Life in upside-down land

This is not a post about living south of the equator, but some observations about the topsy-turvy world which NGOs inhabit, and the strange rules that govern their behaviour. You may choose to listen to Queen’s I’m Going Slightly Mad while reading it.

If, in running a business, you make a big sale you have a number of options as to what to do with the money. You might decide to invest your profits in delivering an extra good product to your customer in the hope of enhancing your reputation and winning further business. Or if business is fairly slack at the moment and the outlook poor, you may choose to hoard the cash and eke it out to see you through the hard times. Conversely you could use the revenue to drum up other business or otherwise invest in your company, confident that you will raise enough additional funds to ensure you deliver the promised product to your customer on time. In fact your biggest problem may well be cash-flow, and you may need to rely on bank loans to resolve this situation for you.

In contrast NGOs rarely suffer from cash-flow problems. Except for the most deluded donors, grant money is mostly dispensed up front, which is particularly important as small NGOs are not attractive organisations for banks to lend money to. But, bizarrely, operating under-budget is almost as bad for us as operating over-budget. Of the three broad options available to businesses above, only the first is a possibility for us. We cannot speculate to accumulate because grant acquisition is far less predictable than adding new customers, and donors scream blue murder if we use their cash for something else. Neither can we save our money for a rainy day. Some donors will allow for no-cost-extensions, but typically that may involve moving more money into the salaries pot (we have to pay our staff somehow during that extended period) and changing the budget involves difficult negotiations with the donor. In contrast businesses just commit to delivering on their promises at the cheapest possible cost to themselves.

Now, to be fair to the donors, the better ones at least are often prepared to be flexible, but, and this is the key constraint, everything has to be requested in advance and negotiated! Even for minor expenditure changes that should be frankly beneath their attention they raise queries if things have not been cleared in advance. However, these negotiations take time and energy on both sides, such that, despite the best intentions on the part of donors, NGO managers may be reluctant to make sensible adjustments due to the hassle involved. There is also an implication that somehow budget changes mean that either the project was not planned properly and/or has not been well managed since, when adaptability is a key element of good management and it is impossible to plan projects to the last detail in advance.

The classic result, of which I have recent experience, is an under-performing project that is nonetheless under-budget. This ought to be an oxymoron, and is often put down to lack of (absorptive) capacity on the part of the grantee. But I think it speaks as much for the upside-down way in which we are forced to work, in which managing the inputs has become at  least as important, if not more important, than delivering the promised outputs. I, for one, would feel much more confident about strategically re-budgeting funds to ensure a project stays on track if I didn’t fear aggressive questioning later by the donor, and if I could feel confident that successful delivery of key outputs (or progress towards them if the output is particularly challenging) would inevitably lead to further funding to fill in gaps later on.

Alas, instead I am trapped in a Goldilocks budget management system which frowns upon anything which is either too hot or too cold, or just a bit different from what was on the menu, even if it’s that much tastier as a result.

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