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Secret NGO Budgets: Publish what you spend

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator.

Are you ashamed of your organization’s budgets? Do you think your supporters would be shocked if they could see exactly how you are spending their money? Do you feel the need to keep your finances hidden from your local partners and clients? If you answered all three questions with “yes,” you might be working for an international NGO.

After the August 2008 war between Georgia and Russia, Transparency International (TI) Georgia, a local organization working on transparency and accountability issues, tried to track and monitor 4.5 billion dollars in humanitarian and reconstruction aid that donors had pledged. It was in for a shock.

Out of twelve NGOs that it asked to publicize the budgets of their ongoing projects, only one (Oxfam GB) complied. In an unusual display of interagency coordination, ten NGOs convened a meeting and wrote a joint letter to TI Georgia, arguing that they were unable to share their budgets at short notice as “there are a number of legal and contractual implications involved with donors, head office and other stakeholders which will take time to resolve.”

Nine of the signatories to the letter were members of InterAction, whose standards state that “organizations shall substantiate, upon request, that their application of funds is in accordance with donor intent or request” and that “the member organization shall be committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.” In theory, the NGOs had committed themselves to transparency.

In Georgia, international development organizations have been advocating for greater transparency for years, teaching citizens that they have the right to know how their money is spent, ordering community-based organizations to publicly display the budgets of their micro-projects and telling local governments that they have the duty to provide financial information to those they serve. Years ago, I asked an NGO manager what he considered the greatest success of the project that he was running. “We finally got the district government to post its budget in the mayor’s office, where everybody can see it,” he proudly told me. When I suggested that he post his own project’s budget in his office, he recoiled. “This is an experimental project, so the overheads are very high,” he replied. “So it would be very difficult to explain.”

While there appears to be little hope of gaining access to project budgets through NGOs themselves, institutional donors are subject to legislation in their home countries. I filed a Freedom of Information request with USAID in May 2009 to request copies of the budgets of all NGO projects in Georgia funded by American taxpayers’ money. Six months later USAID informed me that it needed the consent of the NGOs to release this data as it might contain “confidential commercial information,” thereby closing the opacity loop: first NGOs had blamed donors for not being able to release budgets, and now the biggest donor was passing the buck back to NGOs.

After a series of follow-up emails to USAID’s Information and Records Division had gone unanswered, I lodged a formal complaint with USAID’s Inspector General in March 2010. Two months later, the Inspector General’s office finally replied, saying “this matter does not fall within the investigative purview of our office” and passing the buck to the Director of Administrative Services. Meanwhile, one year after my original request for information, the budgets of US-funded NGOs in Georgia remain as elusive as ever.

Secrecy and charity make for strange bedfellows. Those who spend the public’s money in the name of the poor have a duty to make themselves accountable to rich and poor alike by publicly explaining how this money is being spent. Congress should step in and require USAID to publish what US-funded NGOs spend by posting full narrative and financial project proposals online as soon as a funding decision is taken.

Till Bruckner worked for NGOs in Georgia and Afghanistan before managing TI Georgia’s aid monitoring programme in 2008-2009. He is currently writing a PhD thesis on accountability and corruption in NGO projects in Georgia. The views in this article are those of the author alone, and do not necessarily reflect the views of TI Georgia. The author can be contacted at tillbruckner@gmail.com.

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41 Comments

  1. Till Buckner (sounds like a Steven Seagal name, sorry – totally irrelevant) is hitting a raw nerve that the aid and development industry is loathe to account for: the money they receive and how they spend it.

    If enough people keep asking this question, we might get somewhere.

    Of course, a really good report or piece of analysis would wake everyone up and things would change….Lords of Poverty, White Man’s Burden, Does Foreign Aid Really Work?, Dead Aid, Do No Harm, etc. made a really big difference. Because someone wrote about it then people will change their ideas. And loads of project managers read aid industry self-loathing/criticism.

    If enough people suspend their careerist tendencies, divide their focus from arse-protection and donor-placation to consider what it is they are really doing, we might get somewhere too.

    And Do No Harm does what it says; No harm and not much else. The book that is.

    Posted May 24, 2010 at 8:11 am | Permalink
  2. Dr. Kurtz wrote:

    At HRI we take budget transparency very seriously. Each program for example has many different versions of budgets: the HRI internal template, the donor template, the partner template, the one with the NICRA/ overhead fee, the one without, the one with the fee “hidden” among other expenses, the one that we share with planning commissions in each country, the one that we put into the UN matrix, and so on.

    Obviously, with so many budgets it is often hard to keep track of spending, but not to worry, if in doubt it’s always better to overspend. Before we wrap up a project, we already have a feel of the donor and then we class batches of expenses against their budget to ensure that we report 108%-120% expenditures (or “burn”) over a project’s life. We naturally offer to cover the “overspents” ourselves (to show commitment), and then we slap them with another proposal/ application, successful most of the times.

    Transparency goes a long way.

