The accidental NGO and USAID transparency test

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator.  An op-ed from Bill in Monday's Wall Street Journal mentioned Till's struggles with USAID; here Till provides the details. The aid industry routinely pushes institutions in developing countries to become more transparent and accountable. But a slow and almost comically incomplete donor response to a request to see some specific project budgets sheds light on exactly how willing donors are to apply such “best practices” to themselves.

As I described in a previous Aid Watch blog post, I filed a Freedom of Information request with USAID after ten international NGOs working in the Republic of Georgia refused to publish their project budgets. After a painful, 14-month struggle, including failing to respond at all to my first three communications, USAID finally released a set of documents covering project budgets of 19 UN bodies, NGOs and private contractors.

The documents are disappointingly full of blacked-out non-information. The level of disclosure varies drastically from one document to the next. Some budgets are provided in full, while others appear as blacked-out row upon row. In three cases, USAID even withheld the identity of the contractor itself. USAID explained this inconsistency saying that it was legally required to contact each grantee to give it “the opportunity to address how the disclosure of their information could reasonably be expected to cause substantial competitive harm.”

I wondered why USAID is legally bound to follow its grantees' wishes in deciding which information to withhold. Can the grantees of a US federal agency really compel that agency to keep the total amount disbursed, or even their very identities, secret? Why doesn’t USAID specify full disclosure as a grant condition? I have filed an appeal with USAID to address these questions, and will keep the readers of this blog updated.

Since according to USAID every piece of blacked-out information was withheld on request of the grantee, the budgets provide a fascinating glimpse into aid agencies' willingness to open their books. If USAID blackouts do NOT correspond to NGO requests, I would be happy to correct the record.

Perhaps surprisingly, the United Nations showed the highest consistent commitment to transparency. The budgets of the two UN agencies funded by USAID are both reproduced in full.

UMCOR, Mercy Corps, and AIHA emerge as the most transparent NGOs. These charities apparently felt that they had nothing to hide, and did not request USAID to black out any of the information contained in their budgets.

In contrast, Save the Children apparently asked USAID to withhold all information related to salaries. As even the aggregate subtotals for international and national staff have been blacked out, concerns about the privacy of individual staff members cannot have been the sole concern driving the organization's response. Still, the fact that all non-salary related budget lines remain visible put Save the Children in the middle ground in terms of NGO transparency.

CARE's response is harder to interpret as USAID inexplicably sent only an aggregated “summary budget” that leaves little to conceal. What information exists shows that CARE did not object to the release of unit prices for supplementary food items, or of aggregated staff and operational support costs. In contrast, CARE appears to regard its “indirect cost rate” and “cost share” as confidential. To hide this information, USAID also had to black out the budget's bottom line, thus leaving unclear how many taxpayer dollars were handed over in total.

The least transparent NGOs in this test are CNFA, World Vision, and Counterpart International. They apparently requested that USAID black out all information in their budgets except for the grand total. Apparently, these NGOs consider budget items such as “office furniture” (CNFA), “visibility items (t-shirts, caps, publications)” (World Vision) and “forklift expenses” (Counterpart) as confidential information whose release could cause them substantial competitive harm.

What does this transparency test tell us? First, USAID's mechanism for responding to Freedom of Information requests desperately needs an overhaul. It took USAID 14 months to respond to a simple information request. Ironically, in terms of FOIA responsiveness, USAID is less transparent than public institutions in the Republic of Georgia, as recently assessed by a local watchdog organization. And we are still waiting to hear why USAID allows its own contractors to operate in secrecy whenever they wish. All of this places USAID in an awkward position as it recommends greater transparency and accountability to Georgia.

Second, NGOs have publicly committed themselves to transparency and accountability, but their actions show that their interpretations of what this entails in practice differ widely. For example, World Vision is a full member of the Humanitarian Accountability Partnership, but still asked USAID to hide all of its budget information apart from the bottom line. The Georgian country office of Mercy Corps had earlier refused to release its project budgets, but its headquarters apparently has no such reservations. Save the Children is willing to release indirect cost rates but refuses to divulge even aggregate salary information, while CARE appears more relaxed regarding human resource expenses even as it fiercely guards information on its indirect costs rates. Both USAID and the NGOs have too often violated the elementary principles of transparency.

Secret NGO Budgets: Publish what you spend

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator. Are you ashamed of your organization’s budgets? Do you think your supporters would be shocked if they could see exactly how you are spending their money? Do you feel the need to keep your finances hidden from your local partners and clients? If you answered all three questions with “yes,” you might be working for an international NGO.

After the August 2008 war between Georgia and Russia, Transparency International (TI) Georgia, a local organization working on transparency and accountability issues, tried to track and monitor 4.5 billion dollars in humanitarian and reconstruction aid that donors had pledged. It was in for a shock.

Out of twelve NGOs that it asked to publicize the budgets of their ongoing projects, only one (Oxfam GB) complied. In an unusual display of interagency coordination, ten NGOs convened a meeting and wrote a joint letter to TI Georgia, arguing that they were unable to share their budgets at short notice as “there are a number of legal and contractual implications involved with donors, head office and other stakeholders which will take time to resolve.”

Nine of the signatories to the letter were members of InterAction, whose standards state that “organizations shall substantiate, upon request, that their application of funds is in accordance with donor intent or request” and that “the member organization shall be committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.” In theory, the NGOs had committed themselves to transparency.

In Georgia, international development organizations have been advocating for greater transparency for years, teaching citizens that they have the right to know how their money is spent, ordering community-based organizations to publicly display the budgets of their micro-projects and telling local governments that they have the duty to provide financial information to those they serve. Years ago, I asked an NGO manager what he considered the greatest success of the project that he was running. “We finally got the district government to post its budget in the mayor’s office, where everybody can see it,” he proudly told me. When I suggested that he post his own project’s budget in his office, he recoiled. “This is an experimental project, so the overheads are very high,” he replied. “So it would be very difficult to explain.”

While there appears to be little hope of gaining access to project budgets through NGOs themselves, institutional donors are subject to legislation in their home countries. I filed a Freedom of Information request with USAID in May 2009 to request copies of the budgets of all NGO projects in Georgia funded by American taxpayers’ money. Six months later USAID informed me that it needed the consent of the NGOs to release this data as it might contain “confidential commercial information,” thereby closing the opacity loop: first NGOs had blamed donors for not being able to release budgets, and now the biggest donor was passing the buck back to NGOs.

After a series of follow-up emails to USAID's Information and Records Division had gone unanswered, I lodged a formal complaint with USAID's Inspector General in March 2010. Two months later, the Inspector General's office finally replied, saying “this matter does not fall within the investigative purview of our office” and passing the buck to the Director of Administrative Services. Meanwhile, one year after my original request for information, the budgets of US-funded NGOs in Georgia remain as elusive as ever.

Secrecy and charity make for strange bedfellows. Those who spend the public’s money in the name of the poor have a duty to make themselves accountable to rich and poor alike by publicly explaining how this money is being spent. Congress should step in and require USAID to publish what US-funded NGOs spend by posting full narrative and financial project proposals online as soon as a funding decision is taken.

Till Bruckner worked for NGOs in Georgia and Afghanistan before managing TI Georgia’s aid monitoring programme in 2008-2009. He is currently writing a PhD thesis on accountability and corruption in NGO projects in Georgia. The views in this article are those of the author alone, and do not necessarily reflect the views of TI Georgia. The author can be contacted at tillbruckner@gmail.com.