The Trouble with Transparency

Aisha Down / Khmer Times No Comments Share:
A member of the Cambodian Rural Development Team (R) demonstrates home-gardening skills to residents of a village in Kratie province. Supplied.

In the aptly named “Dollars to Results” section of the USAID Cambodia website, the final category of spending, “Program Costs,” amounts to less than 10 percent of the organization’s total $57.4 million budget. On paper, it’s an impressive statistic; less money spent on administration, in the minds of conscientious donors, suggests more spent on that which is really necessary – mosquito nets and malaria medications, the bread and butter of international aid in Cambodia. 
 
However, the logic that gave rise to counting pennies on the dollar as a measure of NGO quality has consequences that can prove crippling to development efforts in the field. As large international agencies and NGOs – USAID, AusAID, and Oxfam, for example – work toward transparency and efficient, streamlined budgets the small, national NGOs that do their fieldwork and implement aid plans pay an often overwhelming price to meet their standards.
 
“We need to get pre-approval before we make any payments, unless they’re in the budget,” says Chan Sarith, financial officer of the Cambodian Rural Development Team (CRDT), speaking of USAID’s requirements for its contractors. “The rules are clear about allowable and unallowable costs. We cannot pay for alcohol, for guns, or for construction. I’m not sure why the last. We put it in our budget once – “toilet construction.” We had to change it to ‘sanitation funds for rural families.’”
 
The CRDT, in the language of the NGO world, is what’s known as an “implementation partner” – a Cambodian partner NGO that bids for contracts from larger international NGOs such as USAID and Oxfam, and, upon receipt, mobilizes a seasoned field staff to implement them. 
Its contracts range from installing tanks of clean water in rural villages to market research on linking rural vegetable growers to potential buyers. In order both to receive grants and to fulfill the terms of them, Mr. Sarith and his team say they face a huge number of requirements and restrictions – both on the bidding end and on the reporting end.
 
“We must employ four full-time accountants,” says Mr. Sarith. “Moreover, we pay for our own audits, up to $4,000 a year. We have to hold quarterly meetings, to show that we’re transparent, and we have to have lists of participants, meeting minutes. We have monthly, quarterly, yearly reports. If we don’t have these, we are not transparent.”
 
All very well and good, say critics of the NGO world in Cambodia. With more NGOs per capita than anywhere in the world except Rwanda, according to one tally, corruption is a significant concern. While Transparency International rates the transparency and accountability of NGOs in Cambodia as “moderate,” donor concerns abound of NGOs using loose frameworks to run as businesses, for-profit or personal gain. 
 
“Accountability standards can help prevent corruption,” says Preap Kol, director of Transparency International. “This includes having good policies, and regular and mandatory audits.”
 
But, while these transparency requirements might help prevent corruption, they also require a staggering amount of work, work that local partners with staff trained in rural livelihood development are not always equipped to do.
 
“The organizations who fund us offer little to help us meet their requirements,” says Yous Pheary, the executive director of Community Economic Development (CED) in Kratie. “We have experience with rural development. Not with paperwork.”
 
Even when organizations like the CRDT and the CED have built staff capacity to navigate the burdens of reporting and bidding, they face additional problems. In a nation where most materials are cheap and English classes are expensive, a good administrative staff costs a lot more than mosquito nets. But, say Mr. Sarith and Mr. Pheary, international NGOs conscientious of high “program costs” are unwilling to pay their partners sufficiently for the work they put into maintaining their high transparency standards. 
 
“We’ll get 10 percent to 20 percent of a given project budget allocated to ‘indirect costs,’” says Mr. Sarith. “This includes admin costs. It’s not enough.”
 
The CRDT, says Mr. Sarith, has weathered the demands of a number of partners by having what he terms “core funding.” Some of this core funding comes from donors – but most comes from a couple of social enterprises, businesses, that the CRDT runs to support its operations, among them an English-language school in Phnom Penh, and a tour operator in Kratie. 
 
