Safeguarding our donors’ funds: how VCS oversees our projects to be effective and accountable

When I donate money to charity I want to know that my money is going to the right place. I want to know that the charity is using my funds appropriately, and for the intention it was supposed to. – Arnica Rowan, VCS President


VCS Treasurer Tawnya reviewing financial records with Director Meseret at Faya Orphanage

Vulnerable Children Society is a volunteer run charity, but that does not mean we do not have many safeguards in place to oversee the funds that we are spending, to ensure our donors know their money is safe with us. In fact, being a small organization that is quickly growing, it’s very important to us to have oversight and accountability measures in place that will help us stay transparent and accountable as we grow.

We have many safeguards in place and I thought it would be a good idea to share something with you, so that you know the length we go to to ensure the long-term sustainability of our organization.

When we started our organization, we needed to rely on reports from our project partners, pictures of the projects being completed, and occasional visits from VCS supporters on site. However, as we became a registered charitable organization in January, we’ve been “growing up”the accountability and oversight to match Revenue Canada’s standards.

Arnica meeting with government officials to inspect programs

First off, my trip to Ethiopia in May with Tawnya our treasurer and Rita our update volunteer was key in explaining our requirements to our partner and learning infinitely more details about the programs run by them on the ground. we learned which organizations our partners work with, how they ensure that the House 2 House kids as going to school and being provided for, and what kind of ongoing oversight such as house visits are in place. We were leased with the involvement of the local governments, because it adds another layer of record keeping and connections with the families. We also learned how much our partners know about the kids, even if it didn’t make it onto our reports!

Arnica, Birhan our consultant, and Tawnya

Secondly, in Ethiopia we hired a (very) part-time consultant who works directly for VCS to visit our projects on the ground, advise us on administrative norms and coordinate with our local partners. He’s a very knowledgable man who runs and Ethiopian non-profit, and has been invaluable in helping us institute policies and procedures. We are so luck to have him and he’s worth his weight in gold. He’s started attending our board meetings remotely via Skype, and it’s interesting to follow our conversations in English and Amharic, making sure we understand the cultural intricacies as well as the policies of our work on the ground.

Our project with Canadian Humanitarian was an experiment in expanding our organization’s reach with our limited oversight capacity, and it worked very well… Because Canadian Humanitarian is a registered charity like us, but much bigger with full-time staff, we were able to have reporting on our dollars without having to be at the project all the time ourselves. This partnering with a “bigger brother” organization worked wonderfully, and we plan to do it again. Our consultant and their staff got along well, and have been learning from each other and sharing experiences and best practices as well.

For our own programs, we have more challenges, since we are small and have limited capacity in Ethiopia We ask that each child who sponsored through our House 2 House program has a regular, twice a year, update. This update consists of photos and or a written update. We have had a LOT of challenges in getting updates for all our kids in the past, but this has greatly improved since our last visit to Ethiopia in May, thanks to the renewed efforts of our partner, Faya Orphanage. However, if we do not receive updates on the child because they are out in the countryside or the family has been out of contact for more than one reporting period, we do actually sever that relationship with the family. No reports… No funds.

Meeting with our Faya Orphanage director Sintayehu before a visit to a House 2 House site

Recently we have also synced our sponsorship lists with the actual children who are being sponsored on the ground. We always knew that we were supporting more children than we have sponsors for, but now we know exactly who these kids are, and can limit the intake of new kids so that they are all supported adequately. We have also instituted receipting so that only kids in our program are receiving “extras” such as school uniforms and registrant fees (instead of spreading the funds too far to be effective.)

Cataloguing donations at Faya Orphanage with director Meseret

With Faya Orphanage, we have an annual contract. This contract details the amounts we send and each organization’s responsibilities. It is filed with the Canada Revenue Agency that oversees charities, and that enables us to funnel funds to the orphanage. However, as a registered charity, we have to know exactly where our funds are being spent. We used to simply send the funds and our visitors and photos comforted us that the kids were being taken care of. Now that we a registered charity, however, that doesn’t cut it. To that end, we have started receiving monthly financial reports that detail the line items of our support dollars, in addition to the (very brief) annual audited financial statements. This highly level of accountability has not been easy to institute (reports are running overdue as I type this!), but it’s imperative for being able to track the funds all the way to the salaries and supplies for the orphanage. So we persist and are working on ways to make this money reporting process smoother for our partners and ourselves.

As for money management in Canada, we do several things to safeguard your money. Firstly, we use Canada Helps, which maintains records of donations so nothing is unaccounted for. Tawnya our treasurer maintains complete books for VCS on quick books and, importantly, reconciles and supervises very shoebox expense receipt I give her. Our board regularly receives up to date financial reports, asks hard questions, and our financial reports are posted publicly on our website.

We have several policies to ensure that we don’t overspend. We never make a commitment that we can’t bankroll. For example, when we committed $10,000 to the project in Gindo, we made sure we had backup funds in our bank account to cover the amount if our fundraising didn’t work. Now we did manage to raise $5000 as planned and therefore had the remainder for other projects. But the point is that we honor our commitments.

We have a $3000 contingency fund that is expressly targeted for covering any shortages in House 2 House program funding. So if a bunch of donors had to stop contributing or we had an emergency (like a drought in Ethiopia!) we can make good on our commitment to support our House 2 House children and families.

Another example of a policy for sustainability is our board’s policy to ONLY accept business and organization funding for projects. The only source we count on for ongoing funding is our individual sponsors- people like you. Too many nonprofits have suffered from becoming reliant on foundation or corporate sponsorship, only to have it disappear and have to cut ongoing projects. So we use corporate donations for one-shot deals, like the Gindo project.

Tawnya at our micro finance meeting

Lastly, we are trying to be cautious and prudent in setting up any new programs. For example, we were approached in Ethiopia by a lending circle who asked us to support them. We are very interested in micro finance, but there are many ways for it to be ineffective. So the last several months, VP Dacia (doing her phd in International Development) and director Nicole (also taking graduate courses in the field) have been working together to research and design a program that will fit Ethiopian culture, meet the needs of our target demographic, and fit the type of capacity we have on the ground in Ethiopia. They’ve done great work, written reports to the board, and we are looking at the feasibility of instituting our program within the next year. In other words, we are trying to build our programs to last and be as impactful as possible, instead of just starting things up willy-nilly.

We plan on running Vulnerable Children Society for a long time, and are doing our very best to ensure that our time and our donors money is well invested. Heck, we are all donors too! So we have a vested interest from many sides. Not to say that we don’t make mistakes or have growing pains! But overall, in a short year, you can see how many safeguards we have put in place to be true to our values of transparency and sustainability.

We’d love to hear your comments and, of course, welcome your questions about how VCS runs!

Remember we are volunteer-run, so sometimes it can take a week to get an answer back, but we are always happy to answer your questions. You can also attend our Annual General Meeting if you are a member (if you sponsor, you are automatically a member) in December to find out more!

Arnica Rowan, President, Vulnerable Children Society

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