SGS NGO Benchmark Audit


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The purpose of NGO Benchmarking is to provide NGOs, as well as the donor community and the public at large, with an independent assessment based on a comprehensive set of perspectives, namely:

Dimensions of Best Practices:
Board of Trustees, Strategic Framework, Integrity Management, Communication and Public Image, Human Resources, Fund-Raising - Resources Allocation and Financial Controls, Outcomes, Operations and Continuous Improvement.

Contributors' Expectations:
Transparency, Efficiency, Effectiveness

Management Components:
System, Activities (Programmes/Projects), Human Resources, Finance

Continuous Improvement:
Plan, Do, Check, Act.

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  • SGS Tokyo 60% of one staff in Tokyo for the administrative tasks Automatic Scanner to MINIMIZE the manpower requirement in Japan (Documents are scanned and transmitted to SREO Manila. Once the report is received, the documents together with the report are delivered to JBIC Tokyo) 1 consultants for 2 days/month for the promotion aspects SREO Manila 8 persons in SREO Manila: 1 supervisor + 7 analysts Analyst are not yet specialized (all have similar expertise in procurement) Performance Indicators Between the time documents are received by SGS Tokyo and reports are sent by email to JBIC Tokyo. Hard documents/reports are delivered the next day by messenger.
  • SGS NGO Benchmark Audit

    1. 1. Who are we, What do we do? <ul><li>Inspection , Testing and Certification stock-listed company. </li></ul><ul><li>52,000 staff, 120+ countries. </li></ul><ul><li>Independence and Third-Party: </li></ul><ul><ul><li>We verify compliance of Agreements between business partners </li></ul></ul><ul><ul><ul><ul><li>Quality, Quantity, Price </li></ul></ul></ul></ul><ul><ul><li>We hold accreditations (80+ countries) to certify entities / products against national / international standards </li></ul></ul><ul><ul><li>We support Governments and IFIs to implement &quot;Good Governance&quot; measures </li></ul></ul><ul><ul><ul><ul><li>Optimal use of resources, Accountability, Transparency, Revenue enhancement </li></ul></ul></ul></ul><ul><li>We aim to offer trust and confidence </li></ul>
    2. 2. Aid Efficiency Services (Governments & Institutions Division) Geneva Headquarters
    3. 3. <ul><li>“ To verify the proper use of </li></ul><ul><li>grants and loans provided for the </li></ul><ul><li>betterment of Civil Society ” </li></ul>Our Mission is
    4. 4. Aid Efficiency Services Risk Profiling of Development Partners (PEs, PIUs etc.) Independent Procurement Reviews NGO Benchmarking + Technical Assistance / Capacity Building Documentary Checks Of Procurement Steps « No Objection » + By-Products --- Project Implementation Monitoring Evaluation Preparation Execution
    5. 5. We provide Answers to the following Questions: NGO Benchmarking Are You Truly Accountable? Risk Profiling Are You Fit For The Job? Project Monitoring Are You Doing Things Right? Documentary Checks on Procurement Steps Are You Playing By The Rules? Independent Procurement Reviews Have You Done The Right Things?
