NGOs and the Development Sector
Non-government organizations (NGOs) have a moral and financial obligation to conduct their humanitarian or environmental objectives with integrity and transparency. In particular, they have a duty to their stakeholders, both donors and aid recipients, to ensure that cash is used to further the NGO's charitable objectives, and to provide transparency over how that expenditure is managed.
Whether donors are individuals, corporations, governments, foundations or multilaterals, it must be easy, convenient and secure for donors to give money, both on an ad hoc and regular basis, wherever in the world they are located. NGOs therefore need to be able to accept a variety of currencies, but without incurring foreign currency risk or fragmenting cash balances by holding amounts in different accounts. This is particularly important during periods when donations are at their highest, and from a larger number of donors, such as during crisis situations and in response to specific appeals.
A significant portion of internal costs relates to expenses incurred by program managers, researchers and other staff. Many of these operate in challenging parts of the world, so they need easy and convenient access to funds to cover travel, accommodation and other costs, whilst ensuring that costs are controlled and expense policies are adhered to. For example, various types of card programs such as prepaid or travel cards, can be very helpful in providing both convenience and control in expense management.
NGOs frequently make a large number of payments to local agencies and suppliers, both domestically and cross-border, and for widely varying amounts. This can be particularly challenging following major events such as conflicts or natural disasters. Payment processing is often performed manually, which makes it difficult to enforce rigorous approvals, adds to the cost and administrative burden, and introduces the risk of delays, error or fraud. Consequently, NGOs are increasingly seeking efficient payment solutions for increasing transparency and reducing administration for the generation, approval and transmission of payments, and more automated payment products that ensure that beneficiaries receive cash quickly, securely with clear auditability over processes.
In remote communities or less developed countries, cash is still a dominant means of payment, creating the challenge for NGOs of how to transport cash quickly and securely to the right locations and in the right amounts. NGOs therefore require secure and auditable encashment and cash transport services as well as pioneering new forms of electronic payment that are appropriate to the communities in which the organization operates. For example, in Africa, around 60% of adults have a mobile telephone, while only 20% have bank accounts. The opportunities are therefore substantial to leverage mobile technology to increase the speed, efficiency and transparency with which payments are made.
The ability to forecast short, medium and long term cash flow is essential for NGOs to commit to financing longer term projects. For example, while donations are typically highest in response to specific appeals and disaster situations, programs that the organization finances in response to a crisis may continue over months or years, creating a complex cash flow profile. NGOs therefore require visibility over cash, and the technology to forecast and model cash flow accurately to ensure that programs are appropriately financed, and that an investment return can be secured on cash not immediately required.