Transparency, Terrain And Terrorism

September 27, 2013       Don McNamara      

In the United States, money is money. Greenbacks or plastic, in a cash till or in the cloud, it all still represents dollars.

Money talks, but it speaks in many languages, not all of which translate easily to “In God We Trust.” Somewhere else in the world “currency” might be a bag of grain or a goat. Transferring hard currency is always an issue, whether it is due to terrorism rules or the remoteness of the target. There are also vital issues of accountability for the currency transfer and to the donor.

Andrew Rowan, president and CEO of the Humane Society International (HSI), said that his organization, which has its global headquarters in Washington, D.C., has a policy in place for fluctuations in exchange rates. “In terms of exchange rate issues, there are obvious challenges with affiliates around the world, United States or United Kingdom or wherever they are,” Rowan said.

“What we’ve moved toward is paying people in local currency so if the exchange rate changes dramatically we take the loss or take the extra money,” he said. “We take the risk. We don’t expect our people on the ground to take the risk.”

One of the key elements of cash disbursement is that it enables choice. “Recipients are able to decide for themselves what they most need, which can include but needn’t be limited to livestock,” said Brian Harris of Western Union Business Solutions (WUBS). “If the resources are available in the local market, cash aid can be a smart choice as it will not only empower personal decision-making but can also help support the local economy. The logistical challenges of transporting physical goods over possibly difficult or dangerous terrain can also be negated by delivering cash and then sourcing local products.”

What can be more problematic than simple exchange rates is the bureaucracy nonprofits can face when trying to move funds in pursuit of mission. Rowan offered India as an example of a relatively stable country that presents significant bureaucratic challenges in the transfer of funds.

According to results of surveying by WUBS, system integration can be a problem. One of the challenges is getting software working together that allows for reconciliation and for keeping track of the money.

“Just setting up an entity in India is a challenge, with a lot of bureaucracy,” Rowan said. “Once you get set up you have to get a lot of permissions, for example from the central bank. Even when you send money it takes a long time.” Rowan recalled an incident when his organization wanted to transfer funds and it took three months to get permission just to move the money.

Rowan said that he thinks the restrictions came about during the administrations of Indira Gandhi, who was prime minister from 1966 to 1977 and again from 1980 until her assassination in 1984. Rowan said he thought that at the time there was a fear of foreign money influencing India’s elections. The bureaucratic roadblocks can become less burdensome over time.

“If you’re a nonprofit in India and have a track record, they pay less attention to you and (a transfer) goes through much more smoothly,” he said. Establishing an affiliate in a remote area anywhere can sometimes mean starting a bank account in the name of an individual rather than an organization. That raises eyebrows not only in governmental offices but also within the nonprofit.

“Our auditors want to see paper, and they get a little twitchy when they see money going into a personal bank account,” he said. “You have to make sure you have the paperwork to support the fact that you got the money the right way and spent it the right way.”

That matches with the WUBS survey data. Cash distributions and wire transfers are currently the main alternatives for international funds distribution. Even with wire transfers, there are concerns about secure distribution and accountability, according to the survey data.

“Being able to deliver cash aid straight to recipients can also help NGOs increase the transparency of their reporting,” said Harris. “By sending funds directly to an individual, donors know that their contributions are going directly to the people who need it.”

Rowan said HSI occasionally encounters local resistance when it is perceived as giving aid to animals when people are the first concern.

“One of the issues we handle all the time when dealing with animal protection is ‘Why animals, why not people?’” Rowan said. “We have to act appropriately to local sensibilities.”

Although care of animals and care of humans might seem mutually exclusive, Rowan said that is not so. He cited HIS’s dog sterilization program.

“We’ve got data showing we can eliminate rabies through sterilization and vaccination,” he said. “That can change the human-dog relationship, and it can reduce the number of dog bites. We have reduced dog bites by two-thirds, and we’re pretty sure it’s due to the sterilization program.” In other words, Rowan said, improving the human-dog relationship benefits humans.

Local custom can come into play in ways other than finances or questions about mission. “Sometimes our community is under pressure to provide food that is less expensive rather than food that might be culturally appropriate,” said Joel R. Charny, vice president for humanitarian policy and practice of InterAction, an alliance group in Washington, D.C., of more than 180 U.S.-based international organizations. Aid organizations trying to feed people have encountered problems when trying to provide corn to people who are accustomed to eating millet, he said.

“You face the difficulty of saying, ‘Do I want to feed the maximum number of people with food that’s culturally inappropriate or use food that is culturally appropriate but not feed as many people,” Charny said.

When talking about international aid efforts, of course, the shadow looming over almost everything is that two large towers are no longer standing in downtown Manhattan.

“The original problem that Muslim organizations faced during the Bush administration was hostility to Muslim organizations in general,” said Kay Guinane, director of the Charity and Security Network, headquartered in Washington, D.C. “The government shut down the three largest Muslim charities after 9/11 in the name of security.”

According to the Charity and Security Network Website, the organization was started in 2008 to provide public education aimed at bringing attention to the problem, promote alternative regulatory approaches that reflect the realities and needs of successful nonprofit programs and grantmaking and offer coordination and support for nonprofit stakeholders to work for reform.

Guinane said that effort includes making Muslim aid organizations aware of things like good governance and transparency. It has made an impact. “The Obama administration is not shutting them down the way the Bush administration did. There’s an attempt to establish good relations,” Guinane said. “There’s not that kind of ‘gotcha’ attitude.”

Still, problems exist. “The banking sector is acting out of fear of actions by government,” Guinane said. “Any organization with ‘Islamic’ in its name can experience trouble fundraising. That’s not just in the U.S., but also in places like the U.K.”

Guinane offered an example. An organization in Michigan, Life for Relief and Development (LIFE), which the Charity and Security Network describes as the largest U.S.-founded Muslim American humanitarian relief and development organization, had its Detroit office raided by the Federal Bureau of Investigations (FBI) in 2006. No criminal charges were filed, but the raid triggered media scrutiny, which prompted LIFE’s local bank to withdraw its services, interrupting its humanitarian assistance programs.

Guinane explained that U.S. government-imposed sanctions in places such as Iran, North Korea and Somalia have made aid operations in those countries extremely difficult, so that, ironically, sanctions that were brought in the name of counter-terrorism have served to create or foster the kinds of conditions that would help terrorism flourish.

Charny said that organizations belonging to InterAction experienced extreme difficulty in Somalia.

“During the famine in the Horn of Africa in 2011 the center of the famine was in southern Somalia, which is under the control of what was a designated terrorist organization, al-Shabab,” Charny said. “Even though a famine early warning system indicated the need for preparation for a famine, our community was prevented from responding at a level we would like.”

Charny said that the famine was foreseen in the fall of 2010 but there was no American funding until August 2011, whereas similar situations in Kenya and Ethiopia were dealt with much more expeditiously because those countries are not under the same restrictions as Somalia. The result was widespread starvation in Somalia.

“That is a very stark example of emergency relief hampered by counter-terrorism regulations,” he said.  E