TransparencyGate: the end of the road

by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator. Sixteen months after I first filed a Freedom of Information Act request with USAID for the budgets of American-financed NGO projects in Georgia, I have reached the end of the road. Rejecting my appeal, USAID has confirmed that it continues to regard NGO project budgets as “privileged or confidential” information, and will not release budgets without contractors’ permission.

The opacity of USAID’s subcontracting makes it impossible for researchers to get access to comprehensive and comparable data that could inform debates about the effectiveness of delivering aid through NGOs. For example, the issue of aid fragmentation within NGOs could only be raised because Oxfam GB voluntarily provided a researcher with a list of all its projects abroad.

USAID is on very thin ice when it tries to push developing country institutions to become more accountable. The next time USAID lectures an African official on the importance of transparency in public procurement, I hope she will pull out a list of blacked-out budgets and argue that her ministry is following American best practice when it treats all financial details of its subcontracting arrangements as “privileged or confidential.”

Financial opacity also remains the default position for most NGOs. CARE and Counterpart instructed USAID to release more information in response to this FOIA, and they deserve credit taking for this step. However, USAID’s latest information release suggests that no other NGO has given the green light for such information sharing.

The recent public statements by NGOs and other aid actors reveal wildly divergent understandings of what accountability should mean in practice. As InterAction points out, “the issue at hand is what constitutes relevant information, and to whom specific information should be disclosed.”

What information is relevant? Scott Gilmore argued that we should be interested in accountability for outcomes rather than for expenditures, and many commentators on this blog have questioned the desirability or utility of public access to NGOs’ salary figures or NICRA rates, and raised concerns about privacy, security and competitive disadvantages.

I continue to believe that project proposals, including uncensored budgets, are essential components of a meaningful rendering of account. Proposals spell out what an NGO plans to achieve, when, where, why and how, and at what cost. If we don’t even know what a project sets out to do, and with what resources, how can we hold it to account for its success or failure?

Equally, there is disagreement on who qualifies as a legitimate stakeholder. CNFA and Mercy Corps have both emphasized that they feel themselves obliged to render account to institutional donors and beneficiaries, but not necessarily to third parties. This line of argument glosses over the sad reality that NGOs do not reveal project budgets to their beneficiaries either. Also, as charities enjoy tax-exempt status and spend public money, we are all donors, like it or not. And we all care about the beneficiaries, so we are all “aid watchers”.

If project budgets are not particularly relevant, and scrutiny by ordinary citizens does not bolster accountability, why do international NGOs regularly make their local sub-grantees post project budgets in public places for all to see? As far as I know, no Northern NGO has worried that such excessive transparency may compromise the privacy, security or competitiveness of community-based NGOs in the South.

This FOIA journey has shown one thing above all: NGOs (save Oxfam GB) simply do not want outsiders to see their project budgets, full stop. Not a single NGO has used this forum to announce its willingness to give beneficiaries or other stakeholders access to its project proposals and budgets in the future, even though every country director has these documents on his hard drive and could attach them to an email within two minutes.

Project budgets are shown only to those stakeholders who have the power to force NGOs to open their books: donors, headquarters, and audit institutions. The poor and powerless have to be content with whatever information NGOs choose to provide.

Can NGOs be accountable without showing outsiders where the money goes? The Humanitarian Accountability Project thinks so. “Public disclosure of financial information is not a requirement for HAP membership,” HAP recently confirmed. InterAction concurs, stating that it “purposefully does not define in our standards specific mandates for disclosure.” InterAction also highlights “the request of some donors to keep their financial support private.”

Transparency International, drawing parallels to the oil and gas industry, strongly disagrees: “Competitive advantage or even privacy, are not acceptable exceptions. Only personal physical security suffices.” Aidinfo observes that “the burden of proof is shifting to those who would keep information secret.”

Donor-abetted secrecy jars with President Obama’s call at last week’s MDG summit: “Let’s resolve to put an end to hollow promises that are not kept.  Let’s commit to the same transparency that we expect of others.”

