The European Union prides itself on providing, with its member states, over half of the world’s development aid (Euro82 billion budgeted for 2014-2020). These funds are channelled by EuropeAid to programs that vary in scope and scale. Some take a few months; others involve millions of euros over several years. Many are carried out by affiliate non-governmental organisations (NGOs). In all, Europe grants Euro7.5 billion annually directly to NGOs, which are seen as equal partners in helping the EU shape its aid policies.
Although foreign aid is a political tool, its monetary dimension allows, even warrants, evaluation in economic terms. In that sense, governments, including supra-national bodies such as the EU, are much like Multinational Corporations. Both operate in several countries but are managed from one, both set long term goals, and both invest in projects to maximize gains – whether profit or non-profit by nature. In this respect, governments, like corporations, need to periodically evaluate their “investments.”
While business gains are widely considered straight-forward and measurable in comparison to aid investment gains, business investors are increasingly being made aware of the importance of evaluating their investments in a wider context. Business models have expanded to include measures like perception, public opinion and customer engagement. This new focus on the strategic relationship with customers presents a win-win approach offering a value chain that maximizes profits and lowers costs, but also increases overall customer satisfaction.
Can the same metrics be applied to the EU’s investment in aid? Absolutely. Not only should the EU apply business rigor in assessing results of foreign aid, it should do so with a sense of responsibility to European taxpayers whose money is spent by EuropeAid. This is particularly important given that EU investment in foreign aid is growing – the EU pledged to disburse 0.7% of GNI in international aid in 2015, up from 0.43% in 2013.
In applying these business metrics, it seems NGOs would make the perfect candidates for evaluating the EU’s investment in foreign aid. After all, they are directly involved in spending it, and familiar with its effects on the ground. NGOs can be a valuable source for policymakers in providing data and technical information. In doing so they become part of the political process and need to be transparent because they receive public funding.
With the amounts of money involved in the NGO-EU relationship, taxpayers should be ensured civil society is reliable and trustworthy. In this respect governmental investments are decidedly different to corporal ones, and as such they require greater transparency and accountability in order to ensure tax money is spent in line with its mandate. And if NGOs are integral to EU development endeavours, they cannot be regarded as third-party evaluators. Rather, they should be rigorously evaluated by truly independent parties.
Transparency and accountability from NGOs is required. There is need for stricter monitoring and greater transparency to prevent misuse of funds. Sometimes, European funds are granted to NGOs that use them for political advocacy that pushes prejudice such as antisemitism, and others. The European Anti-Fraud Office (OLAF) has issued a report in September 2015 on fraud prevention in EU funded projects, stressing many problems inherent specifically to NGO funding – such as conflict of interest and subcontracting.
EU “funds projects submitted by NGOs, in line with (the) EU’s fundamental principles and values, but not NGOs themselves.” In other words, the EU will not take responsibility for the counterproductive and problematic actions of groups acting in its name – or rather, unlike the above-mentioned business-models, it fails to take into account the wider context in which its funds are at play.
To be fair – the EU is trying. The Commission’s new and ambitious rules, requiring staff to report all interactions with lobbyists, is a step forward but does not encompass all NGOs promoting lobby-like agendas.
But the EU’s Transparency Register only includes EU-based organisations, leaving many grey areas for misuse. Furthermore, a March 2015 briefing at the European Parliament warned that often NGOs are “subjects at risk in the money laundering framework, either as fronts for terrorist organisations that raise and transfer funds, or as legitimate enterprises that indirectly support the aims of terrorist organisations.”
There is no doubt that the EU’s commitment to aid all over the world is praiseworthy. But deep pockets and a fat checks do not promise success – not in business and not in foreign affairs. To ensure European taxpayers’ money is invested, not wasted, decision-makers must demand and implement higher levels of transparency and accountability, not only for those seated in Brussels, but also for the NGOs working on behalf of the EU.