26/02/2010<br />1<br />PROJECT EVALUATION<br />What questions should you be asking the organisations you support?<br />Dou...
Asking questions? <br />Gathering information is part of due diligence.<br />Every organisation is unique in its offering,...
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Questions to ask NGOs - Tshikululu Social Investments workshop 2010


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Presented during Tshikululu's first Serious Social Investing workshop, which took place on 25 and 26 February 2010. Doug Greenshields (Learning and Development Manager, Tshikululu Social Investments) discusses the questions to ask when evaluating funding proposals.

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  • Asking questions basically means we are talking about Project Evaluation.It is part of the due diligence process that all CSI departments and practitioners should be applying.The CSI function of every company has a huge responsibility to apply the funds made available for CI in the most effective way possible.How and where you ask your questions and how you deal with the answers depends on you, but they need to be asked.Lets look at some fundamentals.This is not rocket science; most of it is common sense.What follows are the generic questions – there will be additional sector specific questions you will need to ask.This is not an exhaustive list but I have tried to cover the main bases and I will try to highlight some of the areas that need Remember every project is unique – in its offering, operating environment, stage of development or decline.
  • GovernanceWith NGOs, just as in business, governance is paramount. There must be an executive body to lead and direct the organisation and put in place the correct structures and controls to ensure accountability, compliance and transparency.  You need to ask:Constitution – is the organisation properly constituted, is the constitution signed, are there membership conditions/constraints, and does it have a dissolution clause?Registration – is the organisation properly registered as a NPO, PBO, Section 21 Company, does it have articles of association, registered with government departments and other bodies?Tax Status – what is the organisation’s tax status; is it registered with SARS as Section 30 and Section 8A?Board – who is on the board, are they active members or figureheads, are they results driven, and does the board display diversity, appropriate and relevant skills, vision, mission and strategy, responsibilities, do they have regular meetings and board papers, are they advocates of transparency?Accountability – who is accountable for the actions and decisions of the organisation? Fiduciary responsibilities?Compliance – is the organisation paying attention to and complying with BEE, King 111, and relevant legislation?ManagementThe operational side of the organisation is also very important. It is interesting to note that in the eighties and early nineties there was a flow of good people form government departments to NGOs, which seems to have reversed in recent times – this has interesting implications. You need to ask:Director/CEO – quite often the founder of the organisation, a charismatic leader, often autocratic, the champion (risk succession), visionary and strategist, sets priorities and makes plans, often has a high external or public profile, often great leaders sometimes not great managers.Management Team and Staff – skills, motivation, commitment, turnover (risk retention), involved in decisions, is there a natural successor to the CEO amongst the staff, are there people in the team who are the acknowledged experts in their field?Organogram – how is the organisation set up, is it balanced and is it logical? Qualifications – does the staff of the organisation have the qualifications to deliver on its projects? Experience – experience is golden, usually in short supply and difficult to determine at first glance?Training – is the organisation committed to training and developing its staff?
  • FinancesFinances can tell you a lot about an organisation. A few simple figures and calculations can yield very useful information to assist in decision making on funding.You need to ask about:Audited Financial Statements – need to look at income, expenditure, surplus/deficit, signed by qualified auditors and board, look for qualifications and read the notes. Recent track record – AFS give you two years for comparison, check trends and anomalies.Reserves (risk) – we use effective cash reserves = cash + near cash investments/current liabilities. Look for at least six months operational costs in reserves, also look at organisations that have multiple years of reserves.Cash flow (risk) – lack of cash flow can cause short term financial difficulties.Liabilities and commitments – overdrafts, mortgages, loans, etc, and ability to service debts?Investments – long term and near cash investments, shares, unit trusts, call accounts, etc.Diversity of income – donors, subsidies, own efforts, fundraising, fees (risk to income stream)Donors – other donors can tell you a lot, look at quantum and periods, look at recently departed donors. List of current and recent donors and amounts.Subsidies – would you expect the organisation to be receiving government subsidies, SETA funding, if they are not why not?Deferred income or project specific (restricted) funding – you can find significant reserves tied up in deferred or project specific funding that is earmarked for certain purposes and not available for general uses.Existence of a Trust – some organisations run an operational Fund and a Trust fund. They often supply the operational financial reports, but not those of the Trust, which may contain significant reserves.Financial management – existence of current AFS, audit qualifications, and well managed finances are apparent from financial reports.Budgets, forecasts and projected cash flow – realistic or wish lists – for the organisation and for the specific project under consideration.Core costs – what are administrative and fundraising costs as a percentage of total costs?Unit cost – is a dangerous indicator if used in isolation as a measure of efficiency, needs to be used in conjunction with impact; and if used as a comparative between organisations make sure you have compared like with like.
