At Humentum’s OpEx DC 2019 Conference, some 1,200 professionals from over 300 member organizations heard Humentum out-going CEO Tom Dente speak of current challenges and opportunities for our sector. During his keynote, Dente stressed that the social sector, for-and-not-for-profit alike, is called to be a trust keeper. This is to say that we are entrusted not only to do good in the world, but also to do so in a manner that empowers, enables, and does not undermine the human dignity of those we seek to aid.
Certainly, and most obviously, we are called upon by the beneficiaries of our work, who are often the world’s most vulnerable and marginalized, to deliver programs, projects, aid, interventions, assistance, and support. There is both a spoken and unspoken mandate to deliver our work efficiently, effectively, with sustainability at the core of what we seek to do, and with the assurance we will do no harm – safeguarding all involved.
We are also called upon by donor agencies and philanthropic institutions to be good stewards of the public and private sector financial resources that we employ to do this work.
And, we are entrusted by and must demonstrate trust in our own human resources, our partnering organizations, and the local, national, and regional entities with whom we have historically had an inherent power imbalance.
That is, to be trust keepers, we as a sector must actively demonstrate trustworthiness. And trust, when it truly exists, is grounded in the principle of reciprocity. We must give it to get it in equal measure. But, how do we do this in a climate of ever-increasing stakes?
A Seismic Shift
According to Development Initiatives, global humanitarian aid alone increased by 30 percent in the five years since 2014 – totaling US$28.9 Billion in 2018. With nearly 2 billion people living in poverty worldwide, almost 700 million of whom live in extreme poverty, this assistance oftentimes represents the difference between life and death. Indeed, the need to which our sector responds is breathtaking in its scope and scale. At the same time, this need is concentrated in countries rife with conflict and internal displacement – including Syria, Yemen, South Sudan, Iraq and Somalia – amplifying the risks and rewards for all stakeholders in the safe and effective delivery of assistance.
Meanwhile, donor agencies have been placing greater emphasis on localizing efforts in the design and delivery of development and humanitarian assistance. This means the traditional implementers – international organizations (both for and not-for-profit) – are expected to develop and rely upon lasting and substantive partnerships with local actors and organizations than ever before, all while delivering aid timely and effectively. And, locally-rooted and indigenous organizations are expected to receive an exponentially-increasing portion of the funding pool directly, rather than as sub-recipients only. Whether or not the current donor targets for this localization of assistance are realistic is really beside the point. It is no longer a matter of whether or when we localize. It is how we do so sustainably.
At the same time, donor agencies are experimenting with the application of results-based cost reimbursement in lieu of the traditional, cost-recovery based model. The results of this experiment will inform whether donors like USAID expand into performance-based reporting and payment agency-wide. Moreover, for implementing organizations with integrated service delivery projects, expenses and draw-downs on USAID funds are becoming an increasingly complicated matter with shifting understanding of newly-articulated funding stream requirements. And, USAID’s increasing use of a participatory, inclusive co-creation model in its procurement processes – from a Broad Agency Announcement (BAA) process and an Annual Program Statement/Notice of Funding Opportunity (APS/NOFO) to a multi-stage Request for Application/NOFO – is opening the doors to more and varied stakeholders in the crafting of solutions to development conundrums. However, these performance-based and co-creation models are not without their (often unintended) shifting of costs and burdens among social sector organizations.
Moreover, technology and innovation are driving changes in how, when, and where we undertake development and deliver assistance. Technology is transforming transparency with its 24-hour news feeds, cell phones, and social media in the hands of most. The use of innovative methods of assistance delivery and research-driven solutions are making what seemed impossible only a decade ago, possible. Thanks to both, we live in an increasingly transparent world, where donors, recipients, and stakeholders in development and assistance can glean real-time the successes and challenges that arise in our delivery of aid. These forces cannot be neatly packaged in binary categories of good or bad. They simply are. And, as Devex’s own Raj Kumar noted during his keynote at OpEx DC 2019, they are disrupting the status quo in the sector. Today, more than ever, we must be more agile, more responsive, more accountable, and more strategic in our work to be effective.
We must be trust keepers.
Cultivating an Organizational Culture of Trust – Placing Compliance and Risk at the Forefront
Trust is vital, but there are some universal truths about trust that we all know and share: trust cannot be forced; trust cannot be engendered when there are mismatched expectations; trust is easily corrupted and broken; and trust, once ruptured, is not easily repaired.
Development and humanitarian assistance rules, regulations, and accountability measures are intended to reflect our social contract with one another, at an individual and institutional level. They articulate a shared ethos. Over time, they serve to create a common language on our collective rights and responsibilities in the delivery and receipt of aid. To be more than words on paper, however, these rules must be clear, concise, and understood by all actors in the sector. At the local level, they must be contextualized, or they will be perceived as policing instead of partnership. They will undermine trust, reinforce perceived or real power imbalances, and engender suspicion and cynicism.
The same is true for our organizational policies and procedures. We cannot expect to engender trust internally or externally without clearly articulating our organizational ethos through our policies, procedures, and practices. And, we cannot adhere to donor-driven rules and regulations without having and following consistently our own policies and procedures. Indeed, the major donor agencies’ own regulations are less prescriptive than we often recognize. They dictate that implementing and beneficiary organizations alike design and implement their own financial management, human resources, and procurement policies. They require, in broad strokes, that these internal policies and procedures facilitate institutional accountability, vitality, and compliance, while mitigating foreseeable risks.
