How Can NGOs Meet the Challenges of Ethical Spending?

Worldwide humanitarian aid contributions in 2013 were at their highest level for five years, putting the sector’s aims and practices under the spotlight.

According to analysts Global Humanitarian Assistance, donations from government and private bodies totalled $22bn (about £13bn) – up nearly a third on the previous year.

With such large amounts of money involved, there is obviously a pressure for humanitarian and development NGOs to show transparency and accountability in their aid flows. This means demonstrating value for money in their procurement policies and, ideally, strengthening the communities involved.

“Any attempt to procure goods and services locally promotes self-reliance,” says Jason Baldaro, global procurement and facilities manager at Voluntary Services Overseas (VSO). “Even if the goods are unavailable, it can highlight an opportunity and challenge local businesses. It could be argued that this is one of many tools in developing an economy – basic supply and demand,” he adds.

However, sourcing from local providers is not without its challenges. As Clea Kahn and Elena Lucchi from the Médecins Sans Frontièresoperational centre in Amsterdam have argued in Humanitarian Exchange Magazine, local procurement can risk neutrality, especially in conflict zones where opposing sides control vital goods and services.

NGO Responsibilities

Clare Battle, a policy analyst at Water Aid, believes the responsibility for getting it right lies with the NGOs involved. “When the quality of local procurement systems is poor, donors and NGOs should help strengthen these systems, rather than employing other practices that may even undermine attempts to move towards country-led processes,” she says.

However, many donors have policies that dictate the circumstances under which procurement can take place. Four years after the Haiti earthquake, for instance, a substantial proportion of US development funding in the country still goes via American, rather than Haiti-owned companies.

Rose Longhurst, funding policy adviser at NGO development membership agency Bond, acknowledges that this can be an issue. “Sometimes donors have specific procurement stipulations, saying that you may have to source certain goods or services from certain areas or organisations,” she says.

Clearly, there is a need for NGOs to balance ethical intervention with consistent funding. Conventional wisdom in this area suggests that the relationship between donors and NGOs creates a self-regulating mechanism against bad practice. An NGO’s spending is accountable to its donors through audits, which are presumed to be a sufficient safeguard against misspending and corruption.

Developments such as the International Aid Transparency Initiative also demonstrate a move toward a greater openness about how aid flows work.

That said, there are few legal frameworks to challenge malpractice, and the closeness of donors and NGOs remains unchallenged. In the case of Haiti, this has led to local aid organisations being largely ignored.

Longhurst, however, maintains that because many charities conform toISO 9000, their procurement practices are externally audited to prevent unethical behaviour.

Read the full article at the Guardian.