Financial Management – Working in Consortia

Published on 22nd July 2020

It is no surprise that there appears to be an unprecedented rise towards working in consortia. The localization agenda alongside tax payers who demand greater accountability from their taxes and the pressure from donors to reduce or completely eliminate HQ and Admin costs have all contributed towards this growing trend/new normal.

In many respects, this is a good thing. The opportunity for cross learning, reduced administration from managing fewer awards, programming across a wider base, shared expertise and large-scale data pool to draw robust conclusions can be positive. However, the key to successful implementation in consortia is contingent upon robust processes and policies as the prime, sub or implementing partner. We will highlight some key points for you to bear in mind if this is the first time that you are working in consortia. If you are a seasoned professional, you may also take comfort in the fact that you are compliant with industry best practice at least.

1. Financial Templates: This includes but is not limited to budgeting and reporting templates. Why bother you ask? Different organizations stakeholder’s needs. Legal and statutory regulations alone are enough to create a real divergence to a simple financial reporting template. It is therefore imperative to generate or agree on a standard template that you will use for the budgeting and reporting the project. You should be careful to communicate that this does not replace what already works for the organization, but simply a means of creating consensus and ease the consolidating exercise for the prime agency.

2. Exchange Rate: You will be surprised by the assumptions made within organizations and the rationale for FX and inflation. When working in consortia, it is therefore advisable where the donor does not specify e.g. Info Euro to agree (preferably up front and communicated clearly) upon the website or source of FX and inflation that will be adopted through the lifetime of the project.

3. Indirect Cost: Will you be adopting a single cost recovery rate for the entire project or a weighted average based on individual organizational rates? Will those rates be audited (e.g. USAID NICRA) or are they based on annual pre audited accounts and so do not need to be audited (DFID NPAC). Do the partners have the capacity to comply with whatever the donor therefore demands in relation to maintaining the ICR?

4. Timeline: If you have ever tried to organize an event, a meeting, a gathering with over 3 people, you will understand that prompt timing can be challenging. In our experience, it is important to be clear on timelines from the inception, have a mechanism for communicating reminders and most importantly ensure you have the right contact details for the key stakeholders on the project. Time zones and cultural perceptions on time keeping may influence or frustrate your efforts as a consortium.

5. Supporting Documentation: Will you be filing hard or soft copies? If soft copies, will you use a shared, easily accessible platform like Google drive? Can all partners access the platform and will the internet speed in their locations hinder or aid reporting deadlines?

6. Costs: Coordination costs are different to your standard direct implementation costs. Do you know what the difference is and who will be covering those costs? If there are proposal development costs, is it clear who will be covering the cost for these? Think through joint costs that arise in your context and where the responsibilities lie for paying them.

7. Close down: Consider adopting a separate close down matrix when dealing with multiple organizations. Where the donor stipulates procedures around asset disposal for example, ensure that there is shared understanding by the organizations involved. If shared project assets exist, decide early how these are to be decommissioned at the end of the project. Do not forget to look out for contingency clauses and where the liability sits. Lastly, decide how to manage the lag between the end of the project implementation period versus the end of the contract itself. Will you have a small team that stays on to finalise the final report and project audit for example? Who will be paying for them?

8. Learning: One of the key advantages of consortium working is the volume and quality of useful data that is generated for future use. How sad it will be if this data is lost at the end of the project and nothing is learned until the next opportunity arises. Learning in the form of a project website or easily accessible info graphics can be a great add on.

We hope that you have found the above useful and will be bearing them in mind as you implement or consider working in consortia. If you would like to seek professional help in navigating consortium working, please get in touch!.

Findev Consulting Limited is a UK based consultancy that provides grant management training to NGOs and civil society organization. We have worked with numerous nonprofits across 3 continents, focusing on proposal development, strategic planning and project evaluation we have experience with creating budgets and appraising successful donor proposals.