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.

Transparency International clarifies the debate, deplores attacks on Till Bruckner

Editor's note: Transparency International Georgia submitted this contribution to the debate originally sparked by Till Bruckner's post The accidental NGO and USAID transparency test. We at TI Georgia have closely followed this debate about whether and to what extent USAID and its NGO contractors should make their budgets public. Till Bruckner began his quest for answers while he was working with us in 2008-09, although his pursuit of the NGO budgets via FOIA requests to USAID was not conducted under the auspices of TI Georgia.

Mercy Corps’ response to the debate begins by stating, “it is unfortunate that the discussion has devolved into insinuations about NGO motives rather than an open discussion of what constitutes meaningful accountability in aid work.” Yet nowhere in this debate has TI Georgia witnessed an attack against the motives of aid workers. Transparency can open up a discussion on the global aid system and how to better address problems that lack of openness can lead to in ANY organisation:  waste, inefficiencies, redundancies and, sometimes, fraud and corruption. As Scott Gilmore points out in his post, the impact is what matters.

The discussion on the blog has been engaging, open, honest and productive. But we do not agree with attacks against individuals who speak up against problems that they see. To call someone a “self-appointed watchdog” misses the point. Others would call Till a whistleblower – exactly the practice we should encourage and protect if we are serious about delivering on our development promises, protecting aid funds and transforming the aid system.

Mercy Corps proceeds to make an ad hominem attack against Bruckner by drawing attention to problems in an assignment he did on behalf of TI Georgia in 2009. Mercy Corps’ criticisms of the unpublished report are fair. That is why TI Georgia chose not to publish the report. But we fail to see how problems in drafting that report are relevant to the question of whether NGOs should publish their budgets or not.

Further, claims that raw budget data are not useful to measure NGO effectiveness are misguided. The question of aid effectiveness is tied up inherently with having access to ALL the information behind aid programs, allowing for comparison and analysis. While releasing project budget documents may not be a catch-all indicator for transparency of an NGO or donor, it is certainly a meaningful one.

Even if conditions are precarious, such as in humanitarian assistance work, there should be a clear NGO or donor policy on transparency, and organisations need to be open about which information cannot enter the public domain – and why. TI, in its handbook, recommends that financial information should only remain secret if its publication endangers staff or beneficiaries.

Mercy Corps argues:

NGOs have different cost structures and different methodologies, and budget documents reveal little about which are most effective.  Certain types of projects – such as technical assistance or gender-based violence prevention – tend by their nature to be heavy on labor costs and light on capital items, while food distribution or micro-lending tend to be lighter on labor costs and heavier on capital requirements.

There are two separate arguments above. The second is about differences between types of assistance projects. No one advocating for aid transparency has implied that one kind of cost structure is inappropriate. Let us see the numbers, assess them and discuss our concerns with you.

The first is an argument we hear from NGOs over and over again: that publishing their budgets will erode their competitiveness. This argument has not gotten the attention it deserves in this exchange. The most sensitive information in those budgets, even before salaries, is the Negotiated Indirect Cost Rate Agreements (NICRAs) that every NGO competing for USAID funds has, as Counterpart’s post highlights. NICRAs arrive in sealed envelopes and are carefully guarded secrets within the industry, differing widely in structure from one organization to another. Perhaps someone can explain why USAID contracting uses this system – presumably if all NICRAs were the same (or if they were all public), NGOs would be slightly more willing to disclose their budgets

In its current state, USAID’s system rewards secrecy and discourages public accountability. We applaud Bruckner for his efforts to raise these serious questions and we look forward to the viewpoints of more NGOs, USAID, and others on the topic.

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

NGO Transparency: Counterpart International to release budget

Editor’s note: Aid Watch received the following statement from Counterpart International in response to a request for comment on Till Bruckner’s post The accidental NGO and USAID transparency test. We have checked our records regarding Mr. Bruckner's FOIA request to USAID for information about our Georgia program budget. Our server logs indicate that USAID's attempt in June to contact us about this FOIA request was unsuccessful because the message was sent to two former Counterpart employees, whose e-mail addresses were no longer active.  As a result, the Counterpart document that Mr. Bruckner received was redacted by USAID without Counterpart's input or knowledge.

