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Financial Realities for Caribbean Environmental NGOs in 2007

Posted on November 20, 2007

The high water mark for independent, community-based institutional support for environmental conservation or natural resources management in the wider Caribbean may have occurred a decade or more ago. The sums allotted to conservation were greater and the effective engagement of locally- and regionally-based organizations in the management of those sums was greater shortly after the Rio Environmental Summit of 1992 and the 1994 Barbados Programme of Action for Small Island Developing States (SIDS) than any time before or after. Many environmental “non-governmental organizations” or NGOs in the Caribbean — even those with long histories in the region — are in precarious financial straits. Many wonder how this could be, given the many accomplishments and the good will that have been generally expressed for environmental programs over the past four decades. In the absence of open discussion of these issues, it is frequently assumed that these financial problems are the result of bad management and carelessness.

Financial Traumas Affecting Environmental NGOs

There are lots of factors, but several major “traumas” stand out:

The Caribbean is an Extra-Cost Environment for Local Institutions

Living and working on a small island or more than one small island is very costly in both time and treasure. In the Eastern Caribbean, nearly half of the island states or territories are multi-island and frequently encounter important social and political reasons to pay the extra costs of maintaining multi-island activities.

A special example for Caribbean regional NGOs involves holding Annual General Meetings away from the “headquarters island” of the sponsoring NGO. These extra costs can run from $10,000 to $50,000 per meeting. It is customary to seek local funding sources in the destination island, but frequently that’s not enough to cover the extra costs. This issue affects both national and regional NGOS. In one notable case in St. Croix in 1991, the Caribbean Conservation Association (CCA) was promised that the US Virgin Islands government would pay two years dues owed in arrears by the territory if the CCA’s AGM for that year were held in St. Croix. The territory then refused to pay anything! The net cost that year might have been as much as US$30,000, a major fraction of the operating funds of the CCA at the time.

The Costs of Barbados SIDS

Another issue that mostly affected CCA was the cost of serving as the NGO Host institution for the global Small Islands Developing States (SIDS) meeting in Barbados in 1994. Because some of the costs were not apparent until after funding partners had closed their books, and in part because the costs of some unauthorized expenditures were not known until much later, it has been estimated that the net long-term costs to the CCA alone for this meeting were somewhere between US$75,000 and $125,000 — a massive sum in the context of its usual Caribbean activities that almost sank the group in subsequent years.

Refusing to Pay Full Costs of Grant Projects

The indirect costs of administering grants are not being paid by most grantors in the Caribbean. This has become more of a problem in recent years as grantors have capped indirect or overhead rates at levels as low as 5%. The real indirect costs of managing national or regional groups which depend on the maintenance of a wide-ranging network of contacts and information spanning groups of islands or even the wider Caribbean are at least 40% of direct costs. This issue has been especially costly to one of the Caribbean’s oldest environmental NGOs, the Caribbean Conservation Association, e.g., in the case of a large regional grant from the European Union which had explicitly agreed to pay additional administrative costs¬†through a direct sub-grant to the Association; but then, after the grant documents were signed, the European administrator abruptly decreed that it would be a conflict for the CCA to both administer the program and to participate in individual projects.

Donor Groups Refuse to Pay Dues

The failure to pay the real costs of grants is doubly aggravating to many NGOs because very few, if any, of the parsimonious (freeloading, actually) donors pay modest institutional dues to most Caribbean-based environmental NGOs, and very few, if any, of their staff or officers pay individual dues to local NGOs. In fact, the failure of regional and international groups to pay dues to national and regional environmental NGOs is common within the region.

Costs of Staff Turnover

Another major source of financial trauma to environmental NGOs in the region is the turnover of executive staff — exacerbated by low wages, institutional uncertainties, and the inevitable problems of working with small group boards of directors — which has several negative effects:

  • Employment contracts often provide over-generous termination terms;
  • Employment regulations in some Eastern Caribbean states (Barbados, for one) often require the payment of fees and costs to terminate employees that are extra-burdensome;
  • Senior staff turnover disrupts the cultivation of relationships with members, donors and clients which pay-off in time with return business, new contracts and grants;
  • Staff turnover leads to the interruption of work performance on externally funded contracts. In one especially unfortunate recent case, all of the funds in a grant were spent before the departing staff member was able to produce any of the contracted products.

Fund Raising and Contracting Competition from International Organizations

A final source of financial distress for local or regional environmental groups is competition from better capitalized international groups — the “mega-NGOs.” Thirty years ago, the international NGOs would most often contract with regionally based groups to perform regional activities, but with the bundling of grants and contracts into larger and larger packages (e.g., the National Fish and Wildlife Foundation or the Gulf of Mexico Foundation), it becomes more and more feasible for the mega-groups and their subsidized local chapters to use advantages of scale and duplication of project activities from one country or area to another to demonstrate “cost-effectiveness” to funders.

The second source of competition from international mega-groups occurs on the fund-raising side. When a major land trust group commits to buy, for example, a critical local watershed for $7 million, every possible effort will be made to raise the funds for that purchase from local sources. If such an activity occurs on a small island of 50,000 people, the land trust fund-raising is likely to “suck the oxygen” out of other conservation fund-raising efforts.

None of the situations described in this essay are crippling in themselves, but they all make clear that the Caribbean’s regional and national environmental groups are¬† stressed and are dependent on relatively large amounts of unrestricted funds. Unrestricted funds are secured primarily from only three sources:

  • Memberships,
  • Cash Contributions, and
  • Indirect Costs.

Public policy, regional environmental program management, and the personal commitment of environmental staff members all need to recognize and work to mitigate the stresses on financial management of environmental NGOs in the region, and to respond with appropriate constraints and resources to avoid the evisceration of local input and to promote the continued development of local management capabilities.

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