Accountability - Ways forward
This page follows on from - Practical problems with accountability
To make accountability meaningful, a better question than 'What did you do?' is 'Did you do a good job?'
This is not an easy question to answer! Whose definition of 'good' do you use (eg managers' or beneficiaries')? How do you measure performance compared to the criteria in a simple and fairly cheap way?
www.listenfirst.mango.org.uk contains practical tools, developed by Mango and Concern, to help organisations be more accountable to the people they aim to serve.
It is also useful to look at different approaches for each of the different goals of accountability. These can be designed to reinforce each other.
Goal 1: Financial accountability
Externally audited financial statements provide all stakeholders with confidence that they know how funds have been used. Different types of audit can also check whether policies have been followed when funds are used (eg to pay salaries, buy goods, or make grants).
Senior managers should check key internal controls, like approving big items of expenditure or signing off bank reconciliations.
NGOs need to employ (and support) enough appropriately qualified finance staff - and they also need to have the right skills and incentives to carry out their financial management responsibilities themselves. For instance, trustees can check whether managers regularly carry out these controls.
The following resources may help:
Presenting financial reports to beneficiaries can help avoid fraud. Examples from the Who Counts? campaign show how effectively this has prevented local corruption in some circumstances. Senior managers or trustees can check whether this is regularly happening in practice.
Accountability to beneficiaries: a practical checklist
Goal 2: Effectiveness accountability
Financial information should be prepared to show expenditure on each activity, rather than on similar line items across different activities. This provides useful information for field managers - and makes it possible to compare costs between different activities.
If an NGO has a clear mission and a practical strategy, then you can use it to judge whether their activities are contributing to achieving those objectives.
An alternative is to measure if it is likely that an NGO is meeting local people's real needs. Managers can set up formal systems to ensure that field staff talk to beneficiaries in a respectful, on-going way. This would include regular opportunities to review the NGO's work together.
Senior managers or trustees can check whether this is happening in practice. Techniques include internal audit and using checklists and board/management review.
Accountability systems can also focus on the second golden rule: NGOs depend on their field staff. Managers can regulate the quality of their field staff by reinforcing their values, as well as technical skills. Systems such as careful recruitment and staff appraisal practices, and internal audit can check whether these factors are in place.
NGO field work is a profession, like medicine or accountancy: they all depend on skilled practitioners working within a framework of control to make high quality judgements on individual cases
Goal 3: Efficiency accountability
Here are two possible ways to measure and report on efficiency and value for money. You can track them over time in the same organisation. It may be possible to compare with similar organisations.
- Overheads ratio
What percentage of your total costs are overheads (also known as indirect or core or admin costs), as opposed to direct programme costs? Your target will depend on the set up of your organisation, but as a general rule of thumb, overheads of more than 30% would normally be seen as high.
But beware! Under investment in administration can actually make an organisation less efficient!
- Unit costs
Depending on the type of activities your organisation carries out, it may be helpful to consider unit costs.
For example, if your work involves supporting young mothers, how much does it cost to support one mother, and what are the component parts? Is there an alternative strategy that could result in the same amount of support but reaching more mothers for the same total cost?
Case study - Resource Allocation by the UK's Major Humanitarian Agencies – includes consideration of unit costs
This approach can be useful, but is also risky in case a focus on quantity and cost reduction reduces the quality of the services delivered. Value for money is not the same as ‘cheap’ – it just means that each dollar is achieving as much as it can, in terms of quality and quantity. You do not achieve value for money by cutting corners.
You may find you want to change the structure of your accounting codes to make analysis of this type simpler and consistent over time.
Current reporting practice
NGOs have to present trustees and donors with reports of their activities which explain how funds have been used. NGOs normally present financial reports and narrative reports together, in formats often specified by the donor.
These reports play an important role, but they do not often fulfil all three goals of accountability.