FMD Pro helps our colleagues and partner organizations better manage projects and realize that Finance is not as scary as you thought it was.
Theo Molenbruge, CRS
Strong financial management is critical to effective, impactful programs in the development and humanitarian relief sector. And, while it is true that all staff of an organization are responsible for financial management – non-financial managers are the boots on the ground for an organization’s financial operations in the field – preparing budgets, managing accounts, interpreting financial data, supervising implementing partner finances, developing reports and implementing internal controls.
However, while non-financial managers are a key factor to successful financial management, these managers often lack the skills, experience and training to effectively manage finances. This situation is a result of multiple factors:
- Non-financial managers are generally hired for their technical expertise in a programmatic area (health, agriculture, education, microfinance, community mobilization, etc.) Once they are hired, however, they are immediately tasked with managing finances – a skill set in which they often have no previous studies or background.
- Organizations are resource constrained and often lack resources to develop or procure curricula for non-financial manager training – and even more critically – lack resource to implement the curricula sustainably at a global scale.
- Those organizations that have resources for financial training generally target the training needs of staff traditionally responsible for the formal financial systems (accountants, bookkeepers, grants managers, and compliance officers.) Non-financial managers, as a result, risk becoming an unaddressed audience.
- In the absence of a sector-wide standard, non-financial manager training curricula are fragmented, vary in quality, and lack consistency between trainers, countries and organizations.
While each of these factors applies to organizations across the sector, these challenges are especially pronounced for the national and sub-national NGOs in the Global South. Too often local organizations are caught in a no-win predicament. On one hand, initiatives like the Paris Declaration on Aid Effectiveness of 2005 emphasize the importance of systems strengthening country ownership and sustainability. As a result, USAID, DFID and others have responded by setting objectives to deliver support directly to organizations (local NGOs, governments, associations, etc.) with local ownership of activities. On the other hand, many of the same organizations calling for decentralization of aid, worry that national and sub-national organizations lack the demonstrated capacity to manage large budgets and complex projects. As a result, only about 1% of all official aid, and an even smaller portion of humanitarian assistance, goes directly to the global south; international agencies struggle to meet decentralization targets; local organizations remain resource constrained; and project impact at the community-level is compromised.
 Sriskandarajah, D. (2015, November 9). Five reasons donors give for not funding local NGOs directly. The Guardian, Retrieved from http://www.theguardian.com/global-development-professionals-network/2015/nov/09/five-reasons-donors-give-for-not-funding-local-ngos-directly