    Posted May 24, 2010 at 8:49 am | Permalink
  3. Julian H wrote:

    Very interesting post. We have had several Freedom of Information requests declined by DfID (the UK’s aid department), when asking about the transfer of government funds to NGOs (following the release of our paper, Fake Aid: http://www.policynetwork.net/accountability/publication/fake-aid).

    They appear to use every means and loophole possible to delay and thwart investigation into such spending.

    Posted May 24, 2010 at 8:58 am | Permalink
  4. Dr. Kurtz makes a salient point. Why not start with sharing the b*llsh*t budget? I’d settle for BS numbers than nothing… At least it’s something to interact with; and they’re sure to trip over their dodgy numbers at some point!

    Posted May 24, 2010 at 8:59 am | Permalink
  5. Daniel O'Neil wrote:

    Although open accounting can seem like a good practice, it is very tricky in poor countries. I have been running international projects for twenty years. The rent on my house is higher than the salary of many of my staff. My salary is nearly triple the highest local salary. Additionally, my top staff is paid well–many times more than what our beneficiaries receive. I think that telling our beneficiaries how much we earn would reinforce the gap between them and us. It would also complicate relations with our government partners (who earn less). I am always happy to share general information about costs (our program in the Haitian-Dominican borderlands is around $650,000/year), but see little upside to sharing details.

    Posted May 24, 2010 at 10:14 am | Permalink
  6. JP wrote:

    In the interest of transparency, which 10 organizations wrote the letter to TI declining to release their budgets?

    Posted May 24, 2010 at 11:08 am | Permalink
  7. Miles wrote:

    Nice article, if not a bit of a polemic. NGO bashing is a little too easy. Things in the real world are more complex. Whilst at Medecines Sans Frontier I know every effort was taken to keep costs down, not only in the field but also in the London office.

    Posted May 24, 2010 at 11:54 am | Permalink
  8. Zula wrote:

    One of my favorite phrases for such situations “poverty pimps” comes to the forefront when the issue of how many NGOs profit (in salaries, travel, expenses) far more in comparison to the actual outcome of their work? They don’t quite know how to explain that discrepancy for the people used as the poster-images for their work. They don’t think the poor-folk could possibly understand why it requires so much money to do the level of work they do.

    But if there is such a broad discrepancy between an NGO’s salary/expenses in relation to the actual work they do and the beneficial outcome, isn’t that a problem?

    Doesn’t this legitimately bring up the problem of who is funding who? Of who benefits more? Is it the “poor developing country folk” or is it the NGO staff?

    While the people in need may love to have problems substantially tackled, solved, mitigated, so they can, you know, actually have clean, piped water, regular, nutritious meals, employment, an actual hospital, a school for their children, etc. and they want it as soon as possible, perhaps for the NGO staff may lean a bit towards “longer-term” solutions, that would extend the time for their travel, project salary, expense accounts to be used, etc.

    I’ve worked with and among a lot of NGOs, and these are questions that certainly many don’t want to have discussed. Those who do want the discussions are often not in the position to initiate them. Certainly, many NGOs don’t pay their staff well. The best salaries are allocated to a few staff members, and the rest are a rotating bunch of drastically over-qualified unpaid interns and exhausted and low-paid staff members. NGOs will justify their frugality to ‘the rest’ of their staff, but don’t want to justify their multiple trips to global conferences for discussions that have been had over and over again, their need for glossy publications that end up mostly in their office closets, and their salaries in relation to the actual project details and outcomes – all of which comes at the expense of over-taxed lower-level staff and the people they are claiming to be saving. Some NGOs don’t even let all of their own staff see those budgets, because they don’t want them to know just how unfair those budgets are to their own staff members to whom they also plead poverty.

    I wasn’t happy working in NGOs because not only was I overstressed for comparatively little pay, but I did not feel I was actually helping on the issues that made me take the low-paying NGO job in the first place, instead of a comparatively easier and higher-paid secretarial job at a corporation. If I am going to be told that I am paid less because the NGO is giving its money to help on issues I care about, well then I darn well better see that actual help – and often I didn’t. And it did not make me feel good. Even with a higher salary, I’d feel better paid but I would still not feel good. And there are various reasons why I’d identify more with the people being helped, than the westerners patting themselves on the back for (claiming to give) the help, so I still didn’t feel good.

    So I began my own work to link to more flexible pick the organizations I worked with, including more local nonprofits that avoid both the acceptable western corruption and the often talked about non-western local corruption, and actually work more effectively in relation to the money allocated. I can still use a better salary in relation to the work, but I am happy that I can exert control to tie that salary in relation to the outcome, the benefit of my work. I can shape the projects so that standard is held by everyone, better integrate local benefit into the money spent, be more responsible on expenses and emphasize outcome over ‘image.’

    It is certainly not easy, but it is far easier (if you have the will to do so) when you have the huge budgets of many international NGOs.