  • OrganisationAs far as NGOs are concerned communities are paramount, beware of organisations that have lost contact with their primary constituencies.You need to ask:Community involvement – is organisation addressing community priority needs and does it have involvement of the community through ownership and participation? Vision and Mission – does the organisation have these, and are they supported by its aims, objectives, outputs and impact assessments?Aims and objectives – what are the organisations aims and objectives, and what are the aims of its projects and programmes, especially the project seeking support?Size and maturity (age) – when was the organisation established? Is it as well developed as you would expect? How many permanent staff, part-time staff or volunteers? Is it lean and mean, too lean to be mean, dead wood, fat cat - a means to an end? (Use your judgement, if the organisation is young and newly emergent apply slightly different evaluation criteria compared to a well established and mature organisation),Projects and programmes – is the organisation the project or does it run a number of projects or programmes, and what are they?Spread – is it a specialist organisation or does it work in more than one sector, if so what sectors, and how successfully? Sometimes it is better to stick to the knitting (core competencies). Also some organisations bolt on extras to follow the money.Location – where is it based and where does it operate? This may have implications for replication in other areas. A word of warning not all projects are transplantable into other areas.Beneficiaries – who are the organisation’s direct and indirect beneficiaries, numbers and other statistics, but most importantly what is the impact on the beneficiaries and their communities.Reputation – track record – what do others say, known ability to deliver, look carefully at restructured, reinvented, resurrected organisations? Be careful of a lot of smoke but very little fire, much prefer a lot of fire little smoke.References – community leaders and opinion leaders – can be sounding boards, facilitators, mentors, knowledgeable, historians, but sometimes gatekeepers. Networking and connections – collection of like minded organisations, preventing reinvention of the wheel, help avoiding potholes and pitfalls, sharing resources and expertise. Inclusive versus exclusive organisations.Sustainability – a tough question as sustainability means different things to different people. To many, it used to mean degrees of financial self-sufficiency and/or adequate financial resources. However, it is more complex than this and is probably more of interplay of organisational viability, financial security, project effectiveness and enduring impact.
  • Project Projects or programmes are at the sharp end of development and again their relationships with beneficiary communities are critical. You need to ask:Community involvement – is the intervention must be addressing community priority needs, it must have involvement of the community – ownership, participation, capacity building, residual effect. Not just a well intended individuals good idea to will save the world. Not a case of we know exactly what you need and this is what we are going to do for you.Aims and objectives – what are the projects aims and objectives, are they realistic and achievable? What needs will be addressed, what target group and activities?Delivery – is the project staffed and resourced to be able to deliver? Does it have a track record and what is it like?Duration – how long will the project be active, does it have a finite life span (three-years) or is it ongoing? Exit strategy?Beneficiaries – who are the direct beneficiaries and indirect beneficiaries, numbers and other statistics? Impact – probably the most important part of the discussion, what is the impact (quantifiable results) on individuals and communities and how will impact be measured?Budget – a breakdown of the specific budget of the specific project, with other donors and amounts. This allows you to get a feeling for the budget shortfall and the amount you may contribute (project dependency ratio)?Monitoring and Evaluation (M&amp;E)Monitoring and evaluation is taking on an ever increasing role in CSI. Donors want to see what their contributions are achieving and M&amp;E is a discipline that has many positive spin-offs for organisations in terms of management, planning, design, evaluation and reporting on activities, not to mention providing evidence for further support. You need to ask;Structures – does the organisation have M&amp;E in structures and processes in place?Information – what information is collected, how is it collected and by whom? Evidence of outcomesDirect EvidenceSystematic evidence (pre- and post-evaluations, changes in test scores, changes in behaviour, case studies, etc).Evaluations – self-evaluations and third partyIndirect indicatorsUser feedback – participant evaluationsDemandLogical justificationA clear logical modelEvidence from previous experiencePreviously published researchTestimonials – endorsementsImpact – quantitative and qualitative measures
  • ReportingYou may have supported the organisation before in which case you need to ask:Progress – what progress has the organisation/project made since the last grant and what changes has it undergone during the period?Conditions – were the funding conditions met?M&amp;E – if M&amp;E was a condition of the grant were the measurement criteria adhered to and the impact measured?Reports – were the relevant reports submitted to expected standards and timeously? Risk NGOs work in a highly risky environment where there is strong competition for resources (especially financial and human) and they need to be able to understand and make plans to mitigate this risk. The main areas of risk that you may want to ask specific questions about are:Financial riskManagement riskRelevance of activitiesReputation risk (scandal)
  • Questions to ask NGOs - Tshikululu Social Investments workshop 2010

    1. 1. 26/02/2010<br />1<br />PROJECT EVALUATION<br />What questions should you be asking the organisations you support?<br />Doug Greenshields<br />
    2. 2. Asking questions? <br />Gathering information is part of due diligence.<br />Every organisation is unique in its offering, stage of development, operational environment.<br />Need to look at some fundamental questions around:<br /><ul><li>Governance?
