An Accountability Framework for the Financial Sustainability of Australian International Development Organisations

Abstract

Non-government organisations (NGOs) are non-profit organisations (NPOs) that contribute toward the support and development of people and countries in need. They play an important humanitarian role in the developing world, acting as a conduit for government funding and an expression of donor concern.NGOs need to be financially sustainable in the long term as they face economic uncertainties. Their situation is more difficult than government or business organisations. For example, governments can access tax revenues and business can access the financial markets. Further, governments and business organisations have access to ongoing feedback for gauging and guiding the current and future sustainability of their enterprise through the use of well-developed tools, or the operation of the market itself. The NPO sector lacks the full discipline of business markets and analysts' metric tools for gauging current and future sustainability.Exacerbating these deficiencies are different stakeholder expectations for the stewardship of NGO resources in order to achieve their mission. The public have a perverse view about overhead expenses and there are confounding issues where beneficiaries are not the principal funders.Given the importance of financial sustainability, arguably there should be a level of accountability by officers for its achievement. While there are formal 'solvency' accountability regimes for organisations there are no similar requirements for the longer-term goal of financial sustainability. Extensive research exists proposing operational approaches to increasing organisational sustainability; however, there is no accepted framework which facilitates accountability for financial sustainability over time.This thesis first investigates the understanding of accountability for financial sustainability by officers of three, long-term, high-integrity Australian NGOs. Next the research assesses whether financial metrics can assist in enhancing NPO accountability through diagnosing and monitoring financial sustainability. The research aims are operationalised by using a qualitative participatory methodology. vi The research found that formal demonstrations of accountability for financial sustainability were mixed. 'Felt' responsibility-that is, responsibility informally accepted rather than externally imposed-presented as a strong lever for achieving an NGO's mission, with tensions identified between mission-generated felt responsibility and more traditional formal accountabilities. Officers of participating NGOs expressed personal responsibility for financial sustainability; however, no shared understanding of financial sustainability was observed either within or among the participant NGOs. The focus was commonly on individual strategies or shortterm solvency.While the outcomes of the research varied between participating NGOs, the theorybased framework developed proved successful as a diagnostic tool, with elements adopted, or intended for adoption, as measurement and monitoring tools.

The financial health of Australian universities: policy implications in a changing environment

“…In undertaking this objective, we distinguish between financial vulnerability, viability and resilience as dimensions of financial health. These financial dimensions are at the heart of long-term mission delivery (Ryan and Irvine, 2012; Booth, 2016). Prior studies in the NFP sector identify these dimensions of financial health as crucial in determining organisations’ ability to continue to provide services in a changing environment, particularly when funding cutbacks occur (Booth, 2016).…”

“…These financial dimensions are at the heart of long-term mission delivery (Ryan and Irvine, 2012; Booth, 2016). Prior studies in the NFP sector identify these dimensions of financial health as crucial in determining organisations’ ability to continue to provide services in a changing environment, particularly when funding cutbacks occur (Booth, 2016). Financially vulnerable organisations are those whose resources and capabilities are inadequate to continue their current level of operations; financially viable organisations are capable of continuing their operations, at least in the immediate future; and financially resilient organisations demonstrate financial capacity to maintain service delivery when faced with financial downturns (Tuckman and Chang, 1991).…”