Operation Hope Foundation do NOT rely ONLY on reports from local partners to ensure accountability. Reports however are only as good as the honesty, ability and integrity of the organisation writing the reports. Often reports describe what has happened but not on what should happen but did not. It is easy to hide fraud, inefficiency and wastage in an operation report.
OHF send staff almost on a monthly basis to its overseas operations. There are tightly knitted procedures that ensures proper decisions are made and expenses are fully accounted for. As an International NGO, OHF has full control over its overseas staff and decides on their salaries, bonuses . promotion and termination. With email and Skype, there is daily communication between the field staff and HQ.
If we work with a local partner, we may not have full access to the information or have control over the decision making processes. Without the profit element, tight control is needed. In a business, a business partner that does not perform will soon faced cash flow issues and will be forced to change and improve. Inefficiencies, wastages and even fraud will have to be eliminated to turn the business around. For a charity/ NGO, as long as the donations continue the flow in, it can run perpetually regardless of how badly the operations are run.
From the above and thousands of similar reports on the internet, it is crucial for funders like Multilateral agencies and international NGOs to ensure accountability and transparency from local NGOs. Having one NGO for very 872 people in Nepal does not make sense and indicate that the funds are not used as intended. Having the right kind of reports and the appropriate audits by the donors will detect and eliminate fraud and ensure the funds goes to the beneficiaries.
Operation Hope Foundation focusses on BENEFIT TO COST RATIO where the benefit is what is received by the beneficiaries and the cost is what was used to deliver that benefit. While it is common to focus on the cost of fund raising, the cost of delivering the benefit is not questioned as much. If $100,000 is given to a local NGO , as far as the international NGO is concerned, that is the benefit that is given to the poor.
But it is in reality the cost and not the benefit. The benefit is the value of the goods or services received by the poor. The “overheads” of the local NGO is not a benefit and should be included in as the cost. However this “overhead” and the value of the benefits are hard to come by if the data is not fully available.
Let us illustrate with an example. An NGO in Singapore raises funds for a disaster for Indonesia. It keeps a part of the funds and transfer the balance to its affiliate in Indonesia. The latter has only monitoring capabilities and appoint several local NGOs to carry out the disaster relief. A part of the donation is kept by the affiliate NGO. The local NGOs pay various local contractors to carry out the work. The benefit is what the contractors deliver but the cost is what is kept by the Singapore and Indonesian NGOs plus what is retained by the local NGOs and the contractors. From this example, you can see that only a portion of the donation benefitted the poor.
The solution to the problem of a low benefit to cost ratio is to execute the program ourselves. This means we have to build up resources, train the staff, have adequate infrastructure and look at the program as a long term project. Rather than just a three year or five year plan, we should look at 20 year plans.
Cambodia staff attending a Human Centred Design Training by Robert Kee
STREET SMART PROCESSES
OHF uses street smart processes to ensure better accountability, control fraud and wastage. Here is an example of our street smart process.
We spend a considerable sum daily to buy food from the wet market. These are cash purchases with no receipts or the receipts are not trustworthy. How then can we ensure that our funds are properly used and not siphoned into someone’s pocket?
First, when the food is brought back, we weigh and record the weight and cost. This is done in the presence of an admin staff who is rotated so that it is not always the same staff that does the checking and recording. The data is then recorded onto an Excel spreadsheet.
Second, we use several teams that take turns to buy the food from the wet market and not always the cook. Using the pivot table, we extract the average price per kilogram per item and compares this average price per kilogram among the teams so to ensure that no one team consistently buys at a higher price.
Third, we have a Food Menu Spreadsheet. 50 dishes are listed on this spreadsheet with the ingredients, the weight or amount per ingredient as well as the cost. Since all the ingredients are listed, anyone can go and buy the food and not just the cook. Also, using pivot table we can update the price per kilogram of the various items so we know the cost of each menu!
Fourth, we have a schedule of persons to buy and cook the food. Instead of depending on just one person the cook, we use a team of people which reduces the temptation for fraud.
Lastly, staff from Singapore regularly visit the wet market to update themselves on prices. These prices are compared with the average price per kilogram derived from the Wet Food Spreadsheet.
It is a combination of data recording and analysis combined with field information that ensures our wet food purchases are honest and with proper nutrition and a variety of different tastes.
The above is an example of how a system is used to enhance operations and detect fraud.