Janez Lenarčič, who oversees the crisis management portfolio at the European Commission, recently caused a stir when he said the biggest barrier to localization is the administrative capacity of local actors in “accountability, transparency [and] sound financial management.” But is the lack of capacity the primary cause, or is it the colossal task of meeting multiple financial reporting requirements set by international funders?
Many of us in the humanitarian and global development sectors are involved in partnering with NGOs and other nonprofit organizations to implement programs and deliver shared goals. Due diligence checks are part of the — ideally mutual — trust-building process and typically include a review of audited annual accounts.
If you have ever struggled to make sense of the financial statements of a nonprofit organization or NGO, you are not alone. Outside a handful of countries that have national standards to guide nonprofit financial reporting, the accounts can look wildly different from one organization to the next.