    6. 6. NGO Benchmarking « Getting the Seal of Good Housekeeping  »
    7. 7. No formal definition of a “ Nonprofit ” … <ul><li>Independent, voluntary association of people </li></ul><ul><li>Acting together on a continuous basis for a common purpose other than </li></ul><ul><ul><li>Achieving government office </li></ul></ul><ul><ul><li>Making money </li></ul></ul><ul><ul><li>Being involved in illegal activities </li></ul></ul><ul><li>As “third-sector”, 4 distinctive features: </li></ul><ul><ul><li>I ndependent from any direct control of a public authority </li></ul></ul><ul><ul><li>Non-profit making (in a private sector sense) </li></ul></ul><ul><ul><li>Not constituted as a political party and </li></ul></ul><ul><ul><li>Non-violent, non-criminal </li></ul></ul><ul><li>NPOs, NGOs, CBOs, PVOs, CSOs etc. </li></ul><ul><li>ICNPO Classification </li></ul>
    8. 8. Nonprofits <ul><li>Extremely diverse: </li></ul><ul><ul><li>Managerial abilities </li></ul></ul><ul><ul><li>Working capital ratios </li></ul></ul><ul><ul><li>Effectiveness of operations </li></ul></ul><ul><ul><li>Leverage at the Public or Private sectors levels </li></ul></ul><ul><ul><li>Attitudes vis a vis grantors </li></ul></ul><ul><ul><li>… </li></ul></ul><ul><li>Is their growing influence matched by increased </li></ul><ul><li>ACCOUNTABILITY ? </li></ul>
    9. 9. How to rise to the Accountability Challenge? Self-Assessment: “ We are very good ” … 1 st Party An interested party does the assessment Each party has his own audit criteria. Multiplicity. Duplication Focus is on projects > organization + potential Conflict of Interest? 2 nd Party 3 rd Party An independent body, referring to a Standard
    10. 10. Typical Accountability Framework <ul><li>Proper accountability </li></ul><ul><li>Shall consider ALL stakeholders and </li></ul><ul><li>Be assessed by bodies that are no party to the “transactions” </li></ul>NGO 1 st PARTY “ NGO Clients ” 2 nd PARTY “ NGO Clients ” 2 nd PARTY Grantors Beneficiaries Grantee Surrounding ? Communities Local ? Authorities ? Suppliers ? Contractors
    11. 11. Purpose of NGO BM <ul><li>Institutional Due Diligence: </li></ul><ul><li>Beyond programs & projects : Overall assessment to determine if leadership and management have the capacity, willingness and readiness to accomplish what they claim </li></ul><ul><ul><li>i.e. To provide assurance to stakeholders that an NGO is </li></ul></ul><ul><ul><ul><li>Fit for purpose </li></ul></ul></ul><ul><ul><ul><li>Accountable </li></ul></ul></ul><ul><ul><ul><li>Sustainable </li></ul></ul></ul><ul><li>… In reference to a consolidated Standard of Best Practices </li></ul>
    12. 12. NGO BM Certification Audit <ul><li>IS NOT: </li></ul><ul><li>An Impact Assessment of projects, activities </li></ul><ul><li>A financial or a management audit </li></ul><ul><li>A substitute for dialogue with Stakeholders </li></ul><ul><li>IS </li></ul><ul><li>A Measure of Compliance with International Best Practices </li></ul><ul><li>… to be translated into an internal management tool </li></ul><ul><li>… for Continuous Improvement Purposes </li></ul><ul><li>D esigned for the NGO to keep control over its processes / results, using it for the outside world, whenever necessary and appropriate. </li></ul>
    13. 13. Referenced Codes and Standards <ul><li>Grantors and civil society organizations have established International Codes & Standards for eligibility / funding purposes (25 today) </li></ul><ul><li>Based on their specific requirements </li></ul><ul><ul><li>Humanitarian principles </li></ul></ul><ul><ul><li>Quality of Deliveries </li></ul></ul><ul><ul><li>Finances </li></ul></ul><ul><ul><li>Ethics </li></ul></ul><ul><ul><li>etc. </li></ul></ul><ul><li>None is truly comprehensive in terms of </li></ul><ul><ul><li>Accountability </li></ul></ul><ul><ul><li>Risk Assessment </li></ul></ul>
    14. 14. Approach to these Standards: Our Rationale (1): <ul><li>Focus on the RISKS an NGO could face and their consequences in terms of </li></ul><ul><ul><li>Image, </li></ul></ul><ul><ul><li>Performance, </li></ul></ul><ul><ul><li>Resource Allocation, </li></ul></ul><ul><ul><li>Control Mechanisms </li></ul></ul><ul><ul><li>etc. </li></ul></ul><ul><li>Identified risks shall be assessed </li></ul><ul><ul><li>Comprehensively ( scope ) and </li></ul></ul><ul><ul><li>At different time intervals ( validity ) </li></ul></ul>
    15. 15. Types of Risks <ul><li>Management : Leadership </li></ul><ul><li>HR : Profiles in line with exigencies </li></ul><ul><li>Market : Stakeholders going to buy </li></ul><ul><li>Competition : Offering something similar/better </li></ul><ul><li>Funding : Fundraising ability to sustain itself </li></ul><ul><li>Insurance : Liability and property  </li></ul><ul><li>IP : Right to use the intellectual property it is using </li></ul><ul><li>Technology : Appropriateness </li></ul><ul><li>Projects: Reasonable, feasible, outcomes measurable </li></ul><ul><li>… </li></ul>Awareness, through independent audit, and downstream Action shall minimize these risks and enhance the value of the organization.
