The Irish Times - Saturday, August 14, 2010

Key funds for NGO administration often neglected in rush to get aid to victims

OPINION: Direct assistance is not necessarily the most effective or efficient way to allocate funds, writes GRAHAM HEASLIP 

GIVEN THE amount of money raised by relief agencies, there is a crucially important question that needs to be asked: are non-governmental organisations (NGOs) utilising the donations they receive effectively?

When faced with harrowing images of acute human grief and suffering in a disaster zone such as Pakistan or Haiti, our natural instinct is to respond.

We give what we can by donating to a relevant humanitarian organisation, and make our choice among the many charities based upon whom we feel might guarantee our cash getting straight to those suffering on our TV screens.

Our responses to the immediate need depicted in the media are gratified by the sight of feeding centres and field hospitals and a belief that our monies are best used in this manner, but is this true?

The world faces many humanitarian problems. Almost three billion people live on less than two dollars a day. In the past decade the world has faced numerous disasters: 707 on average each year, on the basis of figures from an International Federation of Red Cross and Red Crescent report.

The geographic scope of most NGOs is the entire world. Today, contributors, donor agencies, scholars and relief and development practitioners are all asking if NGOs practise what they preach? How do we know? How effective are their programmes and projects?

This pressure for improved analysis of the impact of humanitarian assistance has grown in line with the increase in resources allocated to the sector, and a broader focus on results based on management techniques in the public sectors of western governments.

Donors, such as Irish Aid, tend to evaluate humanitarian organisations on the percentage of funds used on direct relief activities.

As such, organisations with higher overhead costs, for example, higher investments in support activities such as IT, are often considered less efficient. In contrast, those with lower overhead costs – the most-valued indicator of efficiency – are often rewarded with additional voluntary donations.

However, this earmarking of funds violates the humanitarian ethos of impartiality by placing stipulations on how relief is administered.

This is a political and administrative problem that has underlying implications for NGOs, since earmarking aid focuses the relief agency on delivering the majority of aid to the most affected populations in the most visible crises, not on promoting efficiency.

Humanitarian organisations may, for example, be reluctant to spend money on a sophisticated information system that would actually improve their efficiency in the long run.

Funding for organisational support and infrastructure is often neglected under donor demands that as much aid as possible is pushed to victims. Thus, distribution channels may suffer as warehouses, equipment, communications infrastructure, and training remain unimproved or deteriorating.

Earmarking funds specifically for the affected population can also lead to a lack of parts and service support for the trucks and planes required to move material aid and lack of funding for non-allocatable costs such as headquarters expenses.

The high visibility of a disaster calls for NGOs to provide their humanitarian aid both effectively and efficiently. Media will not hesitate to highlight instances of malfunctioning operations or failing services of NGOs.

As this might have a negative effect on the willingness of the public to donate their money, it can have dramatic impact on the humanitarian sector as a whole.

The current business model of humanitarian organisations is geared to respond to disasters, and it is the very disasters themselves that attract both media attention and subsequent donations.

To date there has been little insight in humanitarian performance measurement and a reluctance of NGOs to engage in this process. However, this is of paramount importance.

The extent of the financing involved in the relief sector is significant.

Unless operations are managed efficiently and effectively, millions of euro that could otherwise have been used to save lives will be lost.

Graham Heaslip is lecturer in operations and supply chain management in the school of business and law, NUI Maynooth 

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