On Monday March 28, 2022, Humentum launched its ground-breaking research report into the extent of coverage of administration costs being provided tby funders to national NGOs in ten countriues. There have been articles in the Chronicle of Philanthropy and Devex as well as lots of discusion on Twitter and Linked-in.
This in-depth research was funded by a group of foundations and revealed that two thirds of all funders and project grants provide inadequate coverage of overheads. Given that access to unrestricted funds for these NGOs was limited, the impact of financial health of this inadequate cost coverege was severe and 50% of the NGOs had less than 21 days annual expenditure in unrestricted reserves. These findings probably won't come as a surprise to the Humentum community. We kind of knew this - but its sobering to see such concrete evidence - and as far as we know Humentum is the first to assemble and marshall the evidence in this way. We found really clear evidence of under-resourcing of key organisational functions like finance and, worryingly, the safeguarding functions needed to prevent sexual exploitation and abuse.
Please download and read the Executive Summary, or the Full Report, here:
Administration Costs Research Project - Humentum
Only 42% of the 284 project funding agreements we analyzed provided any kind of indirect % at all. This highlights how challenging a funding context these National NGOs face, and how the international system continues to discriminate between how international NGOs and National NGOs can access funding and on what terms. Our recent advocacy ask to CDC about changing its dsicriminatory policy towards National NGOs is just one more example of this.
Interestingly, we found that on average the National NGOs achieved better cost coverage of their administration costs when they were being forced to charge all their costs directly, rather than when funders allowed an indirect cost rate. It's one of those findings that as a research team we scratched our heads over a lot. Another surpising finding for us was that we found that on average the National NGOs achieved better coverage of administration costs on grants from governments like the US and UK, than from foundation or INGO funders.
The report has 3 Key recommendations for funders. INGOs are major funders of national NGOs, so I'd be very interested to hear how these recommendations resonate with you all. And I'm really keen to hear if there are other recommendations that we as a membership community should be considering in the light of this reserach. Please reply and have a discussion on this topic in this safe space that is Humentum Connect. We'll be organisng some events to discuss the findings soon - so please stay tuned for that.