Blazing a Funding Transparency Trail
By Linda DeNicola, CFO, Pathfinder International
In the world of global philanthropy, financial transparency is the holy grail. When Pathfinder International heard about a solution that would allow tracking of donor funds from initial receipt down to in-country usage at the click of a button, it was a no-brainer. Linda DeNicola, CFO at Pathfinder International, explains.
As a non-governmental organisation (NGO) that receives funding of circa $100m plus every year, we are always looking for smarter ways to work. Ensuring that we are using donor funds to efficiently and effectively serve people in the communities where we work is paramount - especially since future funding is never guaranteed.
The more we can do to demonstrate to donors that we operate in a fully transparent manner, and that an extremely high proportion of donor funds go directly to services in some of the world’s poorest countries, the more likelihood there is of repeat donations. The theory is often easier than the practice, however.
Working in 19 countries, we have 60 field offices and transact with over 14,000 local vendors across Africa, Asia, South America and the Middle East. Like many other NGOs, we face challenges with hand-offs of funds across multiple parties, we work in higher-risk geographies where many participants do not have bank accounts, and where vetting of vendors can be time-consuming.
The level of technological infrastructure in some countries also makes tracking of payments challenging. At the same time, controls and administration of cross-border payments can be costly.
Although Pathfinder International has very advanced internal controls and works to the highest standards of financial accountability, providing complete transparency in such an environment is not easy. Donor funds typically come in as a bucket of dollars and are then distributed to various projects and down to individual field offices, or straight to vendors.
While the allocated funds are monitored using a Microsoft Dynamics-project based transactional accounting system, it can be challenging to maintain full visibility. Furthermore, the donor has no simple, efficient way to see how their funds have been put to use – and the level of visibility we are able to provide isn’t quite as granular as donors would perhaps like.
Seeing the light
When a colleague approached me about piloting a new platform that would allow my team, donors, and vendors, to simply log in to a platform and track funds all the way down from the donor to the final recipient, I was excited at the prospect. After all, one of our main goals is to ensure that the donors’ money is being used for its intended purpose – and that is precisely what the Sunlight Payments platform sets out to achieve.
In brief, Sunlight Payments is a cloud-based, end-to-end digital payments solution that provides NGOs with a secure, private, and fully-traceable service for delivering aid to low to middle income countries. It is backed by Microsoft’s Bill Gates, and Bank of America Merrill Lynch’s Global Transaction Services business provides banking services to assist Sunlight in sending funds to the end recipients.
The bank also performs any necessary currency exchange on behalf of the NGO, so that funds no longer have to be converted by an in-country bank at the point of receipt, but can be converted prior to being sent. This centralised workflow is more cost-effective, since foreign exchange and bank fees can be reduced.
As well as allowing for end-to-end payment tracking, and efficient cross-currency payments, the platform also contains controls designed to efficiently deliver financial resources to the intended recipient; and reduce the opportunities for misappropriation and other hidden costs that can undermine the effectiveness of humanitarian efforts. These features include the prevention and detection of fraud across an extensive library of over 40 procurement fraud schemes and attributes, as well as tools for identifying trusted, reliable vendors.