    The issue of an organization being able to financially sustain itself, fairly pay its staff and spend enough to most effectively work, is a real one. My emphasis is less on the size of the budgets, but on the relationship of those budgets to the work. Can an organization justify those expenses based on the actual work done? And no, publishing a report does not necessarily qualify as work done, especially not when you’ve simply restated the same tired speeches and moving quotes. No, attending 8 international conferences a year to give the same speeches, meet the same people, distribute the same papers and share the same moving quotes, in 8 different countries, doesn’t qualify either. Not even if you bring along a few “natives” to spice up your presentations.

    NGOs should not consider themselves above scrutiny just because they claim to be doing good. Just being an NGO, or even actually doing some visible good, should not give exemption from accountability and review. And it isn’t just the donors to whom they should be accountable. The people plastered all over their websites and brochures, the people targeted for saving, helping, the people in whose names all this aid money is being tossed around, the people in whose villages NGOs putter, whose issues are discussed in meetings, whose lives are presented in grant applications and progress reports, should also have a chance to review how much money is being received on their behalf.

    They are often talked about as stakeholders and partners, but unless they too evaluate how many millions their poverty and other problems are generating in work for others in relation to the work done on those problems, then they are neither stakeholder, nor partner.

    Perhaps revealing that budget detail will inspire an uprising of those who will consider, and then act on the consideration, that they it may be more effective to demand more actual benefit from those international NGOs, as well as take a great stance on directly receiving and more effectively using the available aid money.

    Posted May 24, 2010 at 1:42 pm | Permalink
  9. didier wrote:

    I’m a bit skeptical about this. First – all US based NGOs have to file annual income statements and balance sheets with the IRS wihich are publically available. Most are picked up on GuideStar which also offers some detailed analysis on these for a nominal fee (and has been promoting transparency for a long time). Second, USAID grants can be accessed throug USAID’s own websites and the FBO database outlining business opportunities. It takes some digging as these systems are not well organized, but I imagine that the issue here is getting at branch (country level) budgets which would either require a local office to publish its local annual plan and expenditure report which I know many large organizations have done in the past as a formally published report for the local country. Regarding USAID supported projects, project reports with the accompanying project expenditure reports used to make it into the CDIE database. I guess now that it is “knowledge management”, it has become harder to find.

    Still, I would say that most, if not all of the InterAction members live up to the transparency rules through the posted 990’s, their own annual reports and the stuff you will find on Guidestar and some other places.

    Posted May 24, 2010 at 1:44 pm | Permalink
  10. Till Bruckner wrote:

    The NGOs who wrote the joint letter explaining their refusal to share their budgets were:

    CARE
    CHF
    CRS
    Everychild
    IOCC
    IRD
    Mercy Corps
    NRC
    Save the Children
    World Vision

    DRC (agency eleven) did not sign the letter. DRC explained separately that their website was undergoing reconstruction, but that they would consider posting their budgets online in future.

    All NGOs initially asked to share their budgets were members of InterAction and/or the Humanitarian Accountability Project (HAP). Therefore, they had – on paper – committed themselves to transparency and accountability already. The rationale was to hold NGOs accountable to their own commitments, rather than to externally defined standards.

    Till Bruckner

    Posted May 24, 2010 at 2:24 pm | Permalink
  11. Till Bruckner wrote:

    Guidestar, BBB, IRS 990 forms, annual reports and similar tools do not actually yield much information of value (apart from the top salary in the organization, which alone may come as a rude surprise to some five-dollar supporters).

    For those interested in this topic, I cannot recommend the following book enough:

    Bennett, James and DiLorenzo, Thomas. 1994. Unhealthy Charities: Hazardous to Your Health and Wealth (NY: Basic Books)

    The authors conclude that the current US domestic accountability framework for NGOs does not allow people to discern what a charity is actually spending its money on.

    It’s a shame, because it means that the good charities out there cannot easily demonstrate to potential supporters that they can be trusted to manage funds responsibly and frugally. If Oxfam GB can publish its budgets, what is stopping the others?

    Till Bruckner

    Posted May 24, 2010 at 2:34 pm | Permalink
  12. didier wrote:

    So they do post their information in multiple venues including the IRS but do not live up to their commitments to InterAction? Are InterActions requirements different? What standard are they not living up to – InterAction’s or yours?

    Posted May 24, 2010 at 2:41 pm | Permalink
  13. I don’t think the IRS disclosure is detailed enough to provide a significant explanation although seeing how much some people earn can be a revelation.
    I hope that “if enough people keep asking this question we might get somewhere”.
    The reluctance to share the information is a sign it could be incriminating. In the case of the investigation I have done on how IDRC spent the $5.2 millions it was awarded by the Gates Foundation to promote tobacco control in Africa I could only find about 30% provided to partners in Africa. I still don’t have precise answer about what happened to the remaining 70%. I have a “request for Access to Information” (the equivalent of a FOI in Canada) pending. Of course the grant was finally terminated by the Gates Foundation when the discovery I had made that IDRC’s Chair was also a Director of Imperial Tobacco Canada started to be published in the mainstream media.
    Nevertheless things are still far from clear: there is no real accountability nor real transparency while millions, hundreds of millions are at stake.

