How to get funds into conflict zones

LONDON — Aid organizations in conflict zones are working with some of those in need of the most urgent help worldwide — yet partners attempting to send them funds via banks and payment providers are likely to run into delays, restrictions, and rejections. Legal constraints and bank de-risking efforts have created barriers to sending funds to conflict-affected areas — and more barriers mean longer delays, which in turn means more lives lost. “We want to make sure we’re meeting the most in need and we’re looking at the data in rebel-held areas and noticing how hard it is to get aid into the more difficult areas,” said Yolande Wright, deputy director at the U.K. Department for International Development’s conflict, humanitarian and security department, on a panel at this week’s Bond conference in London. “Do your due diligence up front and engage your bank very early so they can start exploring risk and how you can manage the risk.” --— Roland Pearce, director of corporate banking charities team, Barclays Funding is a big part of that — but in order to reach conflict zones with the necessary support, banks and payment providers require information from NGOs to prevent misspending or misdirection of funds. This includes where the money has come from, where it is going, who the beneficiaries are, who has access to the bank accounts, who local partners are, and how legislation — both nationally and overseas — is being adhered to. The United Kingdom’s Bribery Act, Terrorism Act, and Joint Money Laundering Steering Group’s guidance are all designed to ensure funds reach the right people, but NGOs frequently complain that tight restrictions make it difficult to reach those in need. “We’re in an environment where tolerance for risk is lower,” said Roland Pearce, a director with Barclays’ corporate banking charities team — the main bank for a third of the top 100 U.K. NGOs — who was speaking on the panel. The panelists pointed to preemptive action NGOs working in places like Syria, Venezuela, and South Sudan can take to help avoid funding flow hurdles. 1. Be transparent NGOs should be open and honest with their bank and payment provider about the work they’re doing so staff are best placed to ensure payments and transfers happen when needed, said Pearce. “Do your due diligence up front and engage your bank very early so they can start exploring risk and how you can manage the risk,” he advised. Naser Haghamed, CEO at Islamic Relief Worldwide, said failure to share information or do thorough research on partner organizations could result in a delay in sending money. “Your bank wants to know all the touchpoints at every single level and if you don’t have that information they’ll just send it back,” he said. But having a good relationship with your bankers so they know your systems and due diligence processes could speed up the process: “Then they don’t have to ask the same questions time and time again,” he pointed out. Having a system of preapproval for funds in place could also mean that when conflict erupts or worsens, money can be directed quicker to those who need it most. Wright said NGOs should also be having transparent conversations with donors. While DFID has a high-risk appetite when it comes to meeting humanitarian needs, she explained they do want to talk with project managers about how to handle risk. “If you’re putting a proposal to us, it needs to really articulate your ability to manage this risk, the staffing required, and the time to liaise with your bank,” she added. 2. Be clear about your outcomes Wright’s top tip was that NGOs should be clear about the development or humanitarian outcome they’re aiming for. “Be really clear about the case for that and know how you want to achieve it,” she said. This is crucial as the information then has to be conveyed to multiple stakeholders including the bank, payment provider, and staff, as well as partners and donors. Wright stressed the need to leave enough time between the creation of a project and when funds need to be delivered, in order to inform everyone. “Talk, build in time, and make sure you have the staff to talk to all of the people who will help you to deliver,” Wright advised. From a financial provider viewpoint, Karen Penney, U.K. vice president at Western Union, said in an interview following the panel that it was key for them to understand what charities want to do, what their objectives are, and how they can help them in order to work in sync. “We’re looking for how can we work more closely with NGOs, how can we think about transformational ideas that would help them, their donors, and us in our infrastructure and network,” she said. 3. Build capacity Keeping all parties updated on a project requires investing in capacity and having staff that understand the project fully, Haghamed said: “If you don’t do that, you won’t be able to talk to your banks or your directors because you need the expertise.” You also need people who understand the legal and government requirements in the countries an organization is operating in. Twenty percent of Western Union employees work solely in compliance, Penney said, adding that it’s an area they happily spend money on to ensure they’re compliant with all the regulatory regimes they act within. “I think that becomes doubly important when it's NGOs, because it’s a donor’s, a foundation’s, a government’s, or an individual’s money that is being used. Making sure we’re using sanctions correctly is hugely important.” While she believes all NGOs try to address compliance needs, not all of them have dedicated compliance staff. Organizations are instead trying to get as much money as possible to the end recipient — but compliance experts are a crucial part of doing that, Penney said. In an ideal world, she suggested organizations would share information on the due diligence they have done on a person or an organization. “Could we could share that information rather than everybody spending money on the same thing?” she asked.