Donors are vigilant with regards to their giving especially during financial declines, benefactors with philanthropic values do not cease in their generosity, rather they more thoroughly consider the placement of their contributions. A number of donors are able to give to development organizations because they have become successful at managing their assets, and when they donate they expect the agency to manage their donation in a manner that yields measurable and sustainable dividends. This article is intended to summarize common questions a donor asks a development agency.
What percentage is spent on administration? The most common question asked by a donor. Donors prefer that their donation goes directly to the intended beneficiary. However, some development agencies may have created successful development models that function well in various cultural contexts, so a donor may be willing to overlook high administration expenses. Large donor such as The World Bank and USAID are becoming increasingly more proactive in supporting locally run nongovernmental development agencies in order to get around what is perceived as hefty administration costs, with the aspiration that most of their financial investment would apply directly to a development operation.
How and where will my investment make a difference? Created by factors such as social and individual struggles, overpopulation, exploitation of resources and poverty, underprivileged groups have been with humanity throughout history. The United Nations, in order to facilitate a strategy to assist the needs of the under privileged, has distributed the coordination of basic human necessities within various sectors through its specialized agencies, such as the Food and Agriculture Organization FAO, and World Health Organization WHO, etc. A specific UN agency is responsible for seeking to coordinate outside agencies within their sector, such as health, education, shelter, environment, agriculture, etc. Donors need to ponder the fact that they could give a donation to an agency to “help build better education around the world” or they could give a targeted donation to build a trade school in a deprived community. As well, a donor could invest in an agency that lobbies for reforestation, or give directly to a specific reforestation project. (If effective, a lobbying intervention to promote reforestation would have greater impact.) If a donor decides to support a specific sector such as health or education, he may also want to request a specific geographical location. Also, the agency may be asked how they intend to measure and report on the results of their programs. Consider Haiti as an example of focused development. The necessities of this country both before and after the 2010 earthquake were overwhelming. Development agencies, even with the assistance of a properly run government, would have been incapable of meeting the vast needs of this deprived country. However, those agencies that were able to focus on specific areas of need such as shelter, health or education, appeared to be more effective than other perhaps larger agencies that focused on assistance in a variety of sectors.
What is your exit strategy? Donors may have insight into what, where and why to invest, and with entrepreneurial insight they likely carry this over to their philanthropic practices. Most donors do not want to encourage dependency and would prefer to participate in a work that will eventually become self-sustainable. However, donors should ask about exit strategy with caution since agencies would claim to have an established exit plan. Donors may want to investigate this matter further and inquire about the agency's success rate in the implementation of previous exit strategies. If an agency has been working in a specific country for some time, donors may want to explore factual successful operations where the agency has been able to generate local community accountability and self-sustainability. Who else is investing financially? The more varied the supporters, the more credibility the agency may have. When inquiring about this, the donor needs to keep in perspective the percentage of support coming from local sources. The question to ask is, How much funding comes from national donors? Even extremely poor countries like Honduras and Haiti have a base of potential donors including local NGO’s, religious groups, government, and local philanthropists. The more engaged with national donors the agency is, the more effective and credible it may be.
Do you have a volunteer program? The greatest asset of a development agency is its people. A donor should ask how the agency has managed to recruit national and international volunteers. Financial donors should not be considered volunteers. A field volunteer has a deeper perception of local impact, and has gained direct exposure to the effectiveness of the organization. Agencies such as Doctors Without Borders and the International Federation of the Red Cross comprehensively rely on volunteers to carry out a percentage of their tasks, thus giving opportunity for donor investments to have a more direct effect on local communities.
How do you cooperate with other agencies? Most agencies would promptly state that they actively cooperate with government and/or other nongovernmental agencies. However, an agreement to work together does not necessarily translate into actual work accomplished on the field. There is a suspicion that a substantial amount of funding is spent by agencies seeking ways to work cooperatively, but with little practical consequences. The question of cooperation should be asked by a donor from a business perspective, How do you work cooperatively with other agencies, and in what way has your agency become more cost effective as a result? Some development agencies would provide anecdotal evidence of working cooperatively, however donors need to be informed by factual and historic data.
What is your area of focus? The more diversified the development agency is, the more potential it has to be less effective on the field. The more focused an international development agency is, the higher probability it has to be efficient. Often, agencies that manage a diversified portfolio of development programs need to hire a number of specialized professionals to meet their commitments, and more diversification naturally generates more expenses. However, a development agency may focus its efforts on a targeted area or group and by default, find that needs are overwhelming in all sectors such as education, health, shelter, water, agriculture, etc. In that case, the donor needs to ascertain if the agency is sacrificing the quality of its services by focusing on several sectors, thus making long term impact more challenging.
What is your history of accountability? Most international development agencies have a strategy for dealing with fraud and mismanagement. In practice, an agency may work in areas where ethics and cultural values differ from where funding originates. For instance, in some cultures theft, bribery, or exclusive hiring of family or clan members are predictable conducts. The donor ought to ask the agency how it has dealt with ethical issues in the past. A donor may want to re-evaluate their relationship with an agency who appears unprepared to share its own shortcomings, lessons learned and corrective measures taken.
How do you engage with the local community? The frontline of a development agency is the local community. For an agency to be truly effective, the community receives empowerment to sustain investments made by the agency. Treating anecdotal accounts with caution, the donor needs to inquire about past effectiveness in empowering communities to carry on with the effort.