    Posted May 24, 2010 at 2:42 pm | Permalink
  14. JMK wrote:

    I have worked in the NGO sector for more than a decade, most of that time managing relief programs overseas. This is a thorny and sensitive issue, and an easy one to demagogue and oversimplify (as Zula’s comment demonstrated). The main concerns of the NGOs come down to sensitivity about publicizing international staff salaries.

    The fundamental problem is that NGOs operate in (at least) two different personnel markets: an international professional market and a local market. The supply and demand curves in these markets price their products (in this case, staff salaries) very differently. The skillsets that we recruit internationally – management, technical expertise, finance expertise, etc. – have a finite supply and high demand. An NGO recruiting in this pool competes against the UN, for-profit development contractors, governments (foreign service, USAID, DfID, etc) – all of whom generally pay more than an NGO. The bottom line is that NGO salaries, like anything else, exist within a market – and must pay the going rate demanded by that market.

    Just to anticipate one rebuttal to this line of reasoning – “then why don’t you just recruit for those skills in the local labor market” – when these skillsets can be found in the local labor pool, they very quickly price up to the level of the international pool. A logs professional I worked with in West Africa increased his skills to the point that he became competitive internationally and so he left his country to pursue higher “international” wages elsewhere. There’s no way for NGOs to magically do an end run around market forces when it comes to salaries. And compared against the salaries paid by other international organizations, or against the salaries available to someone with a comparable skill set in a developed country, NGO salary and benefits packages are in general quite modest.

    However, these salary packages may appear obscene when compared against the local labor market in some developing countries….where large populations combine with low levels of education and poor economies to create labor pools with huge supply, low skills, and limited demand – all of which put downward pressure on wages. And this is why NGOs are reluctant to publicize our salaries. Comparing the salaries of internationally-recruited staff against local salary averages is an apples-to-oranges comparison, but there is concern that they will be viewed in an apples-to-apples manner, creating misunderstandings that make life difficult for the organization. If you are an NGO staffer who is partnering with local government officials in, let’s say, DRC – does it make that job easier or harder if that official knows that you make 10 times what he does? Will he be swayed by your explanation of the differing labor markets in which you and he were respectively recruited, or will he simply conclude that your salary is obscene relative to his and stop working with you?

    Posted May 24, 2010 at 3:57 pm | Permalink
  15. HG wrote:

    I agree with Till Bruckner that budgets more broadly should be accessible, but equally with JMK about the problem of blending two different labor markets.

    Where we hire internationals, local skills simply are not available, and unless I want to hire internationals in their twenties (who likely lack the skills we need), I have to pay wages that allow someone with a family to consider doing the job for us.

    Also, it is regular practice in many organizations (at least those not functioning on seniority principle) not to share colleagues’ salaries, since this can create misgivings.

    While I am in favor of more transparency, we also need to communicate clearly that significant overheads are the price of doing business well. Otherwise you end up getting organizations that pump out much money, with little thought, programming and oversight.

    Posted May 24, 2010 at 4:32 pm | Permalink
  16. Raphael wrote:

    I agree salaries are a sensitive subject, but I also agree we need to be more transparent and accountable. The compromise, in my eyes, is to share personnel cost “sub-totals” rather than specific salary line items from our budgets. For example, instead of sharing individual salaries of staff, you can share the TOTAL salary and TOTAL fringe costs for all international staff in the particular project (or group of projects). You can do the same for all national staff salaries/fringe. All other line items: consultancies, supplies/equipment, travel, NICRA, etc, can be shared as is since they are less sensitive. This would allow you to look at field implementation versus overhead ratios, percent going to national versus international salaries, etc. All useful information locally. But I would caution against drawing strong conclusions from this data at higher levels since you are often comparing apples to oranges when you jump from NGO to NGO, or country to country.

    Working in an NGO (which was apparently one of those who refused to reveal their budgets!) I really don’t think the lack of transparency is due to any desire to cover up inefficiencies. It’s really about competitive advantage. We NGOs are in fierce competition with each other when we submit our proposals and budgets to donors (USAID and otherwise). Revealing our salary structure, cost-per-beneficiary, or the types of interventions and strategies we use, would put us at a comparative disadvantage. In some ways, it is like asking Google or Microsoft to share their programming secrets. On balance, this type of NGO competition is healthy and produces better proposals and innovative ideas Same as in the private sector. (The irony is that we may compete in one country and partner in another. This is the paradox of NGO work, where you try to balance sharing/collaboration with the creative force of competition.)

    It would be instructive to hear from those in govt or the private sector on their transparency practices. Do they post their salaries, budgets, technical strategies, etc? Are they more or less transparent?

    Posted May 24, 2010 at 6:34 pm | Permalink
  17. Aki wrote:

    I think is more a matter o fear to tell people where exactly money are going. How much for the projects and how much for salaries and other benefits.
    Many NGOs try to convince you that approximatively all their money go toward their projects and only a very small amount is going toward administrative cost. They live with the impression that donors will really believe almost all employees there work for free driven by some “save the world” way of thinking.
    I think openness and real assessment of their expenses it could bring them more benefits then to think donors are morons and don’t know you also need to spend money on employees and logistic. If is in the limit of decency nobody will mind but I’m afraid this limit is overpassed quite often by many organizations therefore they don’t want you to know by how much.

