With few exceptions, non-governmental organizations (NGOs) in Kosovo tend not to be very transparent with how they manage their finances. This is problematic for several reasons.
First, NGOs work towards the public good. Since we serve the public, we have a responsibility to be transparent about what we do, how we are funded and how we spend our funds.
Second, our financial resources often come originally from taxpayers (in Kosovo or abroad), or from individuals who give money to support us. We have a responsibility to report how their money was spent and what was achieved with their money. Otherwise, they may not feel like funding our work again.
Third, for organizations seeking to hold the government accountable, their own house must first be in order.
Fourth, our latest research on “Where’s the Money for Women’s Rights?” suggests that several donors in Kosovo are becoming hesitant to fund NGOs because organizations have not shown clearly where the money went in the past and what they have achieved with that money.
This does not mean that organizations have not achieved important results, but perhaps organizations could do a better job of showing how money was spent and what results were achieved. NGOs’ future funding depends on how transparent they are with their finances and how well they show their results to donors and community members (as potential future supporters).
“Wait a minute. I’m transparent. I’m not one of those organizations,” you’re thinking. Okay, here are a few important questions for you:
o Do you make an annual report with information about your activities, results, income and expenditures available to the public (not only to your donors)?
o Are two people in your organization responsible for reviewing and approving how money is spent?
o Do you have your organization’s finances audited every year?
o Does your board meet every three months to review and approve your organization’s income and expenditures?
If you answered “no” to any of these, you could improve your organization’s financial management and transparency. Here are a few things that you can and should do. They cost little to nothing and can help you improve the image of your organization and, in doing so, the image of NGOs and civil society more broadly:
1. Prepare an annual report with information about your activities, results, income and expenditures. Make it available to the public. You can put it on your free Facebook page; make inexpensive black and white copies; and/or provide the information at a press conference. Annual reporting is crucial for showing your partners, members, media, donors and citizens how you use your funds and the results you achieve. (For an example of an annual report, see KWN’s website).
2. Make sure that two different people review and approve your financial expenditures. This is important towards accountable and transparent financial management.
3. Ensure that you have an active board, board rotation policy (so members change every few years according to clear guidelines) and regular meetings every three months with board members. During meetings, board members can review and approve your organization’s activities and finances.
4. If you receive funding, especially more than €100,000 per year, undergo an annual external audit. Report results to the public, tax administration and NGO registration office. In your budget proposals, ask donors to fund audits of project expenses. Most donors will. If not, or if you lack funds for an audit, involve (non-staff) members, beneficiaries and partners in voluntarily auditing your finances. They can review your budget, receipts and activities, writing a letter with their conclusions. Make the letter available to the public.
5. Start a log, recording 1) the date; 2) voluntary time, in-kind contributions and donations provided to your organization; and 3) from whom it was received. Based on market prices, estimate the worth of these contributions. Then, you will be able to show with evidence the in-kind contributions you receive.
6. Attend KWN workshops in financial management. Usually such training costs €250-300 per person, but KWN offers them free of charge to our members.