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Though the non-profits sector is not a sector where each pie of money spent needs to be accounted for under the law, nonetheless, since donor funds are involved, there is a need to evaluate the programs and monitor them for leakages and fraud or even for the simple sake of ensuring that the intended beneficiaries are receiving the money that has been earmarked for them.
Moreover, in recent years, the government is also formulating laws and regulations that deem it necessary to evaluate and monitor the programs since the number of complaints about misuse of money and fraud has been increasing. Towards this end, the government has empowered the district level governmental authorities to keep a tab on the activities of the non-profits. Because of these factors, it is important that the programs undertaken by the non-profits are evaluated and monitored on a regular basis.
The program evaluation and monitoring can be done through internal and external audit. Internal audits are typically done by the members of the non-profits themselves whereas external audits are done by consultants and funders who send their representatives to perform an audit of how well the non-profit is doing.
The need for external audits arises as the objectivity and balanced approach to the audit can only be done by external parties who do not have a conflict of interest. Indeed, in many non-profits, there is an annual visit by the representatives of the funders who perform site visits and see for themselves how well the non-profit is utilizing the funds. Moreover, there are also periodic reports and progress sheets sent to the funders by the non-profits so that they are apprised of the situation on the ground. Finally, in these recessionary times when donors are few and the requests for assistance are more, there is a need for monitoring of the programs more than earlier.
Non-profits can follow some best practices like keeping trek of all the money spent on the projects, maintaining a head count registry where they record the details of the members who are paid to do work and the members who are given part time consultation fees. Apart from this, the non-profits must also ensure that they record the money spent on beneficiaries diligently and accurately.
Further, the best practices would also include getting an audit done by third parties meaning consultants who are not members of the non-profits or the donors. The key aspect here is that it is better to monitor progress and evaluate the performance of the non-profits regularly and reliably.
The non-profits sector is also becoming corporatized because of the rising professionalism both among the members of the non-profits sector as well as the donors. Further, there have been more instances of fraud and hence, it is imperative that non-profits get audits done internally as well as by third parties apart from the donor audits that anyway are done in case of funding from external parties.
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The Corporatization of the NGOs and How It Impacts Funders, Beneficiaries, and Others
February 12, 2025