    3. 3. Management?
    4. 4. Finances?
    5. 5. Organisation?
    6. 6. Sustainability?
    7. 7. Delivery?
    8. 8. M&E?
    9. 9. Impact?
    10. 10. Reporting?
    11. 11. Risk?</li></ul>26/02/2010<br />2<br />‘It is more difficult to give money away intelligently than it is to earn it in the first place’ Andrew Carnegie<br />
    12. 12. Governance<br /><ul><li>Constitution
    13. 13. Registration
    14. 14. Tax Status
    15. 15. Board
    16. 16. Accountability
    17. 17. Compliance </li></ul>26/02/2010<br />3<br />Management <br /><ul><li>Director/Chief Executive
    18. 18. Management Team and Staff
    19. 19. Organogram
    20. 20. Qualifications
    21. 21. Experience
    22. 22. Training</li></li></ul><li>26/02/2010<br />4<br />Finances<br /><ul><li>Audited Financial Statements
    23. 23. Recent financial track record
    24. 24. Diversity of income
    25. 25. Donors
    26. 26. Deferred income
    27. 27. Reserves
    28. 28. Cash flow
    29. 29. Liabilities and commitments
    30. 30. Investments
    31. 31. Existence of a Trust
    32. 32. Financial management
    33. 33. Budgets
    34. 34. Core costs
    35. 35. Unit costs</li></li></ul><li>Organisation<br /><ul><li>Community involvement
    36. 36. Vision and Mission
    37. 37. Aims and objectives
    38. 38. Size and maturity (age)
    39. 39. Projects and programmes
    40. 40. Spread</li></ul>26/02/2010<br />5<br /><ul><li>Location
    41. 41. Beneficiaries
    42. 42. Reputation
    43. 43. References
    44. 44. Networks
    45. 45. Sustainability</li></li></ul><li>Project<br /><ul><li>Community involvement
    46. 46. Aims and objectives
    47. 47. Delivery
    48. 48. Duration
    49. 49. Beneficiaries
    50. 50. Impact
    51. 51. Budget</li></ul>Monitoring and Evaluation<br /><ul><li>Structures
    52. 52. Information
    53. 53. Evidence of outcomes
    54. 54. Direct Evidence
    55. 55. Indirect indicators
    56. 56. Logical justification
    57. 57. Testimonials
    58. 58. Impact</li></ul>26/02/2010<br />6<br />
    59. 59. Reporting<br /><ul><li>Progress
    60. 60. Conditions
    61. 61. M&E
    62. 62. Reports</li></ul>26/02/2010<br />7<br />Risk<br /><ul><li>Financial risk
    63. 63. Management risk
    64. 64. Relevance of activities
    65. 65. Reputation Risk</li></li></ul><li>Questions<br /><ul><li>Desk study versus site visits – what is the balance?
    66. 66. Sustainability – what does it mean?
    67. 67. Processes and systems – what should be in place?
    68. 68. How do we measure the true worth of SI initiatives – unit cost versus impact?
    69. 69. Intuition (heart) versus analysis (head) – judgement and experience versus tick boxes and simple calculations?
    70. 70. How do you set the bar and where do you set the bar – is it different for different organisations?
    71. 71. Core cost versus project cost – what to fund?</li></ul>26/02/2010<br />8<br />
    72. 72. Summary<br /><ul><li>There is no one size fits all checklist – but there are fundamental questions to be asked.
    73. 73. Your questions will be based on your companies CSI policy, strategy and objectives, its CSI budget, its sectors of giving and its propensity to take risk.
    74. 74. Use experience and exercise judgement - judge each case on its merits.
    75. 75. Know your sector/s – if you do not, how will you know what questions to ask.
    76. 76. Know your organisations – be sensitive and show empathy but be careful of emotional entanglements – you will have to exit at some stage.
    77. 77. Speak to others, in your company, other donors, other organisations working in the sector and the organisations that you support.
    78. 78. Be careful not to try to feed other peoples’ monkeys.
    79. 79. Be consistent and try not to set unintended precedents, but remember the starfish principle</li></ul>26/02/2010<br />9<br />