In September 2015, the United Nations General Assembly adopted the universal 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). These goals spell out the challenges the world needs combat in order to ensure the sustainability of the planet, and to ensure prosperity and equity for all. The world needs financial resources far beyond today’s ODA to move from billions to the trillions required to finance the global goals.
During 2015, the UK passed a bill that enshrines in law its commitment to spend 0.7% of its gross national income (GNI) on aid every year, making it the first G7 country to meet the UN’s 45-year-old aid spending target. Sweden, Norway, Luxembourg, Denmark, The Netherlands and the United Arab Emirates are notable countries that have achieved the 0.7% goal.
It is widely accepted that in order to obtain continuity, it is fundamental to ensure that funds are spent in a smart and strategic manner to cover the increasingly complex demands of sustainable global development.
CONCERNS OVER MANAGEMENT
AND USE OF FUND
THE CALL FOR STRONGER GOVERNANCE
A critical success factor for NPOs is that individual donors, and those who lead government and corporate philanthropy feel that their money is going to the causes that are important to them and that their resources are not being wasted through inefficiency or lack of careful management and oversight. There is a pressure and responsibility on Non-Profits and NGOs to be financially responsible and as efficient and effective as possible. Currently the donor community is generally dissatisfied with the management of their donations in key regions and countries.
Increasing concerns have been expressed in the media about the way charities and NGOs spend the funds and many cases of wastage have been highlighted. Most alarmingly there is strong evidence that there is grass roots and media pressure in some large donor countries to curtail their donations due to mismanagement of funds.
A report published by the European Union on 24th November 2015, by a committee of Members of the European Parliament under the Chairmanship of Ingeborg Grassle, identified that close to 50% of the EU’s aid portfolio worldwide was being wasted. This amounted to some EUR 15 billion worth of projects which were not being delivered to the people who have been allocated these funds, because these projects were either delayed or would not reach the initially set objectives.
Third Sector Insights, from its own work locally, estimates that 80% of the Trustees, Directors and Executives of the 136.400 Non-Profit organisations registered with the South African Department of Social Development in 2014-15 had little awareness of governance standards and good practices. A similar situation is likely to exist throughout Africa and other regions.
The situation is of particular concern in Africa, the Middle East (non GCC countries), parts of Asia, and Latin America where major donations are being received and the need for these donor resources is critical.
A GLOBAL STANDARD FOR PROPER GOVERNANCE
A PEER NETWORK OF BEST PRACTICES
A GLOBAL SYSTEM TO REVIEW GREAT NONPROFITS
A SUSTAINABLE MODEL FOR PHILANTHROPIC GIVING AND REPORTING
WHAT THE WORLD NEEDS AS SOLUTION
Corporate social investment practitioners appreciate that good governance is the most effective route to curb the wastage of donor funds. Having professional, knowledgeable, competent and dedicated executives running Non-Profit organisations is equally essential today. The donor/funder community is becoming more stringent on these issues, especially when conducting their due diligence, before funding a Non-Profit organisation.
While there exist national regulatory frameworks governing charities and NGOs, for instance the role played by the Charity Commission in the UK or those from the IRS in the USA, the degree of effectiveness varies by country, and even in the most developed countries, the Non-Profit sector has come under increasing criticism.
Donors also have their own specific policies and procedures that beneficiaries are required to follow, as well as monitoring and evaluation, and auditing procedures, which they roll out, which can become unwieldy for small nonprofits to manage. However, the global picture is alarming, clearly indicating that there remains a significant gap in the market to address aid globally.
What is required is a global set of standards and practices against which an NGO can be objectively, transparently and independently benchmarked on a regular basis, to provide trust and comfort to donors, philanthropists, management and society at large. This would have the important effect of increasing donations and funds to charities that meet these standards. It will also be a positive response to those critics who advocate “stop giving” as a solution.