With respect to Mr. Bruckner's specific FOIA request, we asked for and have now received from USAID a copy of its letter asking for our comments and recommended redactions. We have now responded, asking that only our NICRA rate - which is proprietary and competitive information - be redacted.  USAID has informed us that they will provide Mr. Bruckner with a revised copy of the budget reflecting this change.

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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

Response from Mercy Corps on Transparency

Editor's note: Aid Watch received the following from Mercy Corps in response to a request for comment on Till Bruckner's post The accidental NGO and USAID transparency test. We have reproduced the Mercy Corps response here in full: Till Bruckner’s posts on NGO accountability raise interesting questions – and it is unfortunate that the discussion has devolved into insinuations about NGO motives rather than an open discussion of what constitutes meaningful accountability in aid work.  While Mercy Corps appreciates being referred to as among the “most transparent NGOs,” we would argue that the willingness to release project budget documents to a third party is not a good indicator of an NGO’s overall level of accountability to its beneficiaries and stakeholders.  By applying such a narrow focus, Bruckner unfortunately turns what could be a rich and textured discussion of aid methodology into a less germane question of responsiveness to a self-appointed watchdog.

The rest of the story on Georgia First off, a bit more background on the Transparency International research project that Bruckner referenced in the original post.  In May 2009, Bruckner contacted Mercy Corps through our main website, informing us in vague terms that a report on NGO transparency would be forthcoming.  He requested a contact email where he could send the report for our review.  Our Georgia Country Director sent Bruckner an email three days later requesting that any inquiries be directed to him; Bruckner never followed up.  We heard nothing more until the following month, when we and the other agencies received an email from a different TI official, informing us that their project had developed a ranking of NGO transparency “based on the content provided on their websites”.  TI noted that it would “be extremely happy to improve the score of your organization and re-write the relevant sections of the report if you email us the complete proposals with budgets for all your ongoing projects as public documents (we will hide individual salary information before re-posting on our website).”  However, the agencies were given just three working days to review the report and turn any information over to TI-Georgia.

Mercy Corps and the other agencies contacted had serious concerns about TI’s approach.  We felt that the web-centric methodology of the study was flawed; that the format of the resulting report misrepresented how TI had engaged with our agencies (in fact, TI had not engaged us at all at that point); and felt, as agencies in the midst of a major ongoing post-conflict aid effort, that a three-day turnaround on the demand for proposal and budget data was inadequate.  The NGOs sent a letter of reply to TI expressing these concerns, and suggesting that TI take this opportunity to engage with us in a dialog on how to move forward with aid transparency in Georgia.  TI-Georgia eventually did come to meet with the NGOs and listen to our concerns.  As a result of that meeting TI agreed to redo the survey at a later date; however there was no further contact from TI after that meeting.  Bruckner’s posts make no reference to the NGOs’ substantive concerns, nor to the subsequent dialog with TI over these issues.  Here are the original emails, as well as the NGOs’ letter of response to TI, so that readers can draw their own conclusions about whether the issue has been presented fairly.

That process aside, there are important questions at stake here of how, and to whom, aid agencies should be accountable:

Does budget-sharing constitute accountability? Raw budget data, and the willingness to share it, is a poor proxy for real, comprehensive aid accountability – especially when divorced from the context of the project itself.  NGOs have different cost structures and different methodologies, and budget documents reveal little about which are most effective.  Certain types of projects – such as technical assistance or gender-based violence prevention – tend by their nature to be heavy on labor costs and light on capital items, while food distribution or micro-lending tend to be lighter on labor costs and heavier on capital requirements.  Posting the raw budgets of a handful of agencies reveals little about whether those agencies are effective, whether they are accountable to their beneficiaries, or whether their cost structures are reasonable. Furthermore, there can be legitimate reasons for withholding budget data.  To take one example, even Transparency International’s own handbook on Preventing Corruption in Humanitarian Operations acknowledges that “the highly volatile environments in which aid is often delivered means it’s important to recognise that public information about the value of programme resources and their transport may sometimes jeopardise staff and beneficiary security, particularly in conflict contexts.”