    Posted May 24, 2010 at 10:46 pm | Permalink
  18. JP wrote:

    What a joke.

    I don’t think TI is really requesting salary data at the employee level. But even if they are, so what? So there are two labor markets. If the markets are really separate, then information about one market won’t effect the other. Why would knowledge of high international salaries impact local salaries, really? How does that information allow a (relatively) unskilled employee to demand a greater salary? The local hires may be pissed, but it doesn’t actually change the labor market. Unless of course the markets really aren’t that separate, and the prices of labor is just distorted due to very incomplete information.

    Posted May 24, 2010 at 11:05 pm | Permalink
  19. The alacrity with which the NGO-elite are able to formulate and articulate arguments against transparency is amusing, albeit woefully predictable.

    In their defence, I think we should be asking why the UN and its some 22 specialist agencies, 51,000 staff (not including the World Bank or long/short term consultants), and 46 Under-Secretary-Generals are not leading by example?

    The UN is after all the worlds most successful ‘NGO’…

    Seeing as how ‘the world’ pays for this flabby institution, why cant we know line-by-excrutiating-line how much, who, and what they spend ‘their’ resources on?

    And seeing as how the UN is ‘One’ this should all be set out in one simple-to-read spreadsheet…

    And while we’re at it, why not look at awarding some of these Aid Lords ( see: http://negativeagain.blogspot.com/2010/01/aid-lord-perception-index.html)?

    Posted May 25, 2010 at 12:25 am | Permalink
  20. Caitlin wrote:

    I’ve enjoyed following this lively and well-informed conversation.

    In response to Raphael’s comment, I simply don’t buy into the argument that NGOs would suffer in the competitive environment by publishing their proposals and budgets. Very little of what these NGOs are doing is truly innovative — it’s been done by many others, and as staff rotate between different NGOs, donors and aid agencies, they bring the ideas of other organizations with them. In fact, I would argue that if an NGO is doing something that really is innovative, it is in that organization’s best interest to make the information as public as possible. This would draw donor attention and set them up as the leader in a particular field. If someone can give me an example of an innovative development program that would be better if not publicly shared, I’m willing to be convinced otherwise (though I doubt anyone can do that).

    One thing missing from this discussion is the role that donor procurement systems play in creating competition in the NGO sector, and whether that competition is actually a good thing or not. I believe that high levels of competition frequently results in sub-par projects. When there is strong competition for, say, a media project that is being tendered in a developing country, dozens of international NGOs will bid. If the bidding process requires a Chief of Party to be listed (as does the USAID bidding process), then you might have one NGO that has done a fabulous job designing a program that promises to be highly effective, but which is not able to attract the best CoP. So you end up in a situation where the donor must choose between two sub-optimal projects: one designed well, another with a strong Director listed. What frequently happens in these situations is that the donor will select the better designed project and then negotiate to replace the CoP, thereby nullifying the accountability of a score-based selection process.

    The logical conclusion is that donors should hire fewer generalists and more experts, and they should directly manage projects themselves rather than contracting out so much of what they do. In effect, USAID has already done this through their branding requirements, which virtually eliminate NGO brand names who are implementing USAID-funded projects. In essence what this system means is that the USG has a set of “staff” located in the private and NGO sector who compete among themselves. Maybe this is just the pareto efficient system — the best that can be achieved — but I would be interested to hear other people’s thoughts.

    Lastly, I would just say that I am a huge fan of the World Bank’s new policy, which is “if the document is not specifically marked as classified/confidential, then the default is that this is public,” marking a 180 degree shift in the World Bank’s previous documentation policy. I have yet to check, though, whether they are putting their staff salaries online.

    Posted May 25, 2010 at 2:39 am | Permalink
  21. @Caitlin

    Are you sh*tstirring or for real?

    Exhibit A: “I am a huge fan of the World Bank’s new policy”

    Exhibit B: “”…donors should directly manage projects themselves rather than contracting out…USAID has already done this through their branding requirements, which virtually eliminate NGO brand names who are implementing USAID-funded projects. Maybe this is…the best that can be achieved”

    In relation to your World Bank fundamentalism (is that too strong?), I have a challenge for you: please tell me one World Bank funded and administered project in Africa that has unequivocally made a positive impact.

    In relation to your hat-tipping in the direction of USAID, are you honestly asserting that USAID has an effective branding strategy that supports the stated objectives of USAID programming? I’d love to hear of some examples Caitlin.

    If your comments are just your sledghammer wit, then my apologies and good on you!

    Posted May 25, 2010 at 5:27 am | Permalink
  22. Justin Kraus wrote:

    The patronizing arrogance of those who are defending obscure NGO budgetary practices by saying “if the locals knew what the foreign staff get paid, they’d be mad” is laughably naive.
    All local NGO staff already know that expat NGO staff make obscenely more money than they do and they are already (justifiably) pissed off about it.
    Its long past time to tear down this iron curtain.

