MANAGING DFID'S MONEY

Managing DFID’s Money

Some people thought the Multistakeholder Forestry Programme (MFP) was taking a big risk when it began work in 2000. Indonesia was in a state of turmoil, and MFP intended to spend much of its budget funding civil society organisations, few of which had any experience of managing grants. Yet after five years, just 0.14 per cent of the sum spent on partnership grants was unaccounted for, and the UK National Audit Office described MFP’s financial management as exemplary.

The success of the programme owed much to good financial management. “The doubters were proved wrong,” says Mike Harrison, MFP’s UK Co-director. “We showed that if you build the capacity of NGOs and people’s organisations to manage their budgets efficiently, and put in place clear systems of financial management which are easy to monitor, then projects like this can be highly effective.”

From the outset, MFP adopted a collaborative approach with its partners. Many organisations had no experience in planning projects, and MFP’s regional facilitators helped them to develop their ideas and write grant proposals. These were assessed by the Partnership Approval Committee, and refined with potential partners. The Committee included staff from MFP and the Ministry of Forestry, as well as independent expert reviewers for larger proposals.

Around two-thirds of grant applications – there were over 900 – were approved. The average value of each grant was £28,000, but there was a great range in size. During the early years, a large number of very small grants were disbursed, with the median size being £5,000. Later, MFP gave fewer, larger grants, with a median size of £25,000. Over two-thirds the grantees were NGOs, which received 73% of the funds. Unlike some other donor programmes, MFP spent the lion’s share of its budget within Indonesia.

Many of MFP’s early grantees struggled with their financial management, and in 2004 MFP developed a series of templates which were designed to help partners report on their financial activities. Further efforts were made to standardise reporting procedures, and a series of workshops, facilitated by Yayasan Penaburu, a local organisation dedicated to promoting transparent and accountable financial management, provided over 60 MFP partners with training.

“As a result of these workshops, we noticed a marked improvement in the financial reporting of many of our partners,” explains Gus MacKay, MFP Programme Administrator. 

“Our partners were not only able to meet our reporting requirements, they were also able to report more effectively to other donor organisations.”

MFP has been among DFID’s most audited programmes. Its activities, and those of its partners, have been scrutinised by the UK National Audit Office, by internal auditors from DFID and by local auditing firms in Jakarta. Projects have also been subjected to DFID spot checks. These audits confirmed that there has been a significant improvement in partners’ financial management during the course of the programme.

When local accounting firm Johan Malonda & Partners audited project accounts during the first three years of the programme, they found 47 per cent had failed to meet one or more of DFID’s financial management requirements. In contrast, audits for 2005 and 2006 revealed very high levels of compliance. 97 per cent of the projects were considered “satisfactory” – they were fully compliant with DFID regulations – while two per cent required follow-up by the auditors, and one per cent were required to return the funds they had received. DFID’s internal auditors were so impressed with the financial systems which had been put in place for grant allocations, the processing and tracking of payments, the accounting and auditing, they suggested that these should be replicated elsewhere in the organisation.

Multistakeholder Forestry Programme

The program objectives are to strengthen government and civil society partnerships at local and national levels to build capacity, empower community forest managers and develop and implement policy. In particular, the program will work to nurture and strengthen its network of Community Foundations in the regions, established with previous program support. (Internet).

Publications & Reports

Multistakeholder Forestry Programme .Internet. February 4th, 2009

 Penulis : Drs.Simon Arnold Julian Jacob