Internal factors are highlighted by IRED as determining factors for progressing towards autonomy?
IRED highlights several internal factors that are key to progressing towards financial autonomy for development organizations (DOs) and non-governmental organizations (NGOs). These factors are intertwined and mutually reinforcing. Let’s examine the four areas you highlighted in light of the sources provided.
THE QUALITY OF FINANCIAL MANAGEMENT (PLANNING, MONITORING, CONTROL) #
Rigorous financial management is presented as a sine qua non condition for strengthening autonomy. Several books emphasize the need to master financial management tools:
- Developing Accurate and Dynamic Budgets: The “Practical Management Manual-Volume 2-GP II-Copy.pdf” emphasizes the importance of budgets in financial management. The “Funding and Financial Management Manual” also emphasizes the development of annual and monthly budgets as a tool for financially translating activities. “Strengthening Financial Autonomy-RAF.pdf” devotes a chapter to budget development. Sample budgets are even provided in the appendix. Good financial management begins with rigorous budget planning.
- Implementing a simple, computerized accounting system: Financial transparency, discussed in the “NouveauManuel-DeGEstion-FV.pdf,” relies on a clear and appropriate accounting system. The “Manuel de Gestion Pratique-Tome2-GP II-Copy.pdf” discusses the accounting structure and provides an accounting plan. Keeping accounts up to date is crucial for the association’s evaluation and development, and failure to keep proper accounts can lead to a loss of donor confidence and the organization’s demise.
- Cash Management: The “Practical Management Manual-Volume 2-GP II-Copy.pdf” addresses cash management and the need for a cash flow plan. The “NouveauManuel-DeGEstion-FV.pdf” also mentions the cash flow plan as a management tool. Good cash management helps anticipate needs and ensure the organization’s liquidity.
- Internal and external controls (audit): The “Funding and Financial Management Manual” recommends implementing internal and external control systems (audit) to strengthen financial autonomy. “Reinforcing Financial Autonomy-RAF.pdf” devotes a section to controls and auditing. The “NouveauManuel-DeGEstion-FV.pdf” emphasizes that financial management requires great precision and that financial regulations must be established. It is advisable to avoid concentrating all financial responsibilities in the hands of a single person and to implement control mechanisms. External audit reports are also mentioned as monitoring tools.
- Monitoring and evaluating financial performance: The “Manuel de Gestion Pratique-Tome2-GP II-Copy.pdf” discusses the establishment of project-based results and a general operating account. The “NouveauManuel-DeGEstion-FV.pdf” mentions financial performance as an element of monitoring and evaluation. Analyzing the evolution of expenditures and production over time is presented as a useful management tool.
- Knowledge and use of financial tools and mechanisms: The “NouveauManuel-DeGEstion-FV.pdf” mentions advice on how to better master financial tools and mechanisms as a major asset. “Financing Differently” presents numerous examples of innovative financial tools and instruments.
- Clear distinction between the association’s activities and the companies created: The “NouveauManuel-DeGEstion-FV.pdf” and “Financer Autrement” insist on the need for a clear demarcation between the association and its possible productive companies, in particular through company-specific accounting, to identify the conditions for its survival.
STAFF CAPACITIES (TRAINING, COMPETENT DESIGN OFFICES) #
Staff competence at all levels is a key factor in autonomy:
- Continuing Education: The “Manuel de Gestion Pratique-Tome1-GP I-Copy.pdf” emphasizes that technical and management training are essential to project success. An association that wants to progress must set aside an annual budget for an effective training policy. The “NouveauManuel-DeGEstion-FV.pdf” mentions staff training as an important element. “Financing Differently” mentions training-reflection sessions on institutionalization issues and the need for a systematic information-training policy.
- Developing financial and administrative management skills: Several sources mention the need for competent management support and the role of experienced organizations in facilitating the transition from social to economic, from nonprofit to business. “Reinforcing Financial Autonomy-RAF.pdf” emphasizes that management skills are essential for negotiating alternative financing. The “NouveauManuel-DeGEstion-FV.pdf” emphasizes the need for financial and administrative management skills.
- Professionalization of Teams: The “NouveauManuel-DeGEstion-FV.pdf” suggests that some NGOs find solutions for autonomy by professionalizing themselves and transforming themselves into design offices or business developers. “Financing Differently” mentions the need for highly professional staff to manage complicated financial mechanisms.
- Specific skills: “Financing Differently” highlights the need for skills in negotiation, writing funding proposals, and lobbying techniques. The ability to conduct studies and research is also mentioned in the “NouveauManuel-DeGEstion-FV.pdf.”
THE TYPE OF LEADERSHIP AND GOVERNANCE (DEMOCRATIC CONTROL) #
The way the organization is led and governed has a direct impact on its ability to become self-sufficient:
- Democratic Control and Member Participation: “Financing Differently” highlights the need for democratic control and member participation in savings/credit networks. The “NouveauManuel-DeGEstion-FV.pdf” warns of the dangers of technocratizing the cooperative movement to the detriment of participation. “Renforcer l’Autonomie Financière-RAF.pdf” questions whether board and association members truly control the organization. Beneficiary participation in program planning, organization, and evaluation is also emphasized.
- Role and skills of the Board of Directors (BoD): The “NouveauManuel-DeGEstion-FV.pdf” specifies that overall financial management is the responsibility of the Board of Directors. It is important that Board members receive sufficient training to make realistic decisions. “Financing Differently” indicates that the Board decides the degree of autonomy in the management of financial mechanisms and is responsible for guidance and control. The choice of board members is therefore an important issue.
- Committed and Motivated Leadership: The “NouveauManuel-DeGEstion-FV.pdf” illustrates, through the example of the IPD, that the recovery of an organization depends on the women and men who lead it, their motivation and their skills, highlighting the importance of personal commitment.
- Transparency and accountability: The “NouveauManuel-DeGEstion-FV.pdf” emphasizes transparent finances and management. Those responsible for management must be held accountable. “Financing Differently” mentions transparency as a condition for the success of savings and credit unions.
THE ABILITY TO PLAN (INCLUDING “END OF AID PLANNING”) #
Strategic planning, including projection towards autonomy, is essential:
- Establish a comprehensive medium-term activity program and define long-term objectives: “Strengthening Financial Autonomy-RAF.pdf” emphasizes the need for the NGO to have thought through and established a comprehensive medium-term activity program, as well as long-term objectives constituting its long-term policy.
- Strategic Planning: The “New Management Manual-FV.pdf” mentions institutional strategy tools and the strategic plan.
- Long-term vision and autonomy as a goal: The “NouveauManuel-DeGEstion-FV.pdf” designates financial and political autonomy as a key objective of the association. “Renforcer l’Autonomie Financière-RAF.pdf” is entirely dedicated to this long-term vision of financial autonomy.
- “Planning for the End of Aid”: “Strengthening Financial Autonomy-RAF.pdf” emphasizes that international aid must plan with associations for the “end of aid” by helping them create their own revenue, reserves, and capital. This idea is echoed in the “Funding and Financial Management Manual,” which stipulates that seeking aid should be a temporary action ensuring the transition to financial autonomy. “Financing Differently” also highlights the idea of aid that supports the institutional development of partners by planning with them for the end of aid.
In conclusion, IRED emphasizes a holistic approach to financial autonomy that relies on strong and competent internal management. The quality of financial management, staff capacity, democratic and transparent leadership and governance, as well as strategic planning capacity that integrates the perspective of long-term autonomy, are considered essential internal factors for DOs/NGOs to reduce their dependence on external aid and become truly autonomous development actors.
