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Where the Money Goes… Tracking Spending on Gender and Social Inclusion

Our country programme in Nepal has used the tool of Fund Flow Analysis (FFA) for more than 10 years. It is now well embedded in financial reporting.
FROM: Jane Carter – 16. June 2016
© Helvetas

A blog posting a little while ago discussed gender-responsive budgeting, and specifically how we are supporting municipalities in Kosovo with this tool. Yet what of our own project and programme spending? Can such a form of budgeting and accounting also be applied?

This was the topic yesterday in another of our sporadic Webinars, linking different staff members around the world. The speakers were Pragya Adhikari in Nepal and Rosario Uria in Bolivia, both of whom head the finance teams of their respective country programmes. Both have taken on the challenge of tracking the flow of funds through our books to extract information on project performance in addressing gender and social inclusion. This goes beyond their regular tasks of financial controlling and reporting, and represents additional work for them and their teams. In the case of Nepal, it is in part necessity – fulfilling the requirements of one of our funding agencies; in the case of Bolivia, it is purely voluntary.

Fund Flow Analysis in Nepal
Our country programme in Nepal has been using the tool of Fund Flow Analysis (FFA) for more than 10 years now, and after initial teething problems, it is now well embedded in financial reporting. The tool was developed in collaboration with the Swiss Agency for Development and Cooperation, SDC in Nepal, and is required by them for the projects that they support.

FFA is used to track funds according to social and geographical parameters. On social matters, FFA traces the sex and socio-economic status of both those receiving money (project partners implementing activities), and those who are the ultimate beneficiaries. As mentioned in other blogs, the Nepal country programme has developed a clear definition of who are disadvantaged groups (DAGs): simply put, they are economically poor members of ethnic minorities, Dalits, and women. Geographically, FFA tracks the proportion of project funding that effectively goes out of the country (for example, to pay for imported equipment or foreign consultants); stays in the capital city (for example salaries of Kathmandu-based staff); is spent in district headquarters (for example in training sessions), or goes straight to rural areas (directly benefitting local women and men). Of course sometimes costs cannot be attributed in this way, in which case they are recorded as such. Pragya noted that overall, some 20% of costs are un-attributable – which still means that the majority can be allocated to a particular category.

Tracking spending on the Bolivia programme’s transversal themes
In Bolivia, the team decided that the Nepal system would be extremely time-consuming and difficult to implement, so they opted for a “lighter” version. Under this, the managers of each project go through their annual budget at the beginning of the year and determine what items fall under each of the programme’s three transversal themes: gender and social equity, governance, and capacity building. Invoices received through the year are then classified accordingly. Where one item of expenditure covers two themes, a 50:50 allocation is made. This system does not involve too much extra time, and provides “broad brush” data.

What has been learned?
The complexity of project implementation is such that neither of the systems described can provide fully accurate information, but they can give an indication of trends. Critics of the system used in Nepal, argue that it is simplistic to look at where money goes; what is important is what it achieves in terms of outcomes. Thus for example a progressive new law or regulation could change the lives of many poor women and men for the better, but most of the project costs would probably be in terms of advisory input, quite possibly by foreign men, in a capital city. Indeed, much depends on the nature of the project objectives and activities. It is not necessarily “bad” that money is spent on foreign consultants in a capital city (in fact, if this was specifically to promote a progressive law, the ultimate beneficiaries would be identified as such in the FFA). Neither would it necessarily be “good” that a high proportion of spending went directly to poor, socially disadvantaged women in a village if this spending simply promoted dependency. The latter would represent poor project design.

This noted, it is useful to have a sense of how much money goes where. As Pragya observed, projects in Nepal now use FFA as a means of steering and reflection. Do they really need to buy foreign equipment, or is there a local source? Can the training be held in the district, not in Kathmandu? In the district would be better for the local economy… How many women are receiving the training, and how many men, of which social group? Are those giving the training men or women, of which social group? Once these become financial reporting issues, they take on particular significance for managers.

Director, Programme Development
Jane Carter