Building treasury functions in NGOs – How can European organisations build a more mature approach?

At risk of making a very broad generalisation, I suspect that many of us working in the development and humanitarian space do not immediately enter the sector thinking about treasury, foreign exchange and payments.

Ours is a passion-driven sector, full of people motivated to make a positive change in a complex world – a space that might initially seem a long way away from the besuited stereotype of financial services.

However, the importance of a professional and efficient treasury function cannot be underestimated for an international NGO. I write this both as a former NGO treasury professional and a financial services professional. If you are not dealing with FX and international payments on a daily basis, it can be hard to comprehend how complex it is to get the right funds in the right place, at the right time.

The treasury function in European NGOs is, certainly from my own experience, often managed as part of a wider portfolio of responsibilities by members of the finance team. In recent years, this has begun to change, and organisations are starting to take a more specialised approach.

During the pandemic, organisations that received donations and public funds found themselves increasingly pressurised due to decreasing income streams. The efficient management and disbursement of funds was paramount to the continuation of many NGO’s activities and projects. Furthermore, due to bank derisking, where many global banks have retreated from markets they perceive as high risk, it’s becoming more complex to send funds to challenging, but highly-aid dependent, countries, such as Myanmar, Afghanistan and Sudan.

These locations present a blend of issues to navigate, from more practical markets access issues through to properly managing sanctions requirements. Humanitarian and development projects are also requiring new disbursement modalities, with money going to bank accounts, card and mobile wallets. Across Europe, the need for a mature treasury function has become a focus for many.

Historically, NGOs tend to stick with their house banks for as many of their transactions possible, whether that’s managing their staff payroll or disbursing funds to different countries. Guaranteeing delivery is the most important factor. However, with increased public scrutiny and tighter funds, getting the best value for money is also increasingly an important factor.

Finding different financial service providers who specialise in different aspects of the treasury process can be highly beneficial to an organisation. A deeper intellectual engagement between INGOs and their financial services providers will help drive better products and services. Our habit of defaulting to the tried and tested approaches, even if expensive, stops us from finding better collaborative solutions between INGOs and financial services partners.

Furthermore, building a more specialist treasury function can bring significant cost-savings to INGOs and their funders. I am fully aware that this is easier said than done. It can be difficult to find specialised people and to get the internal support for treasury hires, but even maintaining it as an objective will help NGOs to work more smartly.

Treasury management is a complex task. A one-size fits all approach neglects the complexity of the communities we are seeking to support, and better communication needs to exist across the whole system of humanitarian and development finance distribution.

As a sector it’s important we share best practice amongst ourselves, even with the most granular and technical issues. Only then can we properly co-develop solutions that allow the vital work of the humanitarian and development sector to flow smoothly, efficiently and safely

Bond and Partos are hosting ‘European INGO Cross-border Payments and FX: Challenges and Solutions’, an interactive webinar for European international NGO treasury and finance professionals, taking place on Wednesday, 11th September, from 2-4pm CET. If your organisation has a branch in the European Union/European Economic area, we encourage you to forward on the below invitation, introduce us to a relevant contact or encourage your colleague to reach out to us at [email protected].