    16. 16. <ul><li>“ IF YOU CANNOT MEASURE IT, YOU CAN NOT IMPROVE IT” </li></ul><ul><li>Lord Kelvin (1824 – 1907) </li></ul><ul><li>Identify, in reviewed Standards, “Objectively Measurable Indicators” </li></ul><ul><ul><li>108 criteria in NGO BM V1 </li></ul></ul><ul><li>Establish a rating system so that: </li></ul><ul><ul><li>Clear identification of strenghts / weaknesses </li></ul></ul><ul><ul><li>Over time, improvements can be traced </li></ul></ul><ul><ul><li>Data bases for comparison purposes </li></ul></ul>Our Rationale (2):
    17. 17. Standard Design Nonprofit Sector Codes & Standards “ NGO BENCHMARKING ” STANDARD 108 criteria 3 1 Objectively Verifiable Indicators 2
    18. 18. Perspectives <ul><li>P1: Dimensions of Best Practices </li></ul><ul><ul><li> </li></ul></ul><ul><li>P2: Stakeholders ’ Expectations </li></ul><ul><li>P3: Management Components </li></ul><ul><li>P4: Continuous Improvement </li></ul>Each and every stakeholder shall be able to select his “entry point” into the results:
    19. 19. P1: 9 Dimensions of Best Practices Continuous Improvement Fundraising, Resources Allocation And Financial Controls Communication, Advocacy, Public Image Strategic Framework Board of Trustees Human Resources Integrity Management Outcomes Operations
    20. 20. P1 : Dimensions of Best Practices A Certificate is awarded if (a) 70 + % , (b) no major NC and (c) D1, 2, 6, 7 >50% Validity: 12 – 18 months
    21. 21. P2: Contributors ’ Expectations
    22. 22. P3 : Management Components
    23. 23. <ul><li>All organizations need a &quot;feedback loop&quot; to improve! </li></ul>P4: 4 Steps towards Continuous Improvement <ul><ul><ul><li>PLAN : Define / Prepare </li></ul></ul></ul><ul><ul><ul><li>DO : Apply / Execute </li></ul></ul></ul><ul><ul><ul><li>CHECK : Confirm it works! </li></ul></ul></ul><ul><ul><ul><li>ACT : Modify / Adjust </li></ul></ul></ul>Plan Act Do Check Higher Quality NGO BENCHMARKING
    24. 24. P4 : Continuous Improvement
    25. 25. Continuous Improvement Recommendations
    26. 26. .
    27. 27. Certification Mark
    28. 28. Consolidated Report
    29. 29. Distribution of “low scores” by criteria
    30. 30. NGO BM Key Features <ul><li>Consolidates and complements Best Practices from 25+ Standards / Codes towards a Due Diligence tool </li></ul><ul><li>“ If you cannot measure it, you cannot improve it ” </li></ul><ul><ul><li>Rating from different perspectives for various Stakeholders </li></ul></ul><ul><ul><li>Enables to objectively trace improvements </li></ul></ul><ul><ul><li>Mapping of strengths and weaknesses </li></ul></ul><ul><ul><li>Action Plan towards Continuous Improvement </li></ul></ul><ul><li>Generates a Data Base for </li></ul><ul><ul><li>Benchmark of benchmarks </li></ul></ul><ul><ul><li>Identification of Recurrent non-conformities towards capacity building for affiliates / branches </li></ul></ul>
    31. 31. Scope of NGO BM Certification Audits <ul><li>Scope 1 :  Headquarters only : </li></ul><ul><li>We refer to Operations & Outcomes Supervision </li></ul><ul><li>~ 5 manday-process incl ~ 4 mandays on the spot </li></ul><ul><li>Scope 2: Headquarters + a representative sample </li></ul><ul><li>of branches / operations / projects </li></ul><ul><li>We refer to Operations and Outcomes </li></ul><ul><li>Duration depends on # sites + logistics </li></ul>
    32. 32. Status as of August 2009 <ul><li>International Classification of Nonprofit Organisations . 1.Culture and Recreation, 2. Education and Research, 3. Health, 4. Social Services, 5. Environment, 6. Development and Housing, 7. Law Advocacy and Politics 8. Other Philantropic Intermediaries and Voluntarism 9. International 10. Religion 11. Business and Professional Associations and Unions 12. [Not Elsewhere Classified] </li></ul><ul><li>Certified NGO ’s: 51.3% </li></ul><ul><li>Average score: 69.6% </li></ul><ul><li>Scopes: </li></ul><ul><ul><li>1: 105 </li></ul></ul><ul><ul><li>2: 12 </li></ul></ul><ul><li>R e-certifications: 27% </li></ul>Continent Audits Performed ICPNO Codes* Europe 15 3,4,5,6,8,9,11 Africa 33 3, 4, 7, 9,12 America ’s 38 2,4,5,6,7,8,9,11 Asia 31 2,3,4,5,6,8 Total 117  
