership,  members and other aid organisations that apply for certification with the 2007 HAP Standard in Humanitarian Accountability and Quality Management are expected to make their humanitarian plans and progress reports available to key stakeholders. Humanitarian plans include the overall goals and objectives, the timeframe and linked financial summary. Progress reports include progress against the plan, including against the financial summary, and are communicated at time intervals suitable to the different audiences.

As part of the HAP certification process, the auditor notes commitments made by the organisation, including in relation to financial integrity and reviews the management system that supports the implementation of commitments. Specifically linked to the current discussion, the auditor also verifies that the organisation has in place an information policy that includes narrow criteria for non-disclosure, and reviews how the organisation shares financial summaries and progress reports.

Financial transparency is an important aspect of an organisation’s public accountability, recognised as such by various initiatives, including HAP. However, financial transparency is not a sufficient indicator of accountability, in particular of accountability to the group that matters most, the people whom an aid organisation aims to assist. Financial details alone do not reveal much about the quality of the services provided to communities: do the projects deliver good quality services that meet the communities’ needs? Are the interventions appropriate in the specific context? Is the population that the organisation is aiming to assist included in the design and implementation of programmes? Are communities satisfied with programme delivery? Are they able to provide feedback and affect the way in which organisations that affect their lives work? Are they able to raise complaints and receive a response when programming is poor?  And last but not least: are organisations continuously improving the way in which they operate to best serve the needs of those they aim to assist?

The fact that an agency may not make its financial information publicly available at all times does not necessarily mean that it is not transparent or that it lacks accountability. There may be significant risks associated with sharing such information in certain contexts, in which case the organisation should provide a justification for non-disclosure.

Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency USAID and NGO transparency: When in doubt, hide the data Response from Mercy Corps on Transparency NGO Transparency: Counterpart International to release budget Transparency International clarifies the debate, deplores attacks on Till Bruckner Statement from CARE on Bruckner FOIA Request

Statement from CARE on Bruckner FOIA request

AidWatch received the following statement from CARE regarding Till Bruckner's AidWatch post on USAID and NGO transparency:

Statement from CARE (Aug. 30, 2010):

Contrary to what Till Bruckner suggested in a recent blog, CARE did not withhold information in response to his FOIA request to USAID regarding certain projects in the Republic of Georgia. Our records indicate that CARE never received the request from USAID to review CARE’s budget information before USAID provided it to Mr. Bruckner. USAID’s email request to CARE went to two inoperative emails; one was for a former employee and one went to a current employee, but the email address was incorrect.  As a result, the CARE document that USAID sent to Mr. Bruckner was redacted without CARE’s knowledge.

We have since reviewed the document and will ask USAID to produce it in full without any redactions, including our indirect cost rate, which was the primary information that had been withheld.

Secret NGO Budgets: Publish what you spend

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator. Are you ashamed of your organization’s budgets? Do you think your supporters would be shocked if they could see exactly how you are spending their money? Do you feel the need to keep your finances hidden from your local partners and clients? If you answered all three questions with “yes,” you might be working for an international NGO.

After the August 2008 war between Georgia and Russia, Transparency International (TI) Georgia, a local organization working on transparency and accountability issues, tried to track and monitor 4.5 billion dollars in humanitarian and reconstruction aid that donors had pledged. It was in for a shock.

Out of twelve NGOs that it asked to publicize the budgets of their ongoing projects, only one (Oxfam GB) complied. In an unusual display of interagency coordination, ten NGOs convened a meeting and wrote a joint letter to TI Georgia, arguing that they were unable to share their budgets at short notice as “there are a number of legal and contractual implications involved with donors, head office and other stakeholders which will take time to resolve.”

Nine of the signatories to the letter were members of InterAction, whose standards state that “organizations shall substantiate, upon request, that their application of funds is in accordance with donor intent or request” and that “the member organization shall be committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.” In theory, the NGOs had committed themselves to transparency.

In Georgia, international development organizations have been advocating for greater transparency for years, teaching citizens that they have the right to know how their money is spent, ordering community-based organizations to publicly display the budgets of their micro-projects and telling local governments that they have the duty to provide financial information to those they serve. Years ago, I asked an NGO manager what he considered the greatest success of the project that he was running. “We finally got the district government to post its budget in the mayor’s office, where everybody can see it,” he proudly told me. When I suggested that he post his own project’s budget in his office, he recoiled. “This is an experimental project, so the overheads are very high,” he replied. “So it would be very difficult to explain.”

While there appears to be little hope of gaining access to project budgets through NGOs themselves, institutional donors are subject to legislation in their home countries. I filed a Freedom of Information request with USAID in May 2009 to request copies of the budgets of all NGO projects in Georgia funded by American taxpayers’ money. Six months later USAID informed me that it needed the consent of the NGOs to release this data as it might contain “confidential commercial information,” thereby closing the opacity loop: first NGOs had blamed donors for not being able to release budgets, and now the biggest donor was passing the buck back to NGOs.

After a series of follow-up emails to USAID's Information and Records Division had gone unanswered, I lodged a formal complaint with USAID's Inspector General in March 2010. Two months later, the Inspector General's office finally replied, saying “this matter does not fall within the investigative purview of our office” and passing the buck to the Director of Administrative Services. Meanwhile, one year after my original request for information, the budgets of US-funded NGOs in Georgia remain as elusive as ever.

Secrecy and charity make for strange bedfellows. Those who spend the public’s money in the name of the poor have a duty to make themselves accountable to rich and poor alike by publicly explaining how this money is being spent. Congress should step in and require USAID to publish what US-funded NGOs spend by posting full narrative and financial project proposals online as soon as a funding decision is taken.

Till Bruckner worked for NGOs in Georgia and Afghanistan before managing TI Georgia’s aid monitoring programme in 2008-2009. He is currently writing a PhD thesis on accountability and corruption in NGO projects in Georgia. The views in this article are those of the author alone, and do not necessarily reflect the views of TI Georgia. The author can be contacted at tillbruckner@gmail.com.