Transparency as a Tool in Vetting Good Nonprofit Work

Print Share on LinkedIn More

April 21, 2011; Source: The Oregonian | In the wake of the fallout from last week’s “60 Minutes” investigation into Greg Mortenson’s Central Asia Institute, nonprofit watchers are more closely examining sector spending. Reporter D.K. Row of The Oregonian, which has a nonprofit newsbeat, interviewed two well respected international development and relief nonprofits based in the Pacific Northwest – Mercy Corps and Medical Teams International – about their operations.

While the two programs differ in how they spend and report use of funds, both model financial transparency far beyond federal and state reporting requirements. Because of that, potential donors can clearly see how spending patterns align with mission and program focus.

Both organizations are sizable, with substantial on-the-ground personnel in tough operating environments around the world. As an example of country-specific financial reporting, consider Haiti.

Mercy Corps raised $46.4 million for relief and follow up development projects in Haiti: to date, it has spent 37.9 percent of those funds. The greatest expenses so far have been direct relief: distributing cash vouchers to earthquake victims, small business grants and loans, food distribution, and hygiene. Eight percent of total dollars supported field-based personnel, and 15 percent of total dollars were allocated to overhead.

Medical Teams International raised $5.2 million in cash for Haitian relief, as well as $9.3 million in-kind: to date, it has spent 48.1 percent of cash received. While it allocated only 4 percent of dollars to overhead, other expenses are much more concentrated in staff and general costs. This makes sense given that one of its key roles is to mobilize a complex network of in-kind donations.

What does this mean? Not that low overhead is better than higher overhead, nor that it’s preferable to target relief donations to non-personnel costs rather than personnel costs. Both organizations are, in the words of Doug Stamm, CEO of Portland based foundation Meyer Memorial Trust, “among the world’s leading and reputable international relief organizations”.

The numbers do beg the question of why less than half the dollars received have yet to reach Haiti. That this question rises to the surface, however, underscores the usefulness of such transparent reporting.

Mercy Corps and Medical Teams International demonstrate that financial transparency is possible and illuminating, even for complex cross-cultural international relief work. The tragedy about Central Asia Institute’s situation is its failure to recognize that transparency must trump charisma in vetting good nonprofit work.—Kathi Jaworski

  • sam carpenter

    I do exactly what Moretenson does in Pakistan and Azad Kashmir, assisting schools. Thanks Greg. I can look forward to being killed when I return there. But, more likely, I won’t risk that and will simply not go there again.

  • Geri Stengel

    The other tragedy is that donors may be leery of giving to any organization for fear they

  • Chris Lang

    Kathi, if you (and the Oregonian reporter) dig a little deeper on the question of why less than half the dollars have been spent, you’ll find that it’s because rebuilding work takes years and if all the money is blown in the first year, who will be there to help long term recovery? Recovering from disasters like these can take a decade or more, it’s fiscally responsible to think long term and ensure you have funds to help long after the disaster has left the headlines and people stop donating to the fund. Well done Mercy Corps and Medical Teams International, we appreciate your transparency and smart relief work.

  • Kathi Jaworski

    Absolutely, I agree with your point about long term recovery requiring a long tern investment strategy. My point is that the transparency offered by Mercy Corps and Medical Teams international makes it clear that this is their strategy.

    I applaud both groups as well.