    33. 33. Services provided under NGO BENCHMARKING Design of “ Second-Party Standards” based on client ’s by-laws or specific requirements + application through audits CONSULTANCY TRAINING NGOs Trainers Coverage : The 50 most important Best Practices criteria 2 to 3-day sessions with case studies, exercices etc. AUDIT <ul><li>Self-Assessment (web) </li></ul><ul><li>Pre-Audit </li></ul><ul><li>Documentary Assessment </li></ul><ul><li>Certification Audit </li></ul>Consolidated Reports
    34. 34. <ul><li> </li></ul>Contact: Robert Jourdain Aid Efficiency Services Phone:   +41 22 739 94 26 Mobile:  +41 79 610 20 44 Fax:        +41 22 739 98 39 Email:    [email_address]
    35. 35. Example P1 P2 P3 P4
    36. 36. Process: System Integration and Value Added <ul><li>. </li></ul>Site Audit Auditor ’s Manual Auditor ’s Software Main Software E D T Benchmarking Report The client Consolidated Report All Audits Data Base : Benchmark of Benchmarks + Technical Annex NGO Standard 2-week preparation Audit Preparation Questionnaire / Contract
    37. 37. Accountability <ul><ul><li>To Inform interested parties </li></ul></ul><ul><ul><li>( Implies knowing them all) </li></ul></ul><ul><ul><li>To Listen to their concerns </li></ul></ul><ul><ul><li>( Implies participation) </li></ul></ul><ul><ul><li>To Report i.e. to assume responsibility for </li></ul></ul><ul><ul><li> the means and the results </li></ul></ul><ul><ul><li> (Implies sound management practices) </li></ul></ul>
    38. 38. <ul><li>Code of Conduct for the International Red Cross and Red Crescent Movement and NGOs Disaster Relief </li></ul><ul><li>Inter Action's Private Voluntary Organization (PVO) Standards </li></ul><ul><li>Canadian Centre for Philanthropy: &quot;Ethical Fund-Raising Accountability Code&quot; </li></ul><ul><li>The Drucker Foundation self-assessment tool for non-profit organizations </li></ul><ul><li>Malcolm Baldridge National Quality Award, ISO 9000, SA 8000 and ISO 14000 Standards </li></ul><ul><li>National Charities Information Bureau standards in philanthropy </li></ul><ul><li>American Institute for Philanthropy &quot;Charity Rating Guide&quot; </li></ul><ul><li>Canadian Council of Christian Charities &quot;Standards for Organizational and Financial Integrity&quot; </li></ul><ul><li>Charities Review Council of Minnesota &quot;Standards&quot; </li></ul><ul><li>Guide Star database on non-profit organizations and performance ratios / Charity Navigator </li></ul><ul><li>Standards de la ZEWO (Bureau Central des Oeuvres de Bienfaisance) </li></ul><ul><li>USAID NGO Sector Strengthening Program </li></ul><ul><li>The SPHERE Project Humanitarian Charter and Minimum Standards in Disaster Response </li></ul><ul><li>Humanitarian Aid Office of the European Commission (ECHO) </li></ul><ul><li>ICFO International Committee on Fundraising Organizations International Standards </li></ul><ul><li>Maryland Association of Non Profit Organizations </li></ul><ul><li>Guidance Document to the Code of Ethics of the Canadian Council for International Co-operation </li></ul><ul><li>Global Accountability Project: Charter 99 / One World Trust </li></ul><ul><li>Charte de Déontologie des Organisations Sociales et Humanitaires faisant appel à la générosité du public </li></ul><ul><li>AUSAID Accreditation for Non-Government Organisations </li></ul><ul><li>Credibility Alliance Norms </li></ul><ul><li>Charities Review Council Standards of Accountability </li></ul>Referenced Codes and Standards
    39. 39. “ Money talks ” <ul><li>How to identify an organization that </li></ul><ul><ul><ul><li>Is trustworthy, reliable, sustainable, compliant… </li></ul></ul></ul><ul><ul><ul><li>Could make a difference? </li></ul></ul></ul><ul><li>Grantors (and any stakeholder ) are entitled to receive </li></ul><ul><li>proper accounts on how their trust and money is being utilized </li></ul>