How does accountability make aid more effective? The ultimate purpose of accountability and transparency is to provide more effective aid.  As the SPHERE manual’s guidance note on Communication and Transparency states: “the sharing of information and knowledge among all those involved is fundamental to achieving a better understanding of the problem and to providing coordinated assistance.”  This is best achieved when the beneficiary population is involved in the design, implementation, and monitoring of that activity.  This integration of stakeholders into core parts of the project management process ensures that divergence between community needs and NGO deliverables is kept to a minimum.

What constitutes accountability to our constituents? NGO accountability focuses on our beneficiaries, our donors, and the governments of the countries where we work.  We orient our accountability systems to provide appropriate information, in appropriate formats, to these constituencies.  To prevent fraud and ensure good financial stewardship we institute rigorous financial and administrative policies (for an example, check out Mercy Corps’ Office-in-a-Box) and subject ourselves to extensive compliance requirements and a barrage of external audits.  Given the extensive burden that these requirements impose on already-stretched staff, it is often true that NGOs are less responsive to the demands of third-party watchdogs.  At a program level, NGO accountability means providing community stakeholders with means of evaluating a project’s goals, the appropriateness of its implementation strategy, and ultimately its effectiveness in meeting those goals.  Publicizing budget data may be a part of the approach depending on the context – but it is not a substitute for a project methodology that puts a core focus on community priorities and community participation.

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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

USAID and NGO transparency: When in doubt, hide the data

by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator In my last blog post on this website, I claimed that some NGOs had instructed USAID to hide part or all of their project budgets in a FOIA response, and praised others for their openness. Aid Watch subsequently contacted all NGOs mentioned in the piece for comments.

In its response, World Vision denied ever having asked USAID to withhold budgetary information:

World Vision has checked thoroughly with all of its relevant offices and found no record of having received notification of this FOIA request by USAID or any evidence that WV asked USAID to redact information in the documents requested of USAID by Bruckner. After contacting USAID officials, we learned that the redaction was made independently by the USAID FOIA office, not at the request of WV.

Referring to a letter from the donor agency, World Vision correctly pointed out that in the letter, “USAID did not state or imply that World Vision asked that this information be withheld.”

Why had I pointed the finger at World Vision, rather than at USAID? Half a year after filing my FOIA, I had received an email from USAID stating that:

From the nature of your request, we anticipate the need to send a “submitter notification” to the companies awarded the contracts.  We notify them that we received a FOIA request for their proposals. We will afford them an opportunity to provide their arguments concerning the release or withholding of the proposal.  We will contact you when we send out the notifications.

USAID never did contact me again on this matter. When it finally provided the budgets a further eight months down the line, the type and amount of information withheld varied dramatically from one budget to the next, suggesting that the response was not the result of a process centrally managed by USAID in isolation.

Asked to clarify these apparent inconsistencies, USAID confirmed in an email that:

Yes, we did receive differing responses from the submitters. As these were grants, we had to obtain the submitters’ recommendations. Section 1 of Executive Order 12600 requires that we give submitters of confidential commercial information the opportunity to address how the disclosure of their information could reasonably be expected to cause substantial competitive harm.

This is astounding. USAID claims that it contacted its grantees, and now one of the NGOs insists that it was never contacted by its donor. Did USAID fail to contact some or all of its contractors, possibly breaching the law in the process? Did USAID go ahead and black out World Vision’s budgets on its own initiative?

Of the eight NGOs contacted by Aid Watch, only World Vision and CNFA have responded so far. CNFA’s response confirms that it regards its detailed project budgets as confidential proprietary information whose release might cause it competitive harm. However, CNFA declined to comment on a follow-up question which asked specifically whether it had been contacted by USAID, leaving open the possibility that USAID may have acted in line with its grantee’s interests without consulting CNFA in the process.

