The Charitable Measurement Initiative: Community Organization as Auditor

Welcome to the Charitable Measurement Initiative!

The Charitable Measurement Initiative is a collaboration of people and organizations that are deeply committed to the belief that social change organizations can mobilize significant new and better investment if they are able to implement a measurement reporting framework that credibly communicates their real impact to donors. The Initiative is directed by GiveIndia and calls on the resources of pilot program partners Keystone Accountability, Global Giving, and New Philanthropy Capital, as well as many other organizations committed to social welfare.

The process began when we decided to combine our previous experiences in humanitarian and charitable work with our current work as corporate lawyers. We sought to find a group in India that was looking to incorporate capital markets/securities concepts in reporting and analysis to create more valuable and transparent information.

Thankfully, we were put in touch with GiveIndia. Give discussed the idea of running a pilot program implementing the Keystone framework developed by Keystone Accountability to see if we could help organizations more clearly articulate the outcomes they wanted and better communicate their actual results to donors. This was exactly what we were hoping to do and gladly agreed to donate a year of time to making this work.

While we were in London, Give put us in touch with Keystone Accountability and New Philanthropy Capital. After many meetings throughout the spring and summer, we arrived at our joint creation – the Charitable Measurement Initiative – and a plan as to how we would seek to help NGOs in India become more transparent, responsive, and efficient, as well as help donors become more engaged and involved.

Wednesday, October 24, 2007

Community Organization as Auditor

Unlike a domestic donor, which can visit the NGO regularly to ask questions and observe whether its funds are being optimally used, a foreign donor is limited in its ability to actively monitor. One possible solution to this lies with community organizations.

Community organizations consisting of people who care about the issue have a significant interest in making sure that the NGO is optimally using resources to tackle the problem. They would be an important constituent and one who is likely to actively voice his or her opinion if given the opportunity.

A foreign donor could use the community organization as its proxy. The question then is: how can the donor support the community organization? While it would be great to fund the community organization through direct funds or by earmarking a portion of a donation/grant to support interactions with community organizations (or the creation of such organizations), as soon as the organization is funded it faces many other problems. It may be considered an NGO itself, which opens up its own oversight issues. It may also then have additional reporting and statutory requirements – things it may wish to avoid.

Thus, the donor needs to find a way to support community oversight without actually giving it funds. One way to do this is to insist that the NGO it supports actually engages with a community organization consisting of interested parties. This could be done by requiring it to solicit feedback through surveys, town meetings, or allowing members of the community organization on an NGOs advisory board. The donor could not only ensure that the community’s voice was being heard, but could also make sure it was being considered by tracking how active those on the advisory board were or even by seeing if people from the community who were placed on the advisory board later took more active roles in the NGO.

There are no doubt better ways to do this. But my point is that if foreign donors come to understand that one of their best proxies for diligence is an already existing and interested community (rather than sending agents for a couple days), then they can help to ensure that NGOs listen to their beneficiaries and constituents. They can help foster an active dialogue between all concerned constituents.