    Posted May 25, 2010 at 5:33 am | Permalink
  23. geckonomist wrote:

    I just love O’Neil Daniel’s comment :
    “Although open accounting can seem like a good practice, it is very tricky in poor countries. I have been running international projects for twenty years. The rent on my house is higher than the salary of many of my staff. My salary is nearly triple the highest local salary. Additionally, my top staff is paid well–many times more than what our beneficiaries receive. I think that telling our beneficiaries how much we earn would reinforce the gap between them and us. It would also complicate relations with our government partners (who earn less). I am always happy to share general information about costs (our program in the Haitian-Dominican borderlands is around $650,000/year), but see little upside to sharing details.”

    I also love the narrative of JMK, explaining how different the international labour market is from the local market.

    Absolutely brilliant.

    They create no value whatsoever, make a living from donor budgets for many years without any justification and seem very afraid their scam is made public.

    Posted May 25, 2010 at 9:45 am | Permalink
  24. didier wrote:

    A couple of things got lost in this salary discussion (as important as it is).

    1. The blog accuses NGOs of not only being opaque but implies secret willfulll behavior in that area. The facts are that most the INGOs mentioned comply with their industry standards for financial transparency (maybe all – I just havn’t bothered to check on all). In fact they regularly publish the same financial statements that the University of Bristol or Transparency International do. You can even find out the salaries of the top paid staff, among other interesting items, in their annual 990 tax reports in the United States.

    Most also provide breakdowns of their subsidiary operations and even major projects but they don’t give detailed line item breakdowns. Those aren’t required by most governments and ratings agencies looking at financial transparency issues. They are considered to be to much detail.

    2. The implication is that INGOs are trying to avoid accountability is far from the experience I have been exposed to in several INGOs where managers were aware of their responsibilities to be good stewards of scarce resources and where internal control systems were constantly being looked at while external audits (institutional level, country level, and project level) were constantly being conducted. Were there ever any problems…sure. Were they dealt with. You bet. Risk to reputation is something INGOs constantly fear and it makes them vigilant (at least the good ones).

    3. Getting detailed information beyond what the current standards and regulations for transparency is probably something most institutions do not feel compelled to provide. It therefore becomes imperative to approach them in a manner of trust and confidence. Most ratings organizations in the private sector agree to treat data with a degree of confidentiality in order to get the data they need in addition to what is already publically available and this seems to work well. I worked with one institutions where we needed particular data beyond the financials and audits and it took dedicated analysts cultivating the organizations like clients to get the additional data they needed. It also meant offering those organizations something of value like a recognized seal of approval if they cooperated.

    3. At the end of the day, the focus here still seems to be more about dealing with inputs than truly understanding outputs or impacts. Relative costs of inputs are important, but cost-effectiveness is an input/ouput relationship and I’ll pay someone more if she can deliver better results (however you choose to define those).

    Don’t get me wrong. I think INGOs should constantly be working to improve their transparency. I just think they will cooperate more if they are engaged in the process and not just called out. I also think we don’t need to be as defensive as everyone seems to be about this salary stuff.

    Posted May 25, 2010 at 10:21 am | Permalink
  25. Raphael wrote:

    @ Caitlin. I readily concede that the very point of devt and humanitarian assistance is to share good practices so they are replicated. We compete at proposal stage and then share as widely as possible thereafter (although, unfortunately, we tend to share successes rather than failures.). A key difference from the private sector! It is indeed a paradox. But I do think the healthy competition helps push people. Anyone who has sweated-out a proposal devt process knows competition concentrates the mind.

    In my experience, the innovations are often not completely new but rather an application of a particular intervention in a somewhat different way in a different context. This may be a targeting approach, a technology, etc. Off the top of my head, I can think of IDE’s treadle pumps in the 80s. They weren’t new (were actually innovated locally in Bangladesh) but IDE improved them, created a market, and took them to scale. Now they are used everywhere. It isn’t a perfect example since I can’t prove this was directly caused by competitive pressures, but it certainly helped put IDE on the map. There are many such small ideas that are always churning and being adapted by NGOs.

    @ Justin and others, I agree national staff know and are pissed off. As they should be. But would you be comfortable posting your organization, title, salary, and all your fringe benefits on this blog? That is the information every project budget contains. If you have some reticence to do so, consider the discomfort others would have with sharing this information (both international and national staff).

    I actually think salaries should be the same – equal pay for equal work. But I’m a minority on this issue.

    Posted May 25, 2010 at 10:30 am | Permalink
  26. Justin Kraus wrote:

    @Rapheal

    Since I also work for a government, not a private business, here you go.
    Teacher/Researcher, $35,000 a year plus free apartment and travel expenses to/from adjacent islands.
    Its not that hard, really. Why don’t you (and everyone else who works for a government or NGO) give it a whirl?

