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TransparencyGate: the end of the road

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

Sixteen months after I first filed a Freedom of Information Act request with USAID for the budgets of American-financed NGO projects in Georgia, I have reached the end of the road. Rejecting my appeal, USAID has confirmed that it continues to regard NGO project budgets as “privileged or confidential” information, and will not release budgets without contractors’ permission.

The opacity of USAID’s subcontracting makes it impossible for researchers to get access to comprehensive and comparable data that could inform debates about the effectiveness of delivering aid through NGOs. For example, the issue of aid fragmentation within NGOs could only be raised because Oxfam GB voluntarily provided a researcher with a list of all its projects abroad.

USAID is on very thin ice when it tries to push developing country institutions to become more accountable. The next time USAID lectures an African official on the importance of transparency in public procurement, I hope she will pull out a list of blacked-out budgets and argue that her ministry is following American best practice when it treats all financial details of its subcontracting arrangements as “privileged or confidential.”

Financial opacity also remains the default position for most NGOs. CARE and Counterpart instructed USAID to release more information in response to this FOIA, and they deserve credit taking for this step. However, USAID’s latest information release suggests that no other NGO has given the green light for such information sharing.

The recent public statements by NGOs and other aid actors reveal wildly divergent understandings of what accountability should mean in practice. As InterAction points out, “the issue at hand is what constitutes relevant information, and to whom specific information should be disclosed.”

What information is relevant? Scott Gilmore argued that we should be interested in accountability for outcomes rather than for expenditures, and many commentators on this blog have questioned the desirability or utility of public access to NGOs’ salary figures or NICRA rates, and raised concerns about privacy, security and competitive disadvantages.

I continue to believe that project proposals, including uncensored budgets, are essential components of a meaningful rendering of account. Proposals spell out what an NGO plans to achieve, when, where, why and how, and at what cost. If we don’t even know what a project sets out to do, and with what resources, how can we hold it to account for its success or failure?

Equally, there is disagreement on who qualifies as a legitimate stakeholder. CNFA and Mercy Corps have both emphasized that they feel themselves obliged to render account to institutional donors and beneficiaries, but not necessarily to third parties. This line of argument glosses over the sad reality that NGOs do not reveal project budgets to their beneficiaries either. Also, as charities enjoy tax-exempt status and spend public money, we are all donors, like it or not. And we all care about the beneficiaries, so we are all “aid watchers”.

If project budgets are not particularly relevant, and scrutiny by ordinary citizens does not bolster accountability, why do international NGOs regularly make their local sub-grantees post project budgets in public places for all to see? As far as I know, no Northern NGO has worried that such excessive transparency may compromise the privacy, security or competitiveness of community-based NGOs in the South.

This FOIA journey has shown one thing above all: NGOs (save Oxfam GB) simply do not want outsiders to see their project budgets, full stop. Not a single NGO has used this forum to announce its willingness to give beneficiaries or other stakeholders access to its project proposals and budgets in the future, even though every country director has these documents on his hard drive and could attach them to an email within two minutes.

Project budgets are shown only to those stakeholders who have the power to force NGOs to open their books: donors, headquarters, and audit institutions. The poor and powerless have to be content with whatever information NGOs choose to provide.

Can NGOs be accountable without showing outsiders where the money goes? The Humanitarian Accountability Project thinks so. “Public disclosure of financial information is not a requirement for HAP membership,” HAP recently confirmed. InterAction concurs, stating that it “purposefully does not define in our standards specific mandates for disclosure.” InterAction also highlights “the request of some donors to keep their financial support private.”

Transparency International, drawing parallels to the oil and gas industry, strongly disagrees: “Competitive advantage or even privacy, are not acceptable exceptions. Only personal physical security suffices.” Aidinfo observes that “the burden of proof is shifting to those who would keep information secret.”

Donor-abetted secrecy jars with President Obama’s call at last week’s MDG summit: “Let’s resolve to put an end to hollow promises that are not kept.  Let’s commit to the same transparency that we expect of others.”

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11 Comments

  1. anon wrote:

    For some reason I am reminded of col jessup’s memorable line in a few good men.

    Posted October 1, 2010 at 4:49 am | Permalink
  2. MarySmith wrote:

    I appreciate the work you have done on this issue. I’d like to point out, though, that transparency begins at home. In all of the NGOs for which I have worked, budget information and proposals are closely guarded secrets even WITHIN the organization. Where I currently work, it was difficult to get my hands on the institutional strategy, much less department or institutional budgets. Requests for such information are seen as insubordination; it is housed within the so-called “leadership team”, a handful of people who direct the activities and approaches of the entire organization.

    If we really think that what we are doing is the right thing, then we shouldn’t be afraid to publish that information, especially to our own staff.

    Posted October 1, 2010 at 9:29 am | Permalink
  3. David Zetland wrote:

    Hear hear. NGOs are under a stronger burden of disclosure. They take our money and spend it on “the needy,” telling neither side how much was there nor how much was spent.

    Aid middlemen have endless ways of misusing our funds, and we have very little recourse to abuse, save prayer. That’s what I discuss in this paper: http://www.springerlink.com/content/4671q867115w0030/

    Posted October 1, 2010 at 9:52 am | Permalink
  4. Till Bruckner wrote:

    @MarySmith: My experience with INGOs is the same, access to budgets was routinely confined to senior management and the finance department.

    At TI Georgia, we printed out the aid monitoring project proposal and budget and stuck it on the office wall (as well as posting it on the internet). It was a useful management tool: during any team discussion over deliverables and timelines, or when visitors dropped by, we could just walk across the room and have all the info in front of us.

