2 December 2012

Ethiopia: Agency Issues Warnings to NGOs With Fund Raising, Utilisation Breaches

The Ethiopian Charities & Civil Societies Agency (ECCA) issued warnings to over 200 NGOs over budgetary breaches.

The ECCA conducted an investigation over the past quarter on 261 NGOs to see if they are complying with the Charities Law. It said, it found 192 of them spending more than 30pc of their budgets for administrative purposes and 12 local NGOs raising more than 10pc of their budgets from foreign sources, both passing limits indicated in the law; the limit on administrative expenditure is imposed on both local and international NGOs.

"This is an alarming rate of compliance for the agency that shows how much implementation of the law is unrealistic," says Debebe Hailegebriel, general manager of the Pro Just Research & Training Centre and attorney at law, who had been close to the issue since the proclamation was drafted.

The warnings have come in writing and orally. Those who got the written warnings have been told that a repeat of such a breach could have serious consequences, including the loss of their licenses and the transfer of their assets to other NGOs, according to Assefa Tessfaye, head of public relations for the Agency.

The Agency would not reveal the NGOs that have been issued the warnings, but Forum for Social Studies (FSS), an NGO established in 1998 by a group of academics and professionals, was one of them.

The Agency had found that FSS's administrative expenses had passed the legal limit of 30pc and reached 36pc, for which the Agency slapped it with a written warning.

The Forum is engaged in policy research and provision of public forum for debate and consultation on policy issues. Mihret Ayenew, its general manager, says that the FSS did not have any problems with the 70:30 ratio between programme and administrative expenses, but with the rigid list of expenses the Agency has categorised in the two sections.

The Forum fails to keep the legal ratio because payments made for researchers fees and their field travel such as per diem for research purposes are higher, according to Mihret.

We tried our best to keep the permissible ratio but we are not able to do it since the expenses that should be considered as operational fall under the rigid list of administrative costs of the directive, he said.

Payment made to consultancy service, trainers, and travels and rent for conference halls are considered as administrative costs, according to the directive that the agency issued last year to implement the provisions of the directive.

The agency on the other hand argues that the classification will help the organisations to use most of their resources in a way that most benefits third parties which they are established for.

The directive will prevent the organisations from spending their money on luxurious conference halls and refreshments rather than on their major projects, says an official at the Agency.

The Agency which local charities it has issued warnings to for raising more than 10pc of their funds from foreign sources, excepting the European Union and the World Bank. But the Network of Ethiopian Women Association (NEWA), a network of 42 organisations and associations established in 2003, says it had been unable to carry out any projects lately, because it was unable to raise enough money locally to meet the 90pc restriction.

"The Agency should either increase the percentage that we are able to raise from foreign sources or exempt funds from major donors such as the USAID and the UN," says the network's finance manager.

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