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Agyemang, Awumbila, Unerman, and O'Dwyer, 2009

Executive summary

The aim of this study was to investigate, through the experiences of those operating on NGO aid projects at the local level, the impact of different accounting and accountability mechanisms on the effectiveness of aid delivery.

By investigating this issue, the study contributes towards the formulation of NGO accounting and accountability policies that will be effective in improving the efficiency and effectiveness with which aid funding is transformed into a reduction in human suffering in impoverished nations.

In 2008 governments of OECD countries spent approximately US$135 billion on development aid, and are committed to spending over twice this amount (as a proportion of national income) each year by 2015. This is in addition to amounts donated by private individuals, charitable foundations and corporations. Much of this aid is channelled through non-governmental organisations (NGOs) to front-line aid projects.

Given the amount of aid funding, a small increase or decrease in the effectiveness with which aid funding is deployed can have a substantial impact on the lives of many highly impoverished people. The accounting and accountability mechanisms employed by NGOs delivering development aid can either contribute towards or impede the effectiveness with which aid funding is deployed in individual aid projects.

The existing practitioner and academic literature on accountability within development NGOs argues strongly in favour of accountability mechanisms that provide accountability to, and capture the views of, beneficiaries and NGO fieldworkers. It is argued that this will enhance the effectiveness of aid delivery in individual projects by taking into account the views and experiences of those closest to the delivery of the aid. These arguments are, however, either derived largely conceptually - with little empirical support - or are based on the views of relatively senior officers in NGOs and not those of the workers or beneficiaries in the field.

Furthermore, there is a general lack of independent study into the impact on, and perceptions of, beneficiaries of attempts that have been made by some NGOs to expand their accountability. Those studies that have addressed this issue have tended to be narrowly focused on particular NGOs. They have therefore not been able to provide broader insights into issues at the local level associated with the development and implementation of new forms of accountability mechanisms.

Within this context, the aims of this study was to investigate, through the experiences of those operating on NGO aid projects at the local level, the impact of different accounting and accountability mechanisms on the effectiveness of aid delivery. By investigating this issue, the study contributes towards the formulation of NGO accounting and accountability policies that will be effective in improving the efficiency and effectiveness with which aid funding is transformed into a reduction in human suffering in impoverished nations.

To fulfil its aims, this report addresses the following five specific objectives:

1. to identify characteristics of the key mechanisms of accountability employed in a sample of international and local NGOs (in Ghana )
2. to provide evidence of beneficial and dysfunctional impacts of the accountability mechanisms (identified under objective 1.) on the effectiveness of aid delivery
3. to explain why particular accountability mechanisms are considered beneficial or dysfunctional
4. to assess the extent of beneficiary involvement in the accountability mechanisms identified under objective 1. and to investigate the factors preventing and/or facilitating accountability to beneficiaries, and
5. to suggest alternative mechanisms of accountability that may alleviate the potentially dysfunctional impacts of donor-led upward-accountability mechanisms, and encourage the involvement of officers and beneficiaries in the field.

In addressing the study's aims and objectives, the researchers have made the following key observations and recommendations.

There are a wide variety of accounting and accountability mechanisms used across the NGOs in this study. For formal upward accountability to donors, NGOs use annual reports, interim reports, performance assessment reports (written during projects), and performance evaluation reports (written at the end of individual projects). For downward accountability to beneficiaries, they use community consultations and dialogues, participatory reviews, and social auditing.

The formality of upward reporting to donors brings with it a degree of discipline and accountability that is generally perceived to work for the benefit of aid projects. The fieldworkers judged that a number of aspects of existing upward-accountability mechanisms impede improvements in the effectiveness of some aid projects. Some of these issues are indicated below, along with recommendations for changes intended to ameliorate the adverse effects and capitalise on the positive potential of upward-accounting and accountability mechanisms.

Reporting formats often appear inflexible and provide little scope for reporting to INGOs (international non-governmental organisations) and donors the views and experiences of officers and beneficiaries in the field. Coupled with project requirements that are often narrowly and rigidly specified by donors, these sometimes inflexible reporting mechanisms rarely allow feedback to donors on how projects should be adapted to be delivered more effectively in local conditions. It is recommended that donors ensure, when granting funding, that they require NGOs to exercise broader downward accountability to officers in the field, beneficiaries and other stakeholders. It may also be necessary for the mandated upward-accounting and accountability mechanisms to provide flexibility in reporting formats, so that a range of possibly unforeseen issues revealed through downward accountability can be reported upwards to donors.

