Turning ‘once-a-year accountability’ into ‘real-time transparency’

Over the last 15 to 20 years accountability has become a buzzword in our sector. We started by holding business and governments accountable for the social and environmental effects of their policies and action. Not surprisingly they replied by questioning our sector’s accountability – and often its legitimacy. However, being more transparent and accountable is in the best interest of ICSOs. We will first review the two main arguments for strong accountability, securing trust and driving performance. Then we will look at the INGO Accountability Charter , ICSOs’ agreed accountability standard, and discuss how ICSO accountability might look in the future. With the emergence of the internet and with increasing expectations from the outside world, transparency is improving and accountability is getting better, but our sector has still some way to go before we reach a level of transparency and accountability which secures top quality performance throughout the sector and provides a more solid basis for maintaining the high level of trust our sector is privileged to enjoy.

Securing trust

In the absence of any formal power, trust is the currency of our sector. An organisation that is widely trusted can wield significant influence even if it does not have any role in decision making or is not even at the table when decisions are being taken. Many people are prepared to give our sector some credit when it comes to trust. However, over the long run trust has to be earned and it can be lost very quickly. The natural inclination of people to trust our sector is one of our main assets, and the danger that we take being trusted as a given and do not invest enough in earning trust is one of our main liabilities.

Since 2001 the Edelman Trust Barometer assesses the public’s trust in various institutions in 25 key countries. The 2012 Barometer notes: “For the fifth year in a row, NGOs are the most trusted institution in the world.”52 While high levels of trust in NGOs has been a long-term feature in the Global North, most recently a number of key countries of the Global South are joining in. The Trust Barometer writes: “Trust in NGOs has reached a record high of 79 percent in China among 35 to 64-year-olds” and: “Since 2009, trust in NGOs has surged in India to 68 percent among 35 to 64-year-olds”. However, if CSOs do not perform to the public’s high expectation they lose trust very quickly: “In markets that dealt with crises and scandals, such as Brazil (down 31 points), Japan (21 points), and Russia (14 points), NGOs suffered severe drop-offs in trust”. What this tells us is that brand recognition and trust are some of ICSOs’ most valuable assets. But the rapid decrease of trust in NGOs in countries where some organisations underperformed also shows how vulnerable this basis is. However, for the time being, trust is generally very high and in particular many of the large ICSOs have managed to turn high levels of trust into high levels of influence.

This impressive level of trust rests on rather precarious foundations. Looking at the Edelman figures on the declining trust in the other sectors I wonder whether the growing trust in our sector is partly due to the fact that fewer and fewer people believe that they can trust governments or business and that many of these people look to CSOs for guidance. This would mean that we have not so much earned the high levels of trust, but rather benefited from others who wasted the trust placed in them. Solid and sustainable trust rests on the conviction, that statements and action can be verified against agreed parameters at any point in time. This means, in the long-term, transparency and accountability are a necessary basis for trust. However, no ICSO will be able to avoid mistakes completely, and there are widespread fears that transparency and accountability will make mistakes visible and thus destroy trust. I always argue against such a perspective. I believe that in the long run trust can only be secured by admitting mistakes. Trying to maintain an image of infallibility against all evidence cannot be a realistic strategy in an increasingly transparent world. Admitting mistakes and learning from these is not only a much more credible approach, it also provides a solid basis for improving the organisation’s performance.

Driving performance

Business is first of all about profit for the owners. Maintaining and increasing profits is the single strongest driver in a market economy. New products, technical progress, increased efficiency, economic growth, as well as cut-throat competition, environ-mental destruction and huge salaries for top executives: are all driven by the rush for profit. On the other hand, CSOs are often called ‘not-for-profit organisations’ indicating the absence of the driver ‘profit’. As tax-exempt organisations ICSOs are not allowed to generate a profit. This is a great asset on one hand as it allows altruistic human qualities to thrive and keeps egoistic ones very much at bay. On the other hand, it is a significant disadvantage as it leaves only moral incentives to improve the quality and increase the output of an organisation’s work.

