This study, which was commissioned by the IASC Humanitarian Financing Task Team, is a mapping of a variety of partner capacity assessments (PCA) tools and methodologies currently applied by different funders, including multilaterals, bilaterals and INGOs suitability of prospective NGOs to receive and manage humanitarian funds in different contexts.
The study is intended to contribute to policy discussions amongst funders and NGOs alike, leading to the establishment of recognized minimum good practices for partner capacity assessments applicable in different humanitarian contexts. Such good practices would be those which are able to strike a pragmatic balance between the need for due diligence, risk management and accountability and the transformative capacities of NGOs to make a long-term difference— especially national NGOs—in their own country settings.
Donors use PCAs to establish a comparable objective measure to assess a potential partner's capacity and reliability to manage funding for agreed programme interventions. The PCAs are also meant to put in place reasonable accountability assurances, which will guide subsequent resource transfers and operational modalities. NGOs recognize the need for donors to meet internal and external accountability requirements and to have assurances that funds are used efficiently and effectively in order to achieve defined humanitarian objectives. However, the existing diversity of assessments, the level of detail sought, the time requirements involved on the part of NGOs and the administrative burden on the funders themselves often take up already scarce resources. The level of detail required in the assessments may exclude otherwise important implementing partners that do not have extensive management and control systems in place. Moreover, criteria used by different donors regularly overlap and may not be equally relevant to every partner or context in question. Are partner capacity assessments, in fact, asking the right or most essential questions concerning the actual capacity of a NGO to perform within a given humanitarian setting?
PCAs mapped by this study appear to have become more demanding over the last few years, with a substantial number of questions being asked of NGOs, leading to lengthy processes that require substantial investment of time and resources by all parties2 by lengthy due-diligence requirements, which add further to the assessment requirements of NGOs. While there may be a range of rational reasons why these processes have evolved in this way, including an increased focus on accountability by most funders and back donors, the result is increasingly high administrative hurdles for NGOs. This is particularly the case for NNGOs that often have an interest in and access to key communities, and localized capacities for effective humanitarian action.
For many NGOs, the PCA processes appear non-transparent and difficult to prepare for, including the fact that NGOs may not know exactly how the information may be used by the specific funder, or indeed, whether sensitive information is shared with other funders. The consultant of this study also found it a challenge to find PCAs on donor websites and noted a lack of easily available guidelines to facilitate preparation for application processes. This lack potentially limits the effectiveness of the relevant PCA processes as a mutual tool for capacity assessment and partnership dialogue.
Though PCAs and, by extension, related due diligence procedures become a proxy for quality management, no clear correlation was found between in-depth partner assessments and increased quality of performance of vetted NGOs. In addition, no obvious link was found between the amounts of donor funding involved and the degree of scrutiny of the individual NGO in question, suggesting that assessment procedures in use are not always proportionate to the actual amounts of funding involved.
Most of today's PCAs and due diligence exercises seems to be based on the funder's intent to limit risk and establish full accountability for resources spent. Several respondents in this study found that financial accountability measures drive PCA and due diligence exercises with less focus on actual programmatic performance of the NGO in question. In addition, while many donors claim a willingness to invest in risky settings - provided that the risks are well managed - custodians of donor funds, including UN agencies and INGOs seem to assume that they must administer funding more rigidly due to accountability demands of back donors. The study has found examples of good practices where funders get together to discuss risk management issues in specific country settings. This has helped to encourage a dialogue on what risk and its management entails and how to coordinate risk measures better amongst funders.
The study found limited support for increased harmonization of PCA procedures if this translated to a common set of standards across the board. Most respondents feared that harmonization might further add to the rigidity of existing procedures rather than provide efficiencies, and that agency specific interests and mandates could result in yet longer lists of requirements. Moreover, the substantial variation in humanitarian country contexts would rarely benefit from a standard approach, which could ultimately further limit effective assessments of partners. There was, however, a clear interest in looking to simplify existing assessment procedures and agreement that many PCA tools currently in use should better take into consideration the unique characteristics of NGOs to avoid one-size-fits-all assessments. For instance, NNGOs, in particular, work on a smaller scale though they are often assessed in the same way as an INGO working at scale.
The study suggests that the predominant emphasis on financial and accounting systems, and management and audit capacity, while critical, runs the risk of effectively removing the focus from other, equally essential areas of assessment such as prospects for long term partnerships for transformational change beyond transactional service provision. Ultimately, this emphasis may reduce the role of NGOs to that of sub-contractors, or view them as risks to be managed or simply as transactional partnerships. Proponents of an alternative approach to partnerships3 argue that real world organizations in most cases operate in unpredictable and often messy environments, dominated by complexity and rapid change. In such an environment, focus must be on how to stimulate local organizations in ways that lead to transformational change, instead of treating them as small management entities implementing well-structured plans on behalf of external investors.
This view also prescribes that putting in place numerous checks and balances will rarely lead to better results, beyond documenting how funds were allocated operationally and how they were reported back on.
The study has come across several examples of good innovative practices which are described in the main report. These offer alternative approaches to how partners are assessed by funders, how risks management is integrated into the assessments, and how to seek harmonised partner assessment criteria. The good practices include an example of a newly established European pooled fund, which has consciously minimized its partner assessment criteria to cut back processing time and increased speed of delivery. Finally, a collective INGO initiative still in its start-up phase intends to hand over funds and their management entirely to a national NGO consortium, based on a set of assessment criteria to be defined by NNGOs themselves.
A set of recommendations coming out of this study is proposed which are particularly directed towards the IASC Humanitarian Financing Task Team so as to help set the future agendas for upcoming NGO, UN agency and bilateral donor policy consultations in order to make PCA assessments more fit for purpose.