    As far as your preference for salaries being, the “same” I don’t believe that is necessary. Let the market work. The sad reality is that most local staff haven’t had the good fortune to receive 10s of thousands of dollars worth of education since they were 5 years old like most expats have and so are not capable of doing the same work as some expats. This is unfair and wrong, but such is the world we live in, and locals in developing countries know this all too well. Lets stop trying to patronizingly manage their emotions, and treat them with a little respect.

    Posted May 25, 2010 at 10:58 am | Permalink
  27. Not telling you wrote:

    Decently paid NGO/UN staff shouldn’t feel bad about their salaries – they deserve that and more for putting up with all the BS they do.

    The public and young interns/researchers like Till B and Justin Kraus come a dime a dozen railing against the scandalous salaries of expats….that is until they have gained enough experience themselves to enter into the ‘upper ranks’…at which time, they quickly forget their outrage and enjoy the benefits of a decent level of pay (aka “selling out”).

    As for the public – they forget that aid workers aren’t missionaries – they are professionals and experts and to keep them in the aid system till they retire will require giving them a competitive salary. Aid is not charity – so if you want something more than charity – you get a machine and a machine needs skilled workers.

    As for locals – pffff. The SECOND they have access to a higher salary they grab it and suddenly could care less about their former lot. I don’t see better paid local staff at the UN complaining that their countrymen at the local NGO make less.

    One more thing about ‘the public’ – they are full of the highest quality sh*t. They don’t know squat about basic world politics and don’t want to do more than conveniently text a $10 donation or buy a goat for a family and then they want to complain about aid worker salaries? I’d like to see them get off their collective arse and take to the street in protest.

    The problem with critics is this: they think that by exposing certain ‘secrets’ that things will be set right. But they haven’t considered that when you open the floodgates – all kinds of things will come roaring out. If I shared even HALF the stories I have of corrupt ‘locals’ at NGOs and the underbelly of the “poor” (hitherto assumed innocent and sweet) – then no one is going to want to donate money to ANY NGO. You want the truth? You might get the whole truth and it ain’t pretty or donationable.

    Posted May 25, 2010 at 12:36 pm | Permalink
  28. geckonomist wrote:

    Indeed, let’s open the floodgates and deprive all these secretive NGO ‘s with stealing local staff of their funding such that this smelly sector will disappear in no time.

    Sounds like a sweet dream to me.

    Posted May 25, 2010 at 4:01 pm | Permalink
  29. B wrote:

    Love that the defensive reactions and predictable responses are almost baked right in.

    “We can’t publish what we make, otherwise people would know … how much we make! Then they might actually think about why we’re pouring money and very well educated personnel into a sinkhole for years with no measurable result!”

    That’s the whole point. People want to understand the cost-per-whatever of the outcome they’re (not) getting.

    Also, hmm, let’s see… what would be the local results of paying comparatively low skilled, not-internationally-employable local staff the same as the super-educated internationally sourced staff (who, even at their modest salaries, are a heartbreaking case of resource misallocation, especially in their young years)? Gee, I wonder? Sheesh.

    Some of the nuanced yet egregiously clueless responses here make me wish ever harder for budget transparency. Ugh. What a F’ed up cottage industry.

    Posted May 25, 2010 at 6:29 pm | Permalink
  30. Justin Kraus wrote:

    @Not telling you

    Great Jack Nicholson impression, “Truth! You can’t handle the truth!” etc. and so on.

    Posted May 25, 2010 at 7:52 pm | Permalink
  31. Raphael wrote:

    @ Justin. Touché.

    @ B and Justin. Equal pay for equal work is pretty clear to me. If you have a national staffer managing a multi-million dollar project well, why pay her less than an international staffer doing the same exact work across the hall? I’ve been both a national and an international staffer. The only difference? My passport. There are lots of well qualified national staff. Go to Bangladesh. You can’t throw a stone without hitting someone with a PhD. The reason these people are scarce in some countries is because as soon as they can get an international posting they move out of the country! If you paid them comparably they would stay.

    Would you have the same opinion if the difference wasn’t a passport but gender, race, or religion? There are mkt determined wage differences based on these demographic characteristics in many contexts but we wouldn’t dream of condoning a mkt that pays them differently. Again, I admit I’m a very small minority on this issue, but I see this all the time and it’s demoralizing for national staff and, frankly, wrong.

    Posted May 25, 2010 at 11:47 pm | Permalink
  32. zee wrote:

    I wonder what the public perception is out there, of the proportion of staff of an NGO in a developing country who are nationals of that country. My experience is that it is (in a multimillion dollar programme) generally 95%+ of headcount.

    International staff are goddamn expensive. When the skills are there locally you bloody use them, the lower turnover that comes with it to boot is a godsend. But when you need an international staff member, one commenter above said it best, “NGOs can’t do an end run around market forces.”

    Some people above would see “building a career” in aid work and poverty reduction as an epithet. I offer to you the alternative: the shit salaries and even worse amateur-hour management disgraces of decades past. Get a grip.

