by Sasi Tadepalli
Oct 03, 2009
The second day of the conference started off in a much more relaxed manner, thanks to the excellent ice-breaker “skits” by all the participants and Vibha volunteers!
Session #1 – LONG TERM GOAL, VISION/MISSION
Panel – JanMadhyam, Vidyarambam, SKB (Sarada Kalyan Bhandar), GRSV(Gohaldanga Ramakrishna Sarada Vivekananda Sevakendra), HEARDS (Health Education Adoption Rehabilitation Development Society)
Guest Speaker – Jyotsana Lall
Mrs. Lall, the founding member of Gramin Siksha Kendra, has been working in the development sector for over 20 years. A graduate of rural management, she works primarily with underprivileged communities and aims to professionalize development initiatives. She has worked with a number of national and international organizations including Digantar, Center for Environment Education and the National Dairy Development Board.
From the onset, there was an energetic and spirited discussion on the topic. Participants started out trying to define Vision and Mission, Long and Short term goals and how they differ. When a new organization is established, it is forced to write up a vision/mission statement, even if it is an external organization that compels it to do that. Issues like the basic need for a statement, how often the goals need to change and when to review the mission statement were discussed at length, with Mrs. Lall taking the lead. As she put, most of the participants work with just an impulse to make a small difference – having to put this down in words when a society or trust is formed or when marketing and funding teams demand it can get hard for the people working on the field. Although some may feel that it is just jargon, it can be important to be on the same page with others in the sector when trying to convey what the organization actually does.
A few of the participants and the panelists pointed out that the vision and mission of an organization should translate into the team’s vision/mission and in everything that it and its partners do. One question that was widely debated was – When some ground level realities drive some changes in the work that an organization set out to do, does this warrant a change in the vision/mission? Maybe not, just change the approach and the activities that take us towards the vision.
Talked about if any of the social organizations present achieved their mission/vision that they set out to achieve and one perspective is that we can look at it from one success story at a time. Some examples of how their missions were partly achieved by some examples were given by some of the organizations present.
Other questions that were discussed – What tells the organization that it has indeed achieved its vision? Is it possible? Even if, then we find something else to do – the vision of the community should drive the organization and the other way around.
Ron Victor, the president of Vibha explained how the vision and mission statements mean a lot to Vibha as an organization. They link the people wanting to make a difference with the people working on the field. He reiterated the point that every individual in the organization needs to know what the exact vision and mission of the organization is and act according to that in every task that they do.
Lastly, topics that lead directly to the next session were discussed – How are the needs of the community assessed? It is important to be constantly aware of all the needs the community has, even if we are not working in all the areas. Importance of knowing the needs and pulse of a community and addressing what and how a healthy give and take can happen for a shared vision was talked about.
Session #2 – COMMUNICATION WITH STAKEHOLDERS
Panel – GSK (Gramin Siksha Kendra), RDO (Rural Development Organization), SKB (Sarada Kalyan Bhandar), GORD (Gandhian Organization for Rural Development), BCT (Bhagavatula Chraitable Trust) – Tribal Schools
Guest – Jyotsana Lall
When asked why the need to communicate with stakeholders arises, participants responded with various thoughts – Accountability to the community, partners and donors, communication is vital with the community, door to door visits, regular meetings, street plays, etc. should all be employed. If one mode of communication fails, another innovative one should be employed. Maybe bring in an outsider to analyze/assess the process and impact. We shouldn’t be a case “Lost in Translation” due to a lack of understanding of what the community needs and due to misunderstanding between management and field workers. If the program workers are not from the local community or area, the workers need to first understand the local culture, work towards building a trust with the community before they can have a real impact. The effectiveness of any program depends on how the beneficiaries perceive the program and the field workers.
Other ideas that were presented were: make the community understand that it is responsible for the program. It is VERY important to ensure that the stakeholders take ownership of the program – create local committees; let the stakeholders contribute to the program; involve the local Panchyat Raj in these committees; let the community come up with a solution for any problems; let them decide the terms of the program and the organization of the activities; give a small group from the community itself the onus of motivating the rest of the community; remember that the organization is only a facilitator for the program.
Ideas on communication with the donors – if you are in line with what the grant letter says, then the rest should fall into place. However the mode of reporting and formats may vary from agency to agency and you would have to just live with that. Sometimes, it is the project’s duty to convey the ground realities to the funding agency and ask them to change the scope of what is required in the community and, any reasonable funding agency will adapt to the changing needs of the community. If the donor/government insists on continuing work that is not appropriate to the situation on the ground, make the community itself involved in talking to the donor/government – the donor, program and the government should all be answerable to the community.
One question that was immediately addressed by the Vibha team was “How would you communicate to the donor that you disagree with their point of view on a basic program requirement?” Vibha responded that the program can demonstrate, with examples and case studies, to the donor on what and why it is really required.
Ron’s thoughts on relationship with the trustees – when a society is formed with like minded people, not because it had to be formed in hurry, then a healthy relationship follows. If the board is not involved, the program should actively chart out ways of involving the board members – send regular reports, proactively call for meetings, form an active “steering” committee to counter a passive trustee so as to not become a one-person show, etc. It is also very important for the trustees to know what is happening on the field and to be in touch with the stakeholders.
Some of the participants acknowledged that they actually learnt quite a bit on the various modes of communication and what positive changes good communication and relationship with the stakeholders has brought about.
Finally, how can any group influence policy at a higher level? If partner NGOs can communicate and agree on a few basic points, then together, they can in turn communicate to the higher authorities!
Session #3 – ACCOUNTING PRACTICES AND FINANCIAL ISSUES
Panel – Rachana, Alamb, RMKM (Rajasthan Mela Kalyan Mandal), BCT (Bhagavatula Charitable Trust), BTS
Speaker – Anil Baranwal
Mr. Anil Baranwal, a consultant at Account Aid in Delhi, has a background in both rural development and financial accounting and has been providing support and guidance to NGOs and donor agencies on financial management.