    40. 40. Comprehensive? System Activities $ HR P3 Management Components Act Check Do Plan P4 Continuous Improvement Numerous criteria Virtually none Virtually none Very few
    41. 41. BENEFITS CREDIBILITY REQUIRES AN INDEPENDENT THIRD-PARTY <ul><li>Enhance Good Governance, Accountability to Stakeholders </li></ul><ul><li>Detect weaknesses towards corrective / preventive actions </li></ul><ul><li>Reduce / prevent reputation risks </li></ul><ul><li>Efficient processes lead to better results </li></ul><ul><li>Ensure stakeholders ’ commitment </li></ul><ul><li>Comply with grantors ’ growing demand for accountability </li></ul><ul><li>… </li></ul>
    42. 42. NGO BM vs ISO 9000 <ul><li>NGO BM </li></ul><ul><li>Specific to nonprofits </li></ul><ul><li>Organized along risks stakeholders may be confronted to </li></ul><ul><li>Performance criteria defined by the Standard (same for all) </li></ul><ul><li>Flexibility to integrate concerns such as sector specifics </li></ul><ul><li>Detailed Report with scoring from different perspectives ( “Stakeholders’ entry points”) </li></ul><ul><li>Scoring enables to measure progress over time + compare results / identify patterns in a network of NGOs </li></ul><ul><li>ISO 9000 </li></ul><ul><li>Generic across sectors </li></ul><ul><li>Provides means to implement, in a generic way (tool-box) </li></ul><ul><li>Auditee defines its own threshold (performance criteria are left for him to assess) </li></ul><ul><li>Flexibility achievable at cost </li></ul><ul><li>Pass or fail </li></ul><ul><li>No mapping for serial audits </li></ul>
    44. 44. 1. Consolidated Reports <ul><li>To compare units / branches / affiliates within a network </li></ul><ul><li>To identify recurrent non-conformities </li></ul><ul><li>To establish focused improvement programs </li></ul><ul><li>To position an organization vs competition </li></ul>
    45. 46. Other features
    46. 47. Distribution of Management Component Scores by Organizations ’ Size
    47. 48. 2. Second-Party Standard / Option a <ul><li>To complement NGO BM with technical criteria (D10) defined by client </li></ul><ul><li>Objectively Verifiable Indicators and Rating </li></ul><ul><li>D10 is audited during NGO BM process </li></ul><ul><li>Separate Report, D10 certificate issued by client </li></ul>
    48. 49. Second-Party Standard / Option b <ul><li>Based on client ’ s own By-Laws and objectives </li></ul><ul><li>Towards more specific compliance expectations </li></ul><ul><ul><li>Establish structure of the standard </li></ul></ul><ul><ul><li>Translate requirements into objectively verifiable indicators + rating </li></ul></ul><ul><ul><li>Design analytical and reporting framework </li></ul></ul><ul><ul><li>Test, validate, final version </li></ul></ul><ul><li>Standard is client ’ s ownership </li></ul><ul><li>Audits performed by SGS, certificates issued by the client </li></ul>
    49. 50. 3. Training in Best Practices <ul><li>OBJECTIVE : </li></ul><ul><li>Is NOT to tell NGOs what should be their normative model of Good Governance and Accountability! </li></ul><ul><li>To provide an overview of generic Best Practices requirements as underlined in today ’ s Accountability principles set by donor agencies, public authorities or private foundations. </li></ul><ul><li>To enable participants to identify the risks attached to non-compliance as well as shortcomings that may jeopardize sustainable development of a NGO. </li></ul><ul><li>Geared towards a reinforcement of their capacities towards better Compliance with the exigencies of Best Practices. </li></ul>
    50. 51. Training in Best Practices <ul><li>OUTLINE </li></ul><ul><li>The 50 most important criteria are selected across the 9 Dimensions of the NGO BM Standard and explained along the following headers: </li></ul><ul><ul><li>Definition </li></ul></ul><ul><ul><li>Risks of non-compliance </li></ul></ul><ul><ul><li>Benefits of compliance </li></ul></ul><ul><ul><li>References of Best Practices from agencies, states, foundations </li></ul></ul><ul><ul><li>Case studies. </li></ul></ul>
    51. 52. Training in Best Practices