EXCLUSIVE-Global charities accused of "misleading" public on Nepal quake aid

by Tom Esslemont | Thomson Reuters Foundation
Monday, 21 September 2015 00:01 GMT

A man walks past an excavator parked near collapsed houses that were damaged during the earthquake in Bhaktapur July 14, 2015. REUTERS/Navesh Chitrakar

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Up to a sixth of funds for Nepal spent on their overhead rather than in disaster-hit areas, when local NGOs used for much of work

LONDON, Sept 21 (Thomson Reuters Foundation) - If you donated cash to survivors of the Nepal earthquakes this year, you may want to consider exactly how - or if - your money has been used.

Sixteen of the world's largest disaster relief charities have revealed to the Thomson Reuters Foundation that they are spending up to a sixth of funds designated for Nepal on their overheads rather than in disaster-hit areas, when they are using local charities to do much of the work.

Affected communities have denounced the response to the twin quakes in April and May as too slow, with some claiming to have seen scant evidence of nearly $475 million raised through U.N. appeals.

"The response is not helped by international humanitarian charities inflating the cost of doing business when they are not actually doing the work on the ground," said Ben Smilowitz, founder and executive director of the Disaster Accountability Project, a U.S.-based charity watchdog.

Immediately after the quakes, which killed almost 9,000 people, the Nepalese government said it would control the flow of international aid, urging foreign non-governmental organisations (NGOs) to work through national groups.

But as global charities come under pressure to release detailed financial information, Smilowitz said NGOs should be more honest about the partners they are using on the ground as well as the amount they spend on overheads, including marketing, administration and fundraising.

The U.S.-based charity Americares, which distributes medicines and supplies to Nepal-based groups, said 17 percent of its funds go on overheads, the most of all agencies surveyed by the Thomson Reuters Foundation.

The charity said it agreed its overhead rate with the U.S. government aid department, USAID, where officials said the amounts vary according to country context and the NGO's structure.

WHO SPENDS THE MONEY?

The survey also revealed some NGOs had only spent a fraction of the amount raised in the first three months after the quake, while not making clear to donors in online appeals they were working with local partner agencies.

Smilowitz said some international NGOs appear to have operations on the ground when, in fact, they are only donating money to local groups, a process known as regranting.

"When an NGO is regranting ... and they still take standard overhead as if they were delivering the services, then that is waste and abuse. It is misleading," said Smilowitz.

Americares, which has 10 of its own staff in Nepal, said its team was actively involved in the design, implementation and management of relief programmes, as well as regranting.

The charity's president and CEO Michael Nyenhuis said its overheads were proportionate to its activities and he did not believe 17 percent was a high number.

"USAID approves indirect cost rates for those they grant money to, and those are usually in the 20 percent range," he said. "So I am surprised no one is declaring ones that are a little higher than that."

Nyenhuis said the charity had provided about $21 million of medicines and medical supplies to distribute in Nepal.

But despite international donor pledges of $4.1 billion for Nepal, the country's government, which coordinates and approves NGO activity, spent nothing on reconstruction in the first four months after the quake, the United Nations has said.

This month a poll by Ground Truth Solutions, an NGO financed by British government aid, found 51 percent of people affected by the quake felt their main problems were being addressed but only 5 percent said their needs were being met completely.

ONLINE FUNDRAISING

The NGOs surveyed by the Thomson Reuters Foundation were agencies actively seeking Nepal funds through PayPal's charitable donations web page, one of a host of websites, including Facebook, which attract cash for charities.

Team Rubicon, which deploys military veterans to disaster zones, Save The Children U.S., and Catholic Relief Services did not respond to the survey.

SOS Children's Villages, a U.S.-based charity focused on protecting families and the young, said 11 to 20 percent of its Nepal funds went on running programmes, fundraising, management and Nepal-specific communications.

Mercy Corps said it spent 13 percent of its Nepal funds on related overheads; American Jewish World Service 10 percent; the American Red Cross 9 percent; and CARE 8 percent. The Salvation Army, which works with at least six partners in Nepal, said 5 percent went on its overheads.

International Medical Corps, which responded to the survey, did not provide its Nepal costs.

Of those that provided data on the money they had disbursed since the quakes, American Jewish World Service said it had spent about $360,500 of the $2.4 million it had raised for programmes in Nepal by Sept. 9.

By contrast, the Salvation Army World Service Office said of $1.5 million raised, nearly $900,000 had been spent by Aug. 20.

Responding to the survey, PayPal said it covered all associated costs of the funds raised through its page, ensuring 100 percent of each donation received through the PayPal Giving Fund was delivered to the donor's selected relief organisation.

"We make it clear that every organisation uses their donations differently and encourage them to read the (NGO's) mission statement or visit their website to understand how their gift will be used," said Sean Milliken, PayPal's director of social innovation. (Reporting by Tom Esslemont; Editing by Belinda Goldsmith and Megan Rowling; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, corruption and climate change. Visit www.trust.org)