I remember a discussion I had with a wonderful, very committed woman who had founded, and almost singlehandedly developed, a successful children’s organisation. I suggested that now, that her organisation was firmly established with an excellent reputation, the time had come to scale up her activities so that many more children could benefit from her successful approach. She smiled at me, nodded her head and said: “Yes, we are very successful – but I don’t want this organisation to grow any further. This is my baby, and if it continues to grow I cannot control it any longer.” I am sure this aspect of ‘founder’s syndrome’ can be observed in for-profit business as well. But in business, if you don’t occupy your market niche somebody else with a stronger drive will, and in the long run factors like economies of scale may even threaten the market share you hold. Not so in the not-for-profit world: our lady stuck to her decision not to expand but nobody else moved in to fill the niche: many children whom she could have supported with better healthcare, food, education, etc. did not receive the help they needed. Her organisation on the other hand did not have to change, did not have to stretch itself, did not have to explore new territory but could continue its ‘business as usual’ approach without being challenged or criticised by anybody.

But our sector does not only lack the incentive of profit, but also the threat of bankruptcy: Many years ago, I had just started working with terre des hommes in Germany an organisation which supported poor and disadvantaged children when I found that the organisation had had a stagnating income over the last seven years. If one catered for inflation the value of the organisation’s income in real terms had decreased by about 20%. As a new employee I was wondering how the organisation had reacted to this decline. I talked to one of the senior managers and asked whether 20% of the workforce had lost their jobs over the last seven years. The colleague was shocked about my question: “Where do you think you are?” he asked; “This is a highly ethical organisation – we do not fire our employees.” This left me with the conclusion: “But if your income has been shrinking by 20% and if you haven’t cut down your staff costs accordingly, you must be spending 20% less on supporting children.” Without a reply the manager angrily turned away and left, shaking his head in disbelief at my strange way of looking at a civil society organisation.

If this would have been a for-profit company the owners would have detected in year one that increasing costs were eating up their stagnating revenues and that this would have a negative effect on their profits. If they wanted to protect their profits they would have to grow their company’s income or cut costs. Most probably they would have tried to do both, and with some degree of urgency. Not so in the not-for-profit organisation: as their income stagnated and costs increased they continued all existing projects as planned but took on fewer new projects, once existing ones came to an end. Neither the children nor the local partner organisations, neither the employees nor the donors were dramatically affected. Since this shrinking process occurred in small steps over a long period of time the organisation was able to deny or ignore this negative development. And while they were burying their heads in the sand, they spent an ever larger percentage of their income on administration and an ever smaller one on their programmes. In commercial terms: their product became more and more expensive – and if they would have been a for-profit company they most probably would have priced themselves out of the market. They would have gone bankrupt. In our sector, however, there are very few examples of CSOs declaring bankruptcy. Our sector lacks a simple and effective tool to weed out inefficient and complacent organisations.

The most effective way of compensating for the lack of a market mechanism which rewards good and sanctions bad performance is to establish strong and organisation-wide transparency and accountability. If ICSOs are serious about achieving their missions they need to become better at setting objectives, measuring progress towards these objectives and sharing that information both internally and externally. A fully transparent and accountable ICSO will immediately notice when they do not perform well – and they will have a solid basis from which to analyse and improve their performance.

Strengthening accountability

About ten years ago the international CEOs of Amnesty International, Greenpeace, Oxfam and Save the Children were sitting together discussing the need for more, and better, accountability. They identified three major arguments for more effective accountability. Firstly, they found that their internal accountability mechanisms did not provide them with sufficient information to safely and successfully steer their organisations. They needed better instruments to avoid mistakes as far as possible and to enable their organisations to systematically learn from both their failures and their successes. Secondly, as ICSOs had been criticising governments and business for years because of their lack of transparency and accountability and, in fact, had achieved considerable progress in this field, they were facing increasing attention and questions about their own accountability. The CEOs admitted that there was some justification for this criticism and that in order to maintain their organisation’s legitimacy in criticising others they had to become better themselves. The third argument focussed on the large number of different institutional donors some of the ICSOs are working with. Each of these donors has their own reporting requirements and as the recipients ICSOs have to satisfy a multitude of requests. Often several donors are supporting the same project, which means reporting on the same project budget in a number of different formats. Obviously this means a lot of double work and significant costs which could be avoided if there was a more standardised reporting framework.

At this point in the discussion the idea of a joint standard for transparency and accountability emerged and the INGO Accountability Charter53 was born. The four ICSOs decided to develop an overarching framework which would secure better accountability by raising standards and a more effective frame-work by convincing donors to join the effort. Today, almost ten years later, the Charter has been established and most major ICSOs have become members and provide annual accountability reports based on the joint standards. But much still remains to be done: there are still a number of ICSOs which have not yet joined the Charter and the discussion with donors is only just starting. Meanwhile, the multitude of accountability initiatives which have emerged and are still emerging all over the world show that CSOs have understood the need for more transparency and better accountability. A 2009 review identified over 320 initiatives worldwide.54 However, this enormous fragmentation, and the competition between some initiatives, confuses rather than assures donors and the general public: Which standard is appropriate? Which initiative really secures compliance with their standards? Whom can I trust? A recently launched project is now attempting to develop an overarching global standard55 to frame the sector’s overall accountability. A first mapping of some of the most important accountability frameworks has found significant overlaps between the different approaches which provides hope that a common standard will eventually emerge.

