Who is to blame for excessive administration costs in humanitarian aid?

An East Africa-based journalist writes me with an interesting question. An new NGO is trying to harness a firm’s distribution network to get humanitarian aid to children.

A question. [The NGO] were unable to receive the grant direct from [the donor] so had to find an ‘accountable body’.  For this service, they were quoted 17% of the project’s budget – by a UN organisation. Can you relate fact or opinion on that at all?

[The NGO] eventually found that [a pan-African governmental body] was able to provide the service for free, with additional benefits. But UN, World Bank etc. apparently make having an accountable body to channel funds a very costly thing.

I’d be extremely grateful if you have time to share thoughts.

This is indeed a pet peeve of mine, but my ire is not directed at donors like DFID or the World Bank or UN. My response:

My opinion: 17% is an unfortunate expense but a rather common rate for administration, and even low by many standards.

It’s a requirement driven not so much by the multilateral donors, but a consequence of the fact that the giving public and governments have close to zero tolerance for misuse of funds.

This drives a Byzantine and expensive accounting system which partly reduces risk of misuse, and partly gives the multilaterals cover (“we did the best we could”).

This discomfit with misuse gets amplified by the press who tend to tend to report on graft and mismanagement more than success.

So the root cause is the failure of the public and donors to think about the high cost of extreme accountability.

It would be nice of the donors could take a sensible stand against this silliness. I’m not sure they are terribly concerned, or even cognizant. Surely it has occurred to some, but (in my experience) cost-effectiveness is so far down the list of most NGO and donor priorities it may as well be left off.

Thoughts from the NGO and donor world?