Did UMCOR, Mercy Corps and AIHA really agree to release their full project budgets in the Republic of Georgia, as I had assumed, or did USAID just throw open their books without consulting them? Did Save the Children and CARE truly instruct USAID to withhold select pieces of budgetary information? Did I mistakenly malign Counterpart International for opacity when the real culprit was USAID? Who received submitter notifications, and who did not?

Yesterday, Aid Watch asked USAID to confirm that they had indeed contacted each NGO. They replied the same day with this statement:

As a matter of standard operating procedure, USAID notified in writing all the organizations whose budgets were sought under the FOIA request. When we did not receive a response from some of the organizations, the FOIA office followed the regular process regarding redactions. USAID redacts trade, commercial, financial, and personally identifying information in order to protect USAID's and external organizations' business and personal data.

For more information, please see http://www.usaid.gov/about/foia/foireg.htm

So the default position is non-disclosure: USAID is legally bound to contact each NGO, but if USAID’s message gets lost, or if the NGO decides not to respond for any reason, then USAID redacts their data for them. Incentives are thus set up for aid agencies NOT to respond, and for USAID NOT to disclose.

I have begun to doubt that we will hear back from any of the other NGOs that Aid Watch has emailed. What incentives are there for NGOs to take part in an open dialogue, when their own funder sets such low standards for transparency and accountability?

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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

World Vision responds on transparency

Editor's note: we are posting the following note received in its entirety from World Vision. World Vision Statement

In response to the Aid Watch post: The Accidental NGO and USAID Transparency Test

World Vision has investigated allegations posted on August 18, 2010 by Till Bruckner, a guest blogger.  The blog post charges WV and other NGOs with lack of transparency in responding to Bruckner’s request to the U.S. Agency For International Development (USAID) under the Freedom of Information Act (FOIA) for program budgets for the Republic of Georgia.  Mr. Bruckner alleged that World Vision “apparently requested that USAID black out all information in their budget except for the grand total.”

World Vision has checked thoroughly with all of its relevant offices and found no record of having received notification of this FOIA request by USAID or any evidence that WV asked USAID to redact information in the documents requested of USAID by Bruckner.  After contacting USAID officials, we learned that the redaction was made independently by the USAID FOIA office, not at the request of WV.

The reasons for the redactions done by USAID were detailed to Bruckner in a letter from USAID dated July 14, 2010.  World Vision has obtained a copy of this letter and has verified that USAID did not state or imply that World Vision asked that this information be withheld.

We regret that Mr. Bruckner did not get all the information he was seeking.  It is also regrettable that he chose to suggest in his blog that WV had withheld that information when he had no evidence to support that accusation.

As a member of InterAction (one of the largest associations of nongovernmental organizations), World Vision is “committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.”

NGO Response: CNFA Reaffirms Commitment to Transparency

Editor's note: We emailed every organization mentioned in Till Bruckner's recent blog post, The accidental NGO and USAID Transparency Test to ask for their comment. CNFA sent us a response (also posted on their website) this afternoon, which we are reproducing here in full: Transparency and accountability are core values of CNFA. Our programs are designed to be cost-effective – producing maximum output for the least cost. CNFA is fully accountable to our clients, compliant with our donors' policies and procedures, and responsible to our beneficiaries. Our program management practices are broadly inclusive and transparent, involving all relevant stakeholders, donors, partners and policymakers. This is all a matter of "practicing what we preach." CNFA's most important goal, implemented through our programs, is to encourage local partner institutions to adopt transparent business practices, for the purpose of promoting private investment and commercial finance.

