A collection of jaw dropping funding practices and of what you should not do as a donor
(By Flaviano Bianchini)
After almost 20 years of working as an activist in the field, and after almost 12 years of being the founder and director of an international NGO, I have come across a couple of wonderful donors and dozens of horrible ones. I decided to collect the worst cases just to highlight a few examples of what a donor should not do.
The list goes behind the classic “do not micromanage” or “give core founding” (by the way, we got our first core founding in our 9th year of operations…) but more on real cases and scenarios. The list is not exhaustive as otherwise it would have been a booklet, but it just highlights some cases to give you donors an example of what you and your peers should never do.
1. Operational reporting. We, activists and practitioners, get your money, and it is understandable that you want to know what we do with your money. Fair enough! But reporting should not be our main activity. We should not spend more time reporting that in doing the actual work. Once, we got a small fund of $5,000 (USD) to conduct an assessment of the human rights violations of a mining company in Peru. We produced an assessment of less than ten pages (we all know that these kinds of documents must be short and sharp), full of data and evidence. The document was pretty successful in its scope, as a big investment fund used it in order to divest some millions of dollars from that mining company.
The donor then required us to write a report that was actually much longer than the actual study. We were forced to fulfil dozens of pages. indicating the amount of hours we worked, who did the work and under which type of contracts, how we spent the money (more on this later), and even some extra suggestions and insights. Something that was obviously somehow constructed: we had worked on that case for almost ten years; how could we factor in all of the hours worked in those previous years? And how could we count the hours spent on reporting? But that was, nevertheless, a requirement.
To summarise: you, as a donor, have the right to know what we did with your money, but this should not be the main focus of the work. Sending a couple of pages to add to the actual work is already more than enough. After all, the actual job should serve as the report. If you hire a construction company to build your house, the house is the product and the report. You don’t ask them to build a bigger one just to show you how they did it!
2. Financial reporting. To some degree, this is related to the operational report process. You have the right to know how we spent your money. However, reporting project expenditures should not become a nightmare. Here are a few, non-complete, examples.
a. The whole world isn’t Europe. The same fiscal system is not shared worldwide. In some places, the concept of “invoice” does not exist at all. If I work in rural Liberia, there is no way I can get an invoice for every meal I buy, nor for the taxi, and not even for buying required equipment and instruments. And if you force me to have invoices, I will end up buying from “the big boss” of the community.
Once, we had a project with UNDP in rural Mozambique. The UN is one of those donors that need invoices for everything. Results: we spent months sleeping and eating in the only place in town that can produce invoices, which was owned by someone Portuguese and managed by a Lebanese person. None of our expenditures went to the local community. Moreover, local UNDP organised some meals for workshops and, in order to get invoices, they bought everything from the neighbouring town, from a shop owned by another Portuguese person. We basically ended up financing some kind of new colonialism just to get a piece of paper that local community businesses simply had no way to provide.
In other cases, we just spent out of pocket, meaning our own personal, because we had no choice. In the Andes of Peru, there is not one single taxi that can give you an invoice. Either you pay with your own money, or you walk some absurd number of kilometres to get from one place to another.
b. Another time, we had a three-year project in Peru. The project was funded in Swedish Crown, and most of the money was spent in Peruvian Soles and Euros (with some in US Dollars and British Pounds just to add in some complications). The COVID-19 pandemic hit in the middle of the project, adding new restrictions to follow, plus added costs. For example, we had already bought tickets for our flights, which we had to cancel. As a consequence, the project was prolonged for six months; furthermore, the prices of pretty much everything changed significantly. Nevertheless, the donor wanted us to report the exact amount — to the penny! — of the Swedish Crowns we had received almost four years prior. And, they wanted us to be audited for that, so we had to hire an external company that would certify it all. Needless to say, this is an absolutely fake system where everyone knows that it is fake, but everyone is perfectly comfortable keeping it fake! Just the exchange rates and fluctuations alone over four years made it impossible to be precise to the level of cents.
To add even more complications, costs and time, all invoices had to be printed (more than 350!) and the legal representative of the organisation had to stamp and sign them one by one before shipping it all (on paper!) to Sweden. I am still wondering if someone really checked a single signature of that document…
c. Finance needs some flexibility, too. If I am out in the field, I might need to spend money quickly and without restrictions in order to keep things going. Once I was in the field in rural Mexico when one of our instruments broke, and our donor required us to get three quotes for the spare parts. In that area there was only one shop who had this part, so I was supposed to travel 200 km over dirt roads in order to get another quote, or maybe to buy the same thing a few euros cheaper. I ended up buying the instrument with my own money in order to save time and trouble.
The “three quotes/bids” thing is a requirement of most donors. Although it is understandable why, it must be clear that it is not always possible when you are out in the field, especially in remote areas, or if you need some specific equipment. Sometimes we need the flexibility and adaptability to just go to the first shop and buy what we need, or even to pay the person that we know, not because we are showing some favouritism by giving business (money) to him/her/them but because we know that that shop is reliable, ie. has good material and good assistance.
