NGO overhead costs
As the network of Irelands Development NGOs, we promote greater transparency and accountability among our members, and we bring NGOs together to exchange experiences and share examples of best practice.
And we know that for NGOs to change, critical external scrutiny is essential. Our Codes of Conduct are based on the assumption that members of the public will help hold NGOs to account, and we work with politicians and journalists, to promote greater awareness of the work of Irish non-profits.
For too often, public discourse reduces the issue of NGO quality to a narrow discussion of NGO overheads.
As we have tried to set out in this article, the real measure of Quality for NGOs is not the amount of money spent on administration costs, but the extent to which an NGO brings about REAL and LASTING change for the people it aims to serve.
An organisation with low overheads may appear effective, but may in fact be very ineffective in addressing the root causes of the problem; an organisation that spends money on research and beneficiary consultation may appear to spend too much on overheads, but will in reality be able to point at a higher success rate, as it has a greater chance of addressing the real problems affecting poor communities.
Admittedly it is difficult to gauge the quality of the programmes of Development NGOs from Ireland, seeing that the work takes place overseas. For this reason, we encourage members of the public to, at least, ask critical questions of any NGO (see eg. this article), and to rate charities on the basis of their financial transparency (as opposed to their overheads ratio alone see this article on charity ratings based on admin costs).
We in Dóchas feel it is imperative that we improve the understanding among members of the public about the work of non-profits. People in Ireland are incredibly generous, and their support for the work of Dóchas members is very strong, and continues to be strong (see e.g. the 12 million donated for Somalia and our recent MRBI poll on overseas aid). But if supporters and donors are basing their decisions on who to support on inappropriate information, they unwittingly may end up supporting organisations with the best PR, and not necessarily those with the best quality programmes.
(See also this article on how bad donor advice perpetuates bad aid practice)
After all, we all want to rid the world of extreme poverty. And it behoves us to do that in the most effective way possible. Good intentions are not enough: NGOs may be voluntary organisations, but they do need to apply professional standards to their work. And that means investing in the type of mechanisms that can guarantee quality and impact: research, targeting, monitoring, evaluation, etc – Mechanisms that, if done well, cost money, and require resources. Resources that we need to raise from the general public.
And that is why it is so important that “the general public” understand the various dimensions of Quality in the not-for-profit world. Hopefully this blog post helps a little bit.
Thank you for reading it.
- Might it be time to stop talking about NGO Administration Costs? (April 2012)
- Why NOT to use overheads ratios as a way to compare NGOs (March 2010)
- Aid myths busted (May 2012)
- In defence of NGO overhead costs - http://dochasnetwork.wordpress.com/2010/08/18/in-defence-of-ngo-overhead-costs/
- Key questions to ask any charity - http://dochasnetwork.wordpress.com/2010/12/15/key-questions-to-ask-any-charity/
- Good intentions are not enough - http://goodintents.org/
- Where to get donor advice - http://philanthropy.ie/index.php/philanthropy/want_to_give/
Entry filed under: NGOs. Tags: Accountability, Admin costs, Administration, Charities, Charity, Civil Society Organisations, Donations, Effectiveness, Impact, Ireland, Irish NGOs, NGO costs, NGOs, Overheads, Overseas aid, Salaries, Smart Aid.