Community funding lacks transparency and accountability

Open-Ed

This story was updated at 4 pm on April 24, 2024

As the Founder of a charitable trust, I have witnessed the profound impact non-profits have on communities, including the vibrant Indian diaspora in New Zealand.

However, recent revelations have brought to light the lapses in ethical standards among certain not-for-profit organisations, particularly regarding the use of funds.

These revelations pose significant challenges for all involved, threatening public trust at a time when every cent should be dedicated to serving those in need.

Third-Party Agency interference

A major area of concern is the reliance on third-party agencies to secure funding for non-profits. While these agencies play a crucial role in navigating complex funding processes, there are worries about undisclosed commissions and hidden costs. These obscured fees raise questions about the transparency and efficiency of fund allocation within the sector.

For example, a non-profit seeking funding for a cultural festival may engage an agency for assistance. However, the fees paid to these agencies are often hidden within project budgets, leading to inflated costs and potential misallocation of funds.

This monopolisation of funds by third-party agencies further side-lines smaller NGOs, exacerbating inequities within the sector.

Disparities and Mismanagement

Concerns have arisen over some non-profits accumulating unusually large reserves of funds, earmarked for community projects that are consistently delayed or under-delivered. This mismanagement is alarming, especially when other organisations within the same sector struggle to meet basic operational costs, highlighting stark contrasts in fund management and resource distribution.

The situation raises concerns about how non-profits handle excess funds and the missed opportunities for equitable fund distribution across the sector. Questions emerge about why these funds are not being deployed more effectively to address urgent community needs, especially when other organisations are in financial straits.

Another pressing issue is the potential for conflicts of interest arising from familial employment within non-profits.

Such practices erode public trust, tarnishing the credibility of organisations.

Maintaining transparency and fairness in hiring practices is essential to uphold the sector’s integrity and regain stakeholders’ trust.

To address these ethical challenges, robust oversight and policy reforms are urgently needed. Regulatory bodies, such as the Ministry of Ethnic Communities and the Charities Commission, must take decisive action.

Clear disclosure of third-party fees, transparent commission practices, and stricter regulations on employment are vital steps to ensure taxpayer money is used effectively and ethically.

Measures to ensure greater transparency

Implementing regular and detailed audits will uncover irregularities, while mandatory ethical training for board members will instil a culture of accountability.

Enhanced public disclosure practices and strategic fund management guidelines will promote transparency and effective resource allocation.

Moreover, involving community stakeholders in oversight processes will ensure that organisational goals align with community needs.

As stakeholders invest in community welfare, advocating for reforms that uphold integrity and transparency in non-profit operations is imperative. Taxpayer funds are at stake, underscoring the critical need for transparency.

By separating governance from operations and addressing ethical lapses head-on, we can ensure that non-profits effectively serve their communities, restoring public trust and reaffirming their pivotal role in society.

As an unknown saying goes, “Transparency is the cornerstone of ethical governance. Without it, trust crumbles, and the very essence of our charitable endeavours is compromised.”

Mallika Janakiraman is the Founder and Chairperson of Wahine Charitable Trust. She is a Registered Nutritionist residing in Auckland. The above article is the author’s personal opinion and hence not necessarily that of Indian Newslink.