Expert view: Arm's-length financial management

NGOs have to strike a balance between their central needs - for standardised reports, for instance - and their need for decentralised decision-making for local fieldwork. So how do international NGOs manage their finances at a distance and across many countries?

The key seems to lie in encouraging finance and programme managers to work together. Although finance staff may have responsibility for maintaining control, they will not necessarily have the authority to deliver it. For instance, it's down to programme managers to approve how funds are used and to sign off salaries.

Poverty relief charity Send a Cow works in 10 countries and has an annual budget of more than £5m. In each country, a finance officer reports to the executive director. The head office finance staff back home also keep in close contact with the local finance officers and executive directors. The charity has an explicit policy of open and regular communications. For example, the executive directors are copied in to all financial emails. Executive directors, not finance officers, are responsible for sending quarterly financial reports back to the UK, and the disbursement of further funds depends on satisfactory receipt of these reports.

Crucially, Send a Cow's chief executive takes an active interest in financial matters and makes sure programme managers do too.

NGOs suffer when a divide builds up between financial issues and programme issues. That's why many NGOs invest in financial management training for their non-finance managers.

Different NGOs pursue the goal of good financial management in different ways. Oxfam has structured monthly meetings for its most senior programme managers and has a fixed agenda focused on financial management. Some NGOs make sure their programme managers have a finance objective in their personal objectives, which feeds into their annual performance appraisals.

The formal mechanisms differ between organisations, but some things are constant. They are all, for example, continually working to establish the right relationships, to help develop collaborative approaches between finance and programme staff, and they are all focused on carrying out effective work on the ground.

- Alex Jacobs is head of Mango, a charity that provides financial management services for NGOs.

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