Mr. Anil started the session with sample budgets of educational projects, simple method of a fund utilization statement, accounting system for an educational project. Questions like how to show the books when local funds are used to offset a delay in foreign funds, how staff receiving salaries from two different projects have to be maintained, if FCRA account to local bank transfers are allowed and if unused FCRA money can be put in a corpus were answered.
Next, Mr. Anil tried to get the group to define a budget – estimation of upcoming expenditure. It cannot be exact, ‘cause the actual expenditure will be either more or less than what was budgeted. Some donor agencies accept about 5-10% variance, given proper reasons.
He explained how the various elements of a budget are activity, program and resource dependent. He asked everyone to make it a habit to break down each item into actual specifics. Inflation (5-10% maybe) should also factor in while preparing a budget. However, appreciation and/or depreciation should not be a part of the budget.
Rajesh Haridas, the COO of Vibha explained how a good budget tells the donor agency the amount of work and thought put into creating it and how involved the staff is in the details of the project itself. Clearer the budget, better are the chances that it will get funded!
Sample financial reports – Unaudited and Audited were shown. Audited reports that opine on the various parts of the report are much more valuable than a straight “checked and corrected” audit.
How FCRA accounts are maintained was discussed at length. ITRA, 12-A, Section 2 and other financial jargon was also touched upon.
The following topic created quite a stir amongst all the NGOs – Definition of a charitable organization was defined as per the government of India norms providing FREE services (medical, educational and shelter) to the needy is deemed as charitable but organizations selling any products or charging any fees do not come under charitable agencies as of April 2008. How can our projects that sell products made by the beneficiaries or charge fees need to change their program to fit these new rules. If the project CANNOT survive without selling, then separate your organization into two different parts. There was one exception to this for the children with disabilities, where the program can charge a fee to the parents (who can afford to pay), who is turn can claim an exemption on the fee. What happens to this now? – It was decided that all questions will be addressed by Mr. Anil, through Vibha.
The panel gave detailed examples from its respective experiences on each member tackled various financial hurdles that he/she had encountered. The panel agreed that one should rely heavily on the accountants, but do not leave it completely to the accountant. The program should be aware of the accounting reports and the audits that are being sent out. If the program does not have access to or cannot afford a chartered accountant, you can register yourself with AccountAid – www.accountaid.net – which sends update and informational brochures on the latest laws and rules that can be used by the program’s local accountant. “Trust but Verify”
Another important topic related to terminology was addressed. “Honorarium” – a nominal, non-negotiated amount (varying and voluntary) paid to the worker AFTER the services were provided. However, a number of programs use this term, including the government, use this term for the monthly amount paid to the staff. The validity of that was discussed at length. “Salary” – preset payment to staff for tasks done
Session #4 – AVOIDING FINANCIAL CRISIS
Panel – Sevalaya, Prayas, Amta, Rachana
Speaker – Anil Baranwal
The last session led very naturally into this session, especially with Mr. Anil continuing as the guest speaker. He immediately jumped into the topic – the primary way to avoid a crisis is to have a Corpus Fund.
The panel had inputs from everyone on what the meaning of a Corpus Fund (CF) and on who is allowed and should hold a CF. A trust is allowed to hold it – when this fund is created by selling some assets or by funds raised (ear-marked) for that purpose, it is called a CF. The interest from the CF can be used for the program. Ear marked funds can be accumulated for a maximum of 5 years.
Questions like how ear-marked funds can be used as general funds and how unspent funds can be transferred to the corpus were answered by Mr. Baranwal. The corpus can be dipped into by the program. However, Endowment funds are ear marked funds where the income from this fund is utilized by the program according to the donor’s instructions. The endowment principal itself cannot be used by the program. However, when an external agency, mostly from the US sends an EF, it is listed as EF/CF so that the fund can be used in the future. Also, 15% of our income (ONLY interest and local donation) every year can be used to build the CF. If a donor agrees to let you transfer the unspent amount to the CF, a written letter from the donor is very important to show to the Income Tax dept.
Mr. Baranwal pointed out that the money of CF and EF can be invested only in certain permitted mutual funds, scheduled banks, etc., but not stocks and chits (IT Act 1961).
Mr. Baranwal also said that having multiple donors is another way of avoiding crisis. Also, one panelist observed that most NGOs tend to do expense budgeting but only a few do income budgeting. If we budget out the income, NGOs can easily avoid pitfalls.
Another issue that caused quite a stir amongst the participants was the news that new changes, which will come into effect once passed have been proposed by the finance minister – to change the renewal process of the ATG to get lifetime validity instead of renewals every 3 years. Unspent funds by March will be taxed at 15%. So, the NGO has to work with the donor agency to schedule your grant/budget accordingly. How does this affect the current CF that the NGOs have? The ministry was looking for inputs and feedback from the people on these issues before the bill is passed but the date has already passed. Can we go through the backdoor and still have the government hear us out?
Examples and experiences from the various NGOs were given on how they each built their corpus, how they deal with their FCRA accounts, how they dealt with crises on the field, etc. Ron Victor, the president of Vibha, and the COO of Vibha, Rajesh Haridas, gave the group a perspective of how Vibha, as the donor agency and its board, deals with numbers, funds and proposals – monthly board meetings, building a corpus, how budgets are reviewed and how reserves are used.
With this the day’s proceedings came to an end. The final event for the day was the 10 BCT Model High School children performing for all the participants before dinner. They conveyed, through song and dance, the importance of keeping good mental, physical and social health in all villages in our country. It was very well received by everyone and was an excellent way to end the day!