Recently it has been suggested that CNFA's choice not to release financial proposal data falls short of this commitment to transparency. In reality, the competitive process used by USAID and most other donors to award contracts is designed to foster innovation, lower costs, improve efficiency, and generate better long-term results. CNFA firmly believes that our unique approach to economic development has been demonstrated to improve rural incomes by promoting entrepreneurship as well as empowering the private sector to lead to economic growth and expanding commercial agriculture and agribusiness. So, given the highly competitive environment for donor-funded grants and contracts, CNFA is naturally reluctant to provide its proprietary information, including its cost approach, publicly to everyone, including its competitors. This does not mean that CNFA hides this information from its donors or does not comply with all reporting requirements imposed by them.

The program in question, the Georgia Agricultural Risk Reduction Program (GARRP), was part of the US Government's $1 billion pledge to aid Georgia's recovery following the 2008 war with Russia. Of the $19.5 million total program cost, $16.5 million, or 85%, went directly into the hands of Georgian farmers and businesses for the purchase of agricultural inputs and services. In turn, GARRP helped nearly 40,000 conflict-affected families stay on their farms and produce crops worth over $70 million at harvest, speeding the recovery of their livelihoods and their return to economic independence.

CNFA has always been and remains committed to delivering the best value to the U.S. taxpayer, to all its donors and to the beneficiaries of the programs we implement around the world. We believe that our results, our success in competitive donor awards and our publicly available financial records speak for themselves.

Till Bruckner Responds to Critics on Meaningful Transparency

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator. In response to my recent post here, Scott Gilmore of Peace Dividend Trust argues that asking NGOs to share their budgets is misguided. He correctly points out that we should be concerned more with project outcomes than with financial details. However, while aid beneficiaries can and do judge NGO projects by their impact on the ground, Western taxpayers and private donors are unable to do so from afar. Transparency has many dimensions, including financial transparency. As a taxpayer, I have the right to ask what my money is being spent on as well as the right to ask what those expenditures actually achieved. Plus, if I cannot even find out what the total cost of a project was, how can I judge whether it was worth my money?

Scott Gilmore also states that access to budgets will not help to curb corruption, and recommends a focus on audits instead. While it is true that I cannot look at a budget and see whether the money was misappropriated in a legal sense, it does enable me to see what the money was allocated for in the first place. My original aim in requesting these budgets was not to muckrake, but to analyze what percentage of NGO project funds in Georgia flows back into donor countries in some form or another. I need to be able to distinguish between expenditures for local versus international salaries in order to find this out.

The aid industry has created a system that conveniently defines corruption so that expats can live a good life within the rules, whereas locals on far smaller salaries and with larger family commitments frequently get branded as corrupt for breaking these rules. In my experience, Afghan villagers do not share this narrow legalistic definition of corruption. When a project fails to deliver benefits to the poor, and the expat project manager at the same time lives a life of (locally) unimaginable luxury on designated poverty alleviation funds, villagers logically conclude that the project is failing due to corruption: instead of helping them as originally promised, the NGO is only helping itself. NGOs' arrogant attitude - "we're accountable by our own standards so we don't need to tell you where the money goes" - does little to change this perception.

Finally, Scott Gilmore raises the question of competition within the aid industry. I suspect many private donors would be dismayed to learn that some charities seem to orient their practices around the competition for government contracts. In any case, competition for a project ends when a funding decision has been made and taxpayers' money gets disbursed. Putting all successful proposals into the public realm as a matter of course will not only improve inter-agency learning, but will also discourage backroom dealing on contracts. This will create a more level playing field for all aid implementers, whether they are commercial contractors or NGOs. If Oxfam, UMCOR, Mercy Corps and AIHA can share their budgets, it is hard to see why other aid agencies cannot do the same.

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Original post and responses: Till Bruckner: The accidental NGO and USAID transparency test Scott Gilmore: Transparent, Yes. But Transparent What? Transparency Extremist: Transparency in the Aid process Scott Gilmore: Useful Transparency vs. Meaningless Paper Chasing

The accidental NGO and USAID transparency test

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator.  An op-ed from Bill in Monday's Wall Street Journal mentioned Till's struggles with USAID; here Till provides the details. The aid industry routinely pushes institutions in developing countries to become more transparent and accountable. But a slow and almost comically incomplete donor response to a request to see some specific project budgets sheds light on exactly how willing donors are to apply such “best practices” to themselves.