But what is the future of accountability? Today, many ICSOs see producing their annual accountability report as a necessary duty rather than a useful step towards better quality and greater impact for their work. In brief: they undervalue and underutilise accountability and thus don’t turn it to their advantage. Accountability in the internet age requires a fundamentally different approach and can deliver much more useful information. What do ICSOs need to change to turn accountability into a useful and popular tool both for their internal management and their external perception?

From once a year to real time

ICSOs usually produce an annual report, looking back on the past twelve months. State-of-the-art accountability needs to be ongoing and focused on the presence rather than the past. A written annual publication is of limited use to an organisation that wants to learn from its mistakes and build on its successes. For instance, systematising and evaluating the lessons learned from a project which failed a year ago may mean that over the past 12 months quite a number of activities have been started based on the same inappropriate assumptions as the failed project. Similarly, external stakeholders will not be all too impressed with a publication once a year and very little, if any, information in between. With the systematic use of digital information technologies ICSOs would be able to deliver real time accountability. This would dramatically increase the use-fulness of the collected data and the interest staff and leaders across the organisation would take in delivering and drawing on accountability information.

From top-down to 360°

From the start, the scope and direction of accountability has been driven by the answer to the question: Accountable to whom? And the answer was nearly always: to the donors. We speak of upward accountability: the local project that receives funding or technical support is accountable to the ICSO that provides the support, and the ICSO is responsible to their donors, either individuals or institutions. Years ago the Centre organised a workshop on mutual accountability, asking for downward accountability as well. So, the donors should also be accountable to the recipients, e.g. for the timely and appropriate delivery of support, for avoiding undue interference in the recipient’s internal affairs, for treating the partners with respect, etc. Since our workshop we can see some improvement but, across the sector we are still far from fully-fledged mutual accountability. However, even mutual accountability is not enough: the whole sector can be seriously harmed by malpractice in one ICSO; therefore we should be accountable to our peers. Key stakeholders like national governments, the UN and other international institutions which we seek to influence expect us to be accountable. The wider public takes a strong interest in the activities of the most prominent ICSOs; even people who do not support our work want to hold us accountable.

From the duty to deliver to the right to obtain

In simple terms the two aspects discussed so far mean: everybody wants to hold ICSOs accountable at any time and, ideally, against their own criteria. Instinctively ICSOs will reject such demands arguing that being held accountable by so many actors against an enormously wide range of criteria would be impossible and that providing all required information to anybody who might ask would take more resources than the organisation could afford. Thinking in traditional patterns of accountability these arguments are certainly right. But if we change our traditional perspective from ‘the duty to deliver’ to ‘the right to obtain’ accountability the picture looks different. ICSOs should accept that everybody is entitled to hold them accountable; in democracies with a decent judicial system this even includes their enemies. They should also accept that all those holding them accountable want to do this against their own criteria, which are not necessarily identical with the criteria the ICSO has set for itself. If ICSOs are prepared to follow this logic they will have to switch from providing accountability information to others to enabling others to hold the organisation accountable. How can they do this? With real time transparency. Providing up-to-date information on all key aspects of an ICSO’s performance would enable anybody and everybody to hold the organisation accountable at any time against their own criteria.

How would ICSOs’ benefit from switching their focus from providing selective accountability information once a year to providing up-to-date transparency about all important aspects of their work? Firstly, a real-time monitoring of the organisation’s performance would deliver much better information for staff and management of the ICSO who would be enabled to run the organisation much more effectively and efficiently. Secondly, the feedback from the external world would help the ICSO to understand much better the demand they are aiming to fulfil and to react much faster to changes in their partners’ expectations. Thirdly, full transparency would invite co-ownership and co-creation – just another important step for ICSOs to release control for the benefit of increasing their influence. I have heard a number of valid arguments against such an approach, from “we cannot share strategic information with our enemies” to “dictatorships would use the information we provide to close the organisation down and imprison our employees and activists”. No question that these are necessary considerations on a case-by-case basis. However, transparency is one of the key values ICSOs stand for, and thus they should practice full transparency whenever possible.