Business Best Practices for NGOs - Part 2: Business reporting dimensions - critical for NGOs sustainability
NGOs must track expenditures, present the information to different stakeholders in very different formats, prepare narratives that maintain the funders trust and keep the funds flowing. Their end-to-end programme execution comes with very unique requirements in terms of accountability and cash-flow tracking, impact measurement and revision. Working with government agencies, foundations, charities requires willingness and capability to respond to the different set of rules, reporting and compliance burdens imposed be each.
Three management dimensions – common across private and not-for-profit sectors - define the capability of an NGO to meet funders’ expectations:
Real-time transparency: the ability to provide real-time visibility into the flow of funds from award through to service provided and across all field locations regardless of language or currency and to demonstrate use of funds in accordance with stated purpose and adherence with award terms.
Data dexterity: the ability to combine flexibility and granularity in budgeting, data capture and reporting to manage and report against any imposed funding restrictions, to deliver detailed reports as required by different stakeholders, in a secure way, with a flexible account structure, independent of the regular accounting reports.
Timescale flexibility: the ability to report across different time periods, since grants usually cross fiscal years and reporting is expected at multiple timescales : the individual grant time period, the fiscal period of the recipient’s organization, and the fiscal period of the grantor organization. In most cases, the time period has nothing to do with the organization’s accounting periods or period end.
While NGOs are finding innovative ways to do business better and more efficiently, they continue to look at the private sector as well to see which best practices are transferable and beneficial to adopt.
To begin the conversation, here are three business best practices that can make a difference to organizational operations in the fast-paced, demanding environment of NGOs:
Risk identification and mitigation: identifying NGO’s risk exposures (i.e. socio-political context, reserves, funding, health and safety of staff, governance, etc.), defining the risk tolerance levels and the mitigation of certain risks, ensuring a regular review and programme update
Managing the triple constraint - schedule, cost, resources - while also delivering the services and impact stated in the grant award.
Operational discipline: integrating from early budgeting stage the monitoring and evaluation of the programmes and stakeholders context and providing for regular reviews and updates as necessary