“We pay about 9 to 10 percent of our total budget from our core funds, our own pocket now,” says Mr. Sarith. “It’s been more in the past. Sometimes we have no other way to keep our staff.”
 
The CRDT is unique. Its businesses thrive, and, says Sarith, their staff no longer suffers salary gaps – unlike when the NGO started. Other NGOs in the area are not nearly so fortunate.
 
“Thirty percent of our staff change jobs in a given year,” says Pheary. Those who remain work long days of overtime, and must face the uncertainty of periodic funding gaps, which, if long-lasting, can force many to quit.
 
In the meantime, he estimates, 45 percent of local NGOs in Kratie have gone under in the past eight years. The reasons for the failure, according to Mr. Pheary, are twofold. Firstly, little money goes to funding administrative staff and building their capacity, Furthermore, though, the model in which local NGOs must continually bid for contracts to support their NGOs is stifling and allows little freedom for the NGO to improve its structure and working model. “It’s very hard to get work done if you’re constantly fighting for contracts,” says Mr. Pheary. 
 
He adds that USAID and European donors don’t often encourage their bids. “They think local NGOs don’t yet have laws,” he said. “They say we do not have enough standards.”
 
In the face of these complaints, some international NGOs remain on the defense. Rebecca Black, mission director of USAID, emphasizes that the proposal-based model is to promote competition among local NGOs, which produces the best results in international aid. “When people compete, they come up with better-quality processes and products,” she says.
 
As for the work required for reporting on projects and submitting proposals, Ms. Black says that sometimes NGOs misestimate USAID’s requirements. “I don’t think we require at the moment more than we should,” she says. “We have partners who write us more than we need, a lot of the time. We try to help them adjust.”
 
Working well as a local NGO requires a certain sophistication and ability to report on use of funds, she says. For those that can’t leap the bar?  “We find other ways to support organizations that don’t necessarily have sophisticated structures.”
 
Other international NGOs, however, are in the process of change. Oxfam, which is consolidating a number of country programs into one, emphasizes the importance of supporting and trusting local partners.
 
“I dislike the term ‘implementation partners,’ frankly,” said Chris Eijkemans, country director of Oxfam. “It implies that they’re our tools. They’re not.”
 
While Oxfam still sometimes operates on the basis of contracts, says Mr. Eijkemans, most of its funding now goes into supporting longer-term partnerships – the work of NGOs that it has supported for years. 
 
Soeung Saroeun, of the Coordinating Council of Cambodia, says that Oxfam’s policies towards its collaborators are some of the best. “They promote the plans of the organizations they work with, and they listen to their ideas and needs.”
 
As for reporting, he adds that Oxfam’s requirements tend to infrequent – once or twice a year. “This sort of policy is the best,” he says.
 
Oxfam and USAID both affirm the stated goal of almost all international aid groups – to finish their projects and to leave Cambodia. For USAID, Ms. Black says, the work ahead is, as always, empowerment. “The vast majority of people working for us are Khmer,” she says. “Our commitment is to increase their capacity, and the capacity of local organizations.”
 
For Mr. Eijkemans, the question is trust. “There’ve been NGOs in Cambodia since the early 90s,” he says, “all of them working to build capacity.”
 
What is the work of the future? Oxfam’s model of working with its partners emphasizes give-and-take over contracts, he says. “We collaborate with our proposals. We put out ideas, and our partners return with more ideas. Together we build what we’ll do.”
 
Meanwhile, says Or Channy, executive director of the CRDT, the NGO model itself may need to change. “In the next three to five years,” he says, “we will not rely on grants. No funders will continue to provide grants. It is time for other things, for social enterprise, maybe.”
 
There’s a leap of belief it takes to finish any sustained effort. “We need to validate that the progress has been made,” says Eijkemans. “We have built tried for years to build capacity. Now? The capacity is there.”

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