As I described in a previous Aid Watch blog post, I filed a Freedom of Information request with USAID after ten international NGOs working in the Republic of Georgia refused to publish their project budgets. After a painful, 14-month struggle, including failing to respond at all to my first three communications, USAID finally released a set of documents covering project budgets of 19 UN bodies, NGOs and private contractors.

The documents are disappointingly full of blacked-out non-information. The level of disclosure varies drastically from one document to the next. Some budgets are provided in full, while others appear as blacked-out row upon row. In three cases, USAID even withheld the identity of the contractor itself. USAID explained this inconsistency saying that it was legally required to contact each grantee to give it “the opportunity to address how the disclosure of their information could reasonably be expected to cause substantial competitive harm.”

I wondered why USAID is legally bound to follow its grantees' wishes in deciding which information to withhold. Can the grantees of a US federal agency really compel that agency to keep the total amount disbursed, or even their very identities, secret? Why doesn’t USAID specify full disclosure as a grant condition? I have filed an appeal with USAID to address these questions, and will keep the readers of this blog updated.

Since according to USAID every piece of blacked-out information was withheld on request of the grantee, the budgets provide a fascinating glimpse into aid agencies' willingness to open their books. If USAID blackouts do NOT correspond to NGO requests, I would be happy to correct the record.

Perhaps surprisingly, the United Nations showed the highest consistent commitment to transparency. The budgets of the two UN agencies funded by USAID are both reproduced in full.

UMCOR, Mercy Corps, and AIHA emerge as the most transparent NGOs. These charities apparently felt that they had nothing to hide, and did not request USAID to black out any of the information contained in their budgets.

In contrast, Save the Children apparently asked USAID to withhold all information related to salaries. As even the aggregate subtotals for international and national staff have been blacked out, concerns about the privacy of individual staff members cannot have been the sole concern driving the organization's response. Still, the fact that all non-salary related budget lines remain visible put Save the Children in the middle ground in terms of NGO transparency.

CARE's response is harder to interpret as USAID inexplicably sent only an aggregated “summary budget” that leaves little to conceal. What information exists shows that CARE did not object to the release of unit prices for supplementary food items, or of aggregated staff and operational support costs. In contrast, CARE appears to regard its “indirect cost rate” and “cost share” as confidential. To hide this information, USAID also had to black out the budget's bottom line, thus leaving unclear how many taxpayer dollars were handed over in total.

The least transparent NGOs in this test are CNFA, World Vision, and Counterpart International. They apparently requested that USAID black out all information in their budgets except for the grand total. Apparently, these NGOs consider budget items such as “office furniture” (CNFA), “visibility items (t-shirts, caps, publications)” (World Vision) and “forklift expenses” (Counterpart) as confidential information whose release could cause them substantial competitive harm.

What does this transparency test tell us? First, USAID's mechanism for responding to Freedom of Information requests desperately needs an overhaul. It took USAID 14 months to respond to a simple information request. Ironically, in terms of FOIA responsiveness, USAID is less transparent than public institutions in the Republic of Georgia, as recently assessed by a local watchdog organization. And we are still waiting to hear why USAID allows its own contractors to operate in secrecy whenever they wish. All of this places USAID in an awkward position as it recommends greater transparency and accountability to Georgia.

Second, NGOs have publicly committed themselves to transparency and accountability, but their actions show that their interpretations of what this entails in practice differ widely. For example, World Vision is a full member of the Humanitarian Accountability Partnership, but still asked USAID to hide all of its budget information apart from the bottom line. The Georgian country office of Mercy Corps had earlier refused to release its project budgets, but its headquarters apparently has no such reservations. Save the Children is willing to release indirect cost rates but refuses to divulge even aggregate salary information, while CARE appears more relaxed regarding human resource expenses even as it fiercely guards information on its indirect costs rates. Both USAID and the NGOs have too often violated the elementary principles of transparency.

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.