    Posted May 26, 2010 at 6:06 am | Permalink
  33. Raphael wrote:

    Actually, what I think we have is an artificial price ceiling for national staff. So, what is their rational reaction? Exit the national mkt and go to the international mkt where there is supply/demand equilibrium. All I’m saying is let national and international staff compete in one labor mkt and see what happens.

    We’ve veered off the main topic but I think didier summed it all up quite well.

    Posted May 26, 2010 at 11:22 am | Permalink
  34. Jess wrote:

    Why shouldn’t international staff make more money considering they come from countries where the cost of living is higher? High-level local staff make a decent living vis-a-vis the cost of living in their country. It makes sense that international staff should live in safe parts of the cities and should have guards and higher salary since one day they will return to their home country and need to have some sort of savings to live off of, plus the airfare, plus the other personal sacrifices made. Also, considering the money to pay their salaries comes from their own Governments (through DFID, CIDA, the UN, whatever) it doesn’t actually take anything away from local staff.

    Maybe in some countries there are enough local elites with elite education to do the job as well as an expat – but for the most part – lack of capacity is a problem. The locals usually are the ones living more lavish lifestyles anyway with their cohort of domestic help, and high status within their own countries. So let’s pay attention to the caste systems within developing ocuntries themselves and the divisions/inequality within. Also – here we go – locals tend to be more corrupt. I trust international staff more and so should anyone donating their money. Not to mention they clock out faster and take longer to do the work. Truth be told.

    Posted May 26, 2010 at 12:30 pm | Permalink
  35. J. wrote:

    Is Transparency International’s global budget, including salary detail available somewhere online for public scrutiny? And what is their process for responding to inquiry, suggestion, possibly outrage from irate but ill-informed members of the general public?

    Posted May 26, 2010 at 1:38 pm | Permalink
  36. B wrote:

    @Raphael:

    “The reason these people are scarce in some countries is because as soon as they can get an international posting they move out of the country! If you paid them comparably they would stay.”

    If anything, the travesty is that it is so difficult for them to leave. It is their right to get out and apply their skills in a market where they can maximize their earnings, and where they can be the most productive. Trapping them into staying in their home country by paying a seriously market-distorting US-standard wage creates a host of problems, both for the skilled individual and for the local market.

    The meta-problem that people seem to be completely unable to stomach: questioning (when asked pointedly about high-priced international employees) the value added by this staff vs. the cost of being there in the first place. I suspect this is why the concept of transparency can be so threatening.

    Posted May 26, 2010 at 1:43 pm | Permalink
  37. david zetland wrote:

    I just spent the hour reading thru these comments.

    1) NGOs have an obligation to publish b/c they do NOT exist in a for profit, competitive market where their clients pay their salaries. (I am saying “clients” as in poor, but we DO know that donors are clients.)

    2) NGOs — and GOs — are bureaucracies that do not track cause and effect (e.g., profits or outcomes) very well. NOBODY in these orgs wants to rock the boat and call attention to the high prices paid for no results (we know the outputs).

    3) geckoeconmist is right. Few NGOs would exist if normal people saw what a waste of good intentions and good money they are.

    4) My only caveat is to note how people DO get jealous of others’ salaries. This is true everywhere but in commissioned sales, where 100% effort/result goes to 100% reward. I guess the other extreme is aid-land, where that correlation varies from 0.2 to -1.

    Posted May 26, 2010 at 6:00 pm | Permalink
  38. david zetland wrote:

    note that I said 0.2 to -1.0. The paragraph break made me look optimistic :P

    Posted May 26, 2010 at 6:01 pm | Permalink
  39. J. wrote:

    Sorry, Till – can’t hear you… What is/was your salary at Transparency International, again?

    Posted May 27, 2010 at 11:41 am | Permalink
  40. glenn wrote:

    As an aid worker of 20 years, I believ things have gotten worse in terms of efficiency and effectiveness with most of the large international NGOs and the UN. Compared to 20 years ago, budgets have near tripled to achive the same output today, and thats not because of inflation or deterioration of security, but rather increasing beaurocracy. How can an organisation justify a regional office that spends more than the combined budgets of the country offices where aid is being implemented. The people have the right to know, and that is the essence of our work, entirely !

    Posted May 28, 2010 at 12:52 pm | Permalink
  41. Former INGO staff wrote:

    I worked for a big INGO for several years at the top level till last year and reading Till’s article so much – too much – reminds of me of my time in the agency. My experience is that INGOs are probably the least transparent organisations precisely because there is so little formal regulation. Interaction is a joke – self regulation does not work. How many agencies themselves fight against corporates requesting self regulation? To often its a case of do as I say, don’t do as I do. If the agencies genuinely are committed to full transparency so that their donors (large and small) can see exactly how their money is spent, then the agencies would publish internal audit reports and committee minutes. It is in these that we get to see the real picture of where the money goes. (Trust me – it will not be a pretty picture – this is why they refuse to be fully transparent, because if they did their bond of trust with the public and major agencies would be destroyed and thus their funding streams would dry up).

    Posted June 6, 2010 at 1:54 am | Permalink

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    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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