    Posted October 1, 2010 at 11:56 am | Permalink
  5. Dan Kyba wrote:

    The term NGO is often is misnomer since there are many NGOs which receive the majority if not all of their funds via government or its agencies. In such cases they should be fully transparent since they are using public money.

    Those NGOs which depend upon private funding are accountable only to those funders and the clients who purchase their services.

    Whether private or public funds based, too many NGOs rely solely upon anecdotal cherry-picking to demonstrate that they are doing an effective job, rather than any independent third party evaluation.

    Posted October 1, 2010 at 12:40 pm | Permalink
  6. ewaffle wrote:

    While it certainly isn’t necessary under the law, shouldn’t NGOs supported with public funds or given tax -exempt status be required to disclose the same information as do public companies to their shareholders (and anyone else who feels like checking the SEC website)?

    Posted October 1, 2010 at 12:40 pm | Permalink
  7. didier wrote:

    ewaffle – they actually do. You can access the information of pretty much any NGO incoporated in the US (except for maybe Wyclef Jean’s foundation) with the IRS or with organizations that track this stuff like Guidestar on their website.

    Til’s most recent posting is just an indication of how the “dialogue des sourds” continues – just a lot of agendas talking past each other not really bothering to constructively engaqge the issue – sombody’s gotta dark and opaque and somebody’s gotta be the champion of light and that recipe just ends up throwing up a lot of dirt without truly enlightening anyone.

    Posted October 1, 2010 at 12:49 pm | Permalink
  8. Till Bruckner wrote:

    @didier: The level of reporting required of US-based NGOs (e.g. through IRS 990), and the level of scrutiny through Guidestar and other rating agencies, is actually far lower than that placed upon publicly listed companies.

    This issue is discussed at length in the book “Unhealthy Charities: Hazardous to Your Health and Wealth”, see here for a review:
    http://www.arthritistrust.org/Donations/unhealthycharities.pdf
    I cannot recommend this book enough to those who place their faith in IRS 990s etc.

    If we can already see everything on IRS 990 forms, why are NGOs so touchy about their project budgets? Answer: because there’s stuff in there that you can’t find anywhere else.

    Subjecting NGOs – especially small ones – to SEC-style reporting requirements would only make them more bureaucratic and inefficient. As a former NGO field worker, the last thing I want to do is saddle NGOs with even more red tape – or extra HQ people gobbling up resources.

    Asking NGOs to share pre-existing and readily accessible PDF files upon request, in contrast, does not cause them extra work. A key reason why NGOs so vehemently refuse to do this is precisely that most of their private supporters currently have NO IDEA about how their money is being spent abroad – and NGOs are very happy to keep it that way.

    Remember that the audience on this blog is specialist. Many five-dollar-donors would be shocked to hear, for example, what some NGOs pay their expat “volunteers”.

    There’s plenty of good people out there in NGOs, trying to do good work. There’s also a lot of good people in government, trying to do good work. My point is that keeping an eye on good people – and occasionally asking them some hard questions and insisting on clear answers – anchors them in reality, keeps their feet on the ground, and improves their work.

    And yes, that definitely includes asking them to explain where my money goes :) )

    Posted October 1, 2010 at 3:28 pm | Permalink
  9. didier wrote:

    Til,

    It’s an old book about some of the older fat cat charities that operate on somewhat different models than the international NGOs you keep harping about. Sure there are some lessons to be learned, but the devil is not always in the details. I would submit that you can learn a lot from audited balance sheets, income statements, annual reports and the additional salary information and project lists included in the IRS information. I would also submit that the required audits on most government grants fullfill the financial accountability of an NGO to the public in that it is reporting to the representative of the public – what that representative reports to its constituents is another issue. What is reallly being argued about here is not transparency, but granularity (how deep should one go and why).

    I don’t buy that US PVOs are opaque. In my work on the inside and outside, I’ve found them to be very open to issues of transparency – and counter to the comments above – I must have worked for some exceptional organizations because getting a project budget internally was never a problem and in the NGO culture that I knew, salaries were the worst kept secret in the organization – top to bottom (mainly due to water cooler transparency).

    On a lighter note, does the University of Bristol have the same type of transparency as the University of California (www.sacbee.com/statepay) . Note that even here they have redacted the names of student employees citing federal privacy laws – those bastards!

    Posted October 1, 2010 at 7:02 pm | Permalink
  10. Sam Gardner wrote:

    A very interesting saga. It seems necessary to get some standards forced upon the sector. Donors, private or public, are well placed to do this. Very much like the European Commission, just setting the use of standard reporting tools as a prerequisite. As a next step the donor can put all the projects, funded by the donor online. (Who pays the piper, calls the tune).

    It should not to be too difficult to get first a few countries to but the whole caboodle on line. This can be used as a new standard to ask the same transparency form NGOs and other donors.

    Posted October 3, 2010 at 5:50 pm | Permalink
  11. geckonomist wrote:

    Although the narratives used to justify the secrecy was excellent humour , I do not believe that open accounts would make a jota of difference.

    If NGO’s with open accounts would be so much more effective, they would:
    - simply outcompete all others,
    -force others to do open the books as well
    - with their superior programs wipe out hunger and poverty.

    Yet they do not. On the contrary, they are as ineffective as the others.

    I am sure that there must also be open account NGO’s that failed to produce any good results and became inactive, despite the sunlight in their books.

    Therefore hypothesis: open books = better NGO must be binned.

    And, soon to be Dr. Till, if I would run my own NGO with my own money, I would not grant you insight in my books. For the simple reason that it is none of your business.

    Posted October 4, 2010 at 8:33 am | Permalink

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