Earlier this year, Humentum surveyed member organizations and participants in its compliance-related training. The survey was intended to identify the key areas that may be impacting capacity to ensure compliance and risk mitigation systems are in place. We heard from over 350 respondents. We learned that respondents feel increasingly comfortable with specific aspects of donor compliance, such as determining cost allowability and screening for ineligible individuals or organizations.
However, fundamental gaps remain. Respondents noted a chronic unproficiency with some core aspects of donor fund management. Survey respondents reported that the design and roll-out of internal policies and procedures globally remains a major area of weakness. While some organizations may have clearly-articulated policy documents at headquarters, they struggle with the consistent application of those policies across their myriad country offices. Further, respondents highlighted a disparity between headquarters and country offices in access to information necessary for compliance with donor policies. A stark example of this is the failure to make award documents available to all staff – expat and local – working on an award. Without a common understanding of donor requirements specific to an award, compliance is prone to falter. Finally, while survey respondents noted progress in the areas of fraud-prevention, procurement, and sub-recipient management, all three were also the areas of highest risk and concern among respondents. Like these other compliance and risk gaps, they are also both dependent upon, and generative of, trust.
The Path Forward
Localized. Transparent. Partnership. Participatory. These are not merely hollow buzzwords. They are the hallmarks of the path forward.
True, the problems we confront as a sector are complex, and our resources restricted. Yet, the solutions are sometimes simpler than we acknowledge. For all of the essential discussion on disruptive forces and the need for continued innovation, we should also be focusing in equal measure on organizational introspection and adaptation. While there are no easy, cookie-cutter solutions, there are some tools our organizations have – irrespective of location, size, or capacity – that we need to start using today.
First, we must examine our institutional culture to discern the degree to which it promotes compliance. Do we undertake internal operational audits? Do we ask ourselves whether are we transparent? Do we share information readily among various, all-too-frequently siloed divisions? Do we share award documents with headquarters and country office team members so they are informed equally of their responsibilities to the donor, as well as all partners and key stakeholders? Are our technical staff held equally responsible as our operational team members for faithful implementation of internal policies and procedures? Do we have consistent, clear, and concise internal policies and procedures for human resources, procurement, data management and security, conflicts of interest, and whistleblowing? Do we encourage all team members, from our C-suite to our administrative and support staff to take responsibility for the regular review and understanding of internal policies and procedures? Do we acknowledge that truly sustainable capacity is developed in a participatory manner, and not top-down or headquarters to field, or technical staff to operational staff, or C-suite to the rest of the organization? Does our organizational structure and daily operation reflect the values we seek to promote in the world?
Second, we must know who we are and where our operational and technical strengths and challenges lie. Do we undertake a periodic resource mapping of own organizations? Identifying both those resources which enable and, perhaps, impede our ability to move forward as an agile and functional organization? Do we consider our country and local staff as equally capable and, thus, ensure that any resource mapping includes them in the equation, rather than considering them as project-based, transitory, and expendable human resources? What do we do once we have undertaken mapping? Do we adjust our time, energy, and financial resources such that we empower the enabling aspects, while addressing head-on those impediments we have identified? Do we manage the knowledge gained through time, experience, and self-examination so it guides us moving forward?
Third, we must invest daily in the vitality and sustainability of local actors, implementers, and stakeholders both within and outside of our organizations. In financial and programmatic decision-making, do we readily acknowledge and cultivate local team members’ oversight management capacity? Do we undertake an iterative, deliberative, and resourced effort to build lasting capacity in the individuals and organizations where we implement interventions?
Fourth, we must expect and reward internal transparency, so that we may be genuinely transparent and accountable externally. Do we share award documents, agreements, and budgets so all are informed equally of their responsibilities to the donor, partners, and all stakeholders? Do we recognize that doing so strengthens internal accountability and greater likelihood of compliance with donor-driven policies? Do we ensure that we remunerate our team members in a manner that does not require secrecy? Are we using transparent salary and merit increase criterion? Do we ensure that vital checks and balances and 360-degree institutional and personnel reviews are part of our standard operating procedures? Do we invest in our human resources in a meaningful way?
Fifth, and finally, we must operate from the presumption that our team members and local partners are trustworthy. Engendering trust within and outside of our organizations does not come from policing ourselves and others. It comes from having in place regular and consistent education, empowerment, and accountability mechanisms that reflect institutional values, ensure donor compliance, dignify the individuals and communities where we work, and that respect local actors and team members enough to expect compliance. It is about providing these actors with the assessment and capacity strengthening opportunities and tools that set them up for success. It is about proactive investment in these people and organizations, rather than relying on threats of punitive actions as the driver of intra-and inter-institutional partnership.
What should Humentum’s role be in the path forward? The power and purpose that drives Humentum is the community we serve, our member organizations and their partners, who are working in international development and humanitarian assistance. Humentum convenes finance, compliance, HR, learning, legal and other professionals. We are entrusted with our community’s stories of achievements and challenges, as well as their ongoing efforts to adapt to the forces of disruption facing our sector. To keep this trust, we will turn our community’s knowledge and insight into practical solutions to their common issues: through training, consulting, and collaboration. And, we will answer their call to galvanize collective action on issues that require systemic change – like approaches to risk-sharing between funders and implementers and the growing burden and cost of compliance. We will also further cultivate our short-term rapid response and long-term administrative advocacy on key USG and DFID policies and practices which impact the vital work of our member organizations. Finally, we will help create a more enabling environment for civil society everywhere, by establishing international standards like the first-ever international financial reporting guidance for the non-profit sector. Over the next five years, Humentum, CIPFA, the Ford and Open Society foundations and other partners will be driving this effort. By working with our community of members to do all of this, we aim to live up to the challenge Dente set for us – to be trust keepers.
A shorter version of this article was originally published on Devex.