Non-profit organizations (NPOs), including human rights organizations working in conflict zones in particular, are under increasing pressure to adhere to international and local regulations to prove their financial integrity, obtain the confidence of international donors, and ensure the continuity of their work.
Recently, organizations operating in the Middle East region have been subjected to increasing verification and financial control requirements, including revenue control directives and special audits to examine financial soundness in terms of money laundering, terrorist financing and revenue sources. This has increased NPOs’ dependency on local official bodies in terms of licensing in order to get funding, which consequently gave the ruling authorities the upper hand over their work, that sometimes prohibit even the registration of these organizations if the outputs of their human rights work for example, is not in line with the wishes of the authorities.
In Syria – where areas of control are geographically distributed between the warring parties – despite the lack of expertise of NPOS, an absence of a governmental database of NGOs activities, registration obstacles, banking restrictions imposed on opening bank accounts and receiving money transfers, a high level of, non-profits are required to have a high-level application control, and to work in line with local legislations, which includes laws and procedures to conduct transfers and financial transactions through a bank account of the organization. Moreover, NPOs, including human rights organizations operating in government-controlled areas in Syria, are not allowed to work in areas controlled by other parties, which limits access to the target groups and the implementation of activities related to the work of these organizations.
As for financial plans and policies, most Syrian NPOs lay out their financial cycles, either monthly or semi-annually, and collect and document financial plans and records.
As for oversight, Citizens for Syria Organization conducted a study which revealed that less than 20% of NPOs apply the principle of external control over their financial records. Financial oversight, however, is only limited to the accountant of the organization or the senior management.
Accordingly, the financial departments of Syrian organizations carry out accounting and control processes, which reflects an administrative weakness which may have a fundamental role in the lack of donors and funders confidence locally and internationally. The only reliable body for donors is the external auditor who transparently discloses financial information to them. Therefore, they can ensure the financial integrity of the organization.
This brings the problem of local Syrian and human rights organizations, which lies in their inability to afford fees imposedby accounting firms because they lack the necessary financial resources and as accounting firms deal with large organizations to reap more profits which leads small organizations to rely on internal accountants.
Donors set out multiple requirements from NPOs to share financial and administrative risks and develop governance framework and accountability procedures. Some of these requirements are to conduct security checks for local employees and suppliers and to improve the quality and quantity of required reports of their activities.
In light of the complicated situation in Syria, donors should empower and support the diversification of the non-profit sector such as emerging and human rights organizations and to provide them with diverse methods of fundraising and building safe funding networks.
Donors should provide emerging NPOs with their fully detailed requirements, so these organizations could secure necessary funding for their projects. Donors should also provide them with feedback to overcome the problems they may face while preparing reports and financial statements of their projects. Lastly, donors should provide NPOs with specific training on how to maintain accounting standards in the required reports.