Donors' need for periodic performance reporting that regularly demonstrates progress and goal achievement on a project sometimes conflicts with the longer-term nature of certain projects and the slower pace of work in some communities. Addressing this disconnection may require a willingness by some donors to recognise that highly beneficial long-term outcomes cannot always be delivered in a timescale to suit the donor communities' shorter-term reporting demands and expectations. Such a change may require some donor governments to run long-term educational programmes at home, so that their electorates are aware of the important benefits of long-term aid and do not expect results from all aid projects within a four- or five-year electoral cycle. An example of such a programme is the Development Awareness Fund run by the UK Department for International Development (DfID), which aims to educate people in the UK about the role and benefits of overseas aid provision. DfID should ensure that this programme covers awareness raising about aid project timescales among the UK electorate.

Although some quantified performance indicators were considered helpful by our interviewees, they were concerned that, frequently, such indicators could dominate and obscure qualitative information about performance. The latter is necessary for the interpretation of performance metrics. Even where upward-accountability mechanisms provided scope for narrative performance information, there was a perception that many donors paid relatively little attention to this important context-setting narrative discussion. To address this issue, it is recommended that all upward-reporting formats aim to provide scope for, and encourage, a mixture of quantitative and qualitative performance indicators. A further recommendation in this area is to allow debates and discussions with NGO officers in the field and beneficiaries to help determine appropriate performance indicators for specific projects.

Upward-reporting mechanisms usually either did not provide scope for, or were perceived to discourage, the reporting of unintended consequences or failures in aspects of the delivery of aid projects. The fieldworkers considered that an understanding by NGOs and donors of these unintended consequences and failures would offer important learning opportunities to help improve the shape and delivery of current and future projects. To ensure that the effectiveness of current and future aid projects can be improved through learning from unintended consequences, mistakes and failures in existing projects, it is important that upward-reporting formats provide scope for, and encourage, the reporting of these issues. Furthermore, donors should consider clearly signalling that they recognise the value of this type of information and that they will use the information constructively - rather than ‘punishing' perceived failures.

Some forms of partnership arrangement have given rise to accountability problems owing to tensions between the priorities of INGO local branches and those of the local community-based partner NGOs delivering the services. It is advisable that the memoranda of understanding between donors, INGOs and local partners are clear about the accounting and accountability responsibilities and expectations of each party.

In addition to the upward-reporting mechanisms, this study found a number of downward-accounting and accountability mechanisms currently in use. Fieldworkers generally considered these to be helpful, but power imbalances in practice between NGOs and beneficiaries appeared to impede their full effectiveness. The report contains the following recommendations for accountability mechanisms that could help improve the effectiveness of aid delivery.

It is necessary for NGO managers and fieldworkers to develop and implement practices that seek to counteract the negative effects of the power imbalances between NGOs and beneficiaries if the crucial and effective involvement of beneficiaries in the downward-accountability processes is to be more fully realised.

Mechanisms should be developed by NGO managers to disseminate best accountability practice between NGOs.

NGOs should involve a broader range of stakeholders in the annual planning and budgeting of their activities - beneficiaries should be involved in more than just the annual review of individual projects.

Each NGO should use local radio and community radio phone-in programmes to facilitate discussion and engagements between itself and a range of its stakeholders, or even discussion between a number of NGOs and their stakeholders.

NGOs could make documentaries of project activities, involving beneficiaries in the making of these documentaries. In relation to this, they should develop some success stories as exemplars, explaining what the situation was before an NGO started a local project, the changes that occurred in this situation once the project had commenced, and including voices from beneficiaries.

NGOs should develop practices such that, in the early stages of a new project, the communities understand their responsibilities more fully. This could include discussion and agreement between all parties (before a project starts) of the accountability mechanisms that will be used and the information that each party will be expected to produce.

NGOs could develop peer review practices both to disseminate best practice (for both accounting and accountability mechanisms, and project implementation) and to identify and help any NGOs that are performing ineffectively. Such ‘lateral accountability mechanisms' could also be useful to help officers in the field to put peer pressure on some INGOs if they identify practices at other NGOs that they consider would benefit their own operations. Although such self-regulation mechanisms are discussed in the academic and practitioner literature there was no evidence of their use in practice at a fundamental level in the NGOs studied in this research project - although several NGO field officers suggested that such peer review mechanisms would be useful.

Donors should automatically provide feedback to NGOs, officers in the field and beneficiaries.

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