On the other end, I also had a donor who openly, expressly asked me to make a bid for a consultancy just in order to have the three bids they needed to hire another consultant.
d. Another story about flexibility. Once I was in the field in a conflict area, and I had a driver. After two weeks of driving around in the middle of the conflict we finally left the field at 5AM. The driver drove the entire distance over horrible roads, passing checkpoints and military convoys all the way to the capital. We arrived at 15 and he drove me around for another two hours. At 17, after 12 hours of driving, I told him to go home to have some rest and to see his family, who he had not seen in two weeks. I still had a couple of meetings, soI got a taxi to get around the city. When I presented the report, the donor said that I could not get the driver and the taxi on the same day, and therefore they did not reimburse the taxi (a total of 5 euros).
e. Readiness. Sometimes we do need to be ready, and quick. I know that donors have their internal procedures, but this cannot take years. When the tailing dam of a mine in Mexico collapsed and killed dozens of people and polluted 260 km of river, I was able to get to the place three days after it happened thanks to the flexibility of one of our donors, but this is not always the case. A few years ago a big oil spill happened in the Ecuadorian Amazon forest, in an area where we had an ongoing project. It was important to get there to take samples as soon as possible, and we were ready to leave our houses in a day. However, the donor had to go through an internal process in order to approve an extension of the budget, and by the time they did it — 3 months — the oil had already degraded into the environment.
3. Time reporting. Here, for example, is something typical of EU funded projects where they ask you to report the amount of hours you have spent on a given project, considering that you must work exactly 1548 hours per year. It is obvious that no one works precisely 1548 hours per year, and all the calculations are absolutely fake! Yet I had a project report rejected because I put a round number in the salary and they say that it was impossible to have a round number, as it must be divided by the hours! So, I just changed the number (again, the difference was a few euros) and they were happy!
We are activists who work in the field. We have no idea of the true number of hours, days, months, not even years we have been working on a case. When we are in the field, we work up to 15-16 hours a day for 15-20 days straight, without stopping, and then we might need a week of full rest. Sometimes we work at night. Often we wake up thinking about our projects (shall we count those hours?) I woke up last night thinking about a few cases I could add to this article. Does this count as working time? There are times when we don’t work on a specific project for months, perhaps because it’s harvest season in that area, and all our local partners are busy with the crops (more on seasons later).
4. Time constraints. You give me your money, and you want me to spend it in a timeframe that you decide. But when you decide a timeframe in your office in Europe, it might not be a good match for me in the field. Once we were doing a project in Liberia and the donor wanted us to finish by a certain month, forcing us to do the project during the rainy season. Guess what – we ended up spending more time and money digging our car out of the mud than doing the actual work. Another time, I had a project with UNDP to monitor the water in a river in Mongolia, in February — but in February, the river is iced over! Another time I was funded to monitor water in a river in central Italy in August, a season when the river is dry! We even got funds for monitoring Radon emission from a specific fund on Radon monitoring that had to be finished in six months — when the regulation says that Radon must be monitored annually!
If you spent your entire career in an office in Europe, where the only seasonal difference you notice is if you have to switch on the heating or the air conditioning, it would be good to consider that that is not the case elsewhere. Sometimes, the wrong season can expose you to an absence of viable roads, bridges wiped out, extreme drought, and/or diseases.
5. Overhead. I had dozens of funds that expressly prohibit overhead or, in the best case, reduce it to a minimum. You have two people working for six months on a project? Those two people earn 2,500 euros each? Perfect: you got 30,000 plus 5% overhead (I can do the maths for you: that’s 1,500 euros). No one single euro more! Because NGOs must be efficient, and they do not waste money! Result: after six months, those two persons are unemployed. The overhead covers roughly a week each (not even considering that most of the overhead goes to administrative costs like bank fees, audits, accountants and so on). If they are skilled, after two weeks they have found another job. Do this for 2-3 projects and the organisation is gone! In 12 years of Source International I have lost dozens of highly talented and highly skilled persons, often after having spent time and money to train them, because I could not pay them during those “physiological” periods in-between projects.
6. Imposing agenda. We had a project in Mozambique, studying the impact of a coal mine in a rural area. We found very high, dangerous levels of pollution in the neighbouring communities: levels of pollution causing health problems for thousands of people. The donor (a UN agency together with a national authority) told us that we should not share the results, because we would have “increased conflicts”. If you finance a project that is system-changing, you must be ready for a system-change! Everyone is ready to system-change “in words”, but you must be ready to do it in facts, too. Otherwise you can continue financing “easy projects” that avoid causing anyone any harm.
7. Salaries. In this case, I have had many differing experiences. I had donors who complained that a 2,500 euro gross salary for a professional in Europe was too much. On the other hand, I had a donor who financed a project presented by two different organisations, both based in Europe (so, with a similar cost of living). They financed salaries for one organisation (Source International) at 2,500 euros per month, and the other organisation for 6,000 euros per month. Same for the EU. We have an EU funded project where Source International (based in Pisa, Italy) receives 2,500 euros per month for employees, and 3,333.33 euros per month for the director. In the same project, a public institution based in Pisa (so, based in exactly the same city, with the exactly the same costs of living) receives 8,916.67 euros per month for the higher ranking, and 4,000 euros per month for the lower ranking at 70% of their time.
Donors should not intervene through micromanagement of the costs of organisations they fund. They should do everything possible to reduce inequalities, both geographically and socially. Not everyone should receive the same salary in a competitive world and, to a certain extent, it makes sense to pay differently in different countries (although there are some philosophical implications in this, too). However, financing the same job at double or triple the salary is perpetuating the extreme inequality we are trying to fight.
This article is not intended to teach you donors how to do your job, but, after almost 20 years of experience, I feel that I can dare to give you a few kind suggestions. You can take it or you can also keep on as usual because “we always did it like this, and it always worked”. Just keep in mind that the friends of the first human who ever lit a fire almost certainly told him, “why are you doing this? We’ve always done without it and it always worked”.
We invite you to share your own shitty funding experiences here so we can show philanthropic funders how their current funding practices are causing too much harm to those who are in the field, taking action, and facing innumerable obstacles and practical realities every day.
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