Discussion

Incoming Funding Question

Michelle Levesque • 2 December 2021

I would love input from the data user community on what you expect to see when it comes to incoming funding transactions.  I realize IATI is not an accounting system but I can't help but wonder if data users want to know ALL of the funds that are used to fund a project or just the ones that come in the form of donor contributions and can be attributed to a participating organization.  The types of other funds I'm talking about could be FXgains, sale of assets, rental income, service fees.  None of these types of funding have participating organizations to report against and wouldn't be a substantial form of funding so I don't know if it matters on how complete the funding info needs to be.  Insight from the community is much appreciated.

Comments (15)

Michelle Levesque

I don't know that is why I'm asking the users. The partner country may want to see the full amount of funding being used for projects in their country regardless of where the funds come from.  But maybe the partner countries don't need to see all, just what is coming in the form of aid.  From a figures perspective the incoming funding would match the budget and the expenditures but again, maybe no one cares if the figures aren't comparable in spite of what d-portal graphs together.  

matmaxgeds

Hi Michelle - I would vote for the minimum amount of information (to make it easy) needed to know that there are other funding sources e.g. an aggregate transaction per year giving the amount and a narrative saying 'income from FX gains'.

Something like service fees would be important to know about even if just small amounts as that is qualitatively different and very helpful for understanding the project, the results, replicability etc.

Also every bit of extra information shared that means incoming funding does add up the the project value is a huge help.

I used to work in South Sudan at a time when annual inflation was through the roof - FX gains could be huge, so if it can be setup to work now (with low effort), then it is there for the occasional project/situation where it becomes important.

I suspect there might also be a few smart ways to indicate the participating org e.g. an FX gain is additional funding provided by the funder - just like it would be if due to an FX loss, the funder had to increase their funding. Sale of Assets are funding provided by the asset owner etc.

Hope that is helpful,

Matt

Michelle Levesque

[~350] this was VERY helpful.  I'm so glad you chimed in as I knew you would.  Knowing that it is helpful to know the non-donor related funding is huge and that separating FX from other sources is also helpful. 

The challenge will always be that since our data extract is automated, we need to be able to write the algorithm needs so that the programmers can programme the system and it is all a bit of mental and system gymnastics.  Fingers crossed.....

And if there are other data users out there who have similar or different opinions I'd still love to hear them.  

 

Sarah McDuff - IATI Secretariat

Hi Michelle. Great question and will agree with Matt that for data users it's important that all incoming funds (no matter the source) are reported. 

One of the major challenges (as we all know) in using IATI data is the double counting of resources. To most accurately reduce double counting you actually need to be able to map incoming funds to spending. For example, if core funds + Germany + Netherlands are funding a UNICEF activity and then UNICEF disburses $1 million to CARE, you actually need to know the allocation of that disbursement to each of the funders -- i.e. how much of that $1 million was core funds. Then it is only these resources that should be counted when aggregating resources (based on the assumption that Germany and Netherlands have also reported their disbursement to to UNICEF). Of course this is not possible currently in the IATI Standard, but in theory, this is what would actually enable us to reduce double counting.

But certainly a good starting point is making sure that all incoming funds are recorded so then we can work to figure out the best way to make this possible in the future.

And to make the use case more practical, this is a core challenge for governments in trying to use the data -- as the counting of these resources multiple times significantly inflates overall resource flows which is not helpful when you're trying to use this data to know how to allocate national resources. In discussing the CDFD outputs with governments, this came up in almost every conversation. While also a challenge in AIMS, it is often easier to sort as the funding structure is likely to be understood and there can either be manual accounting for this or it can be sorted out through guidelines/data management processes -- e.g. asking DPs to only report their own/core resources, having joint activities with clear guidelines on which orgs should enter what resources, etc.

So yes to reporting all incoming funds but big picture, it's essential that incoming funds, particularly for UN agencies, are reported in a consistent way. While other DPs jointly fund activities of course (and pass money to each other), the double counting of resources is most problematic in UN agency data. And if we could somehow at least have consistency in how UN agencies report this data, it would go a long way in helping data users!

Justin Senn

Thanks Michelle for starting this interesting discussion and Sarah for directing me to it. Sarah - I've read your post a few times, but I admit I'm still struggling to understand the use-case and how it would apply to UN agencies noting there is no direct connection between incoming cash (bank deposits) from donors and the expenditure/disbursements at the activity level. I'm wondering if it's more the internal disbursements within the agency that would be useful, however I have huge doubts that UN agencies would agree to release that level of detail.

Michelle Levesque

[~494] and [~573] I'm glad you find this topic valuable too.  We consistently say that IATI isn't an accounting system yet what people want in terms of easily identifying double-count can only be achieved in an accounting system.  Debits have to equal credits and the rules around consolidated eliminations are impossible to programme in a standard like IATI.  While there are ways to mitigate this, ultimately I think we all have to recognize that we'll never get it 100%.  This information is directional and in the "ball park" but not going to stand up to audit standards no matter how lax the auditor.    

I'm with Justin on the fact that it is impractical to ask the UN agencies or other publisher who often acts as a go-between, to report the gory detail in IATI.  Aside from the fact that we, as UN agencies, aren't even on the same page in terms of the way our accounting works (just ask the CEB and UNInfo teams) we don't have what Sarah is talking about.  When money is given to us by donors and put into a pool of funds because they are unearmarked or lightly earmarked we would have no clue if the money given to Care (Sarah's example) came from Germany or the UK.  By definition the core funding from UK and Germany went into a pot and what comes out the other end is unrecognizable in its component parts.  Like a recipie, we know the ingredients that went in but once mixed we only have a cake and not individual ingredients again.  When you slice that cake you don't know what percetage of the slice is the sugar versus the milk versus the egg.  Ok I think you get my silly analogy.  :-)

[~494] when it comes to non-donor incoming funds (FX, service fees, asset sales) since there isn't donor info captured, and unless I'm mistaken a participatin org is required, do we just put ourselves down as the funder?  

 

Justin Senn

Thanks Michelle. Your analogy of a cake is useful. I'm trying to think how this could best be represented and wonder if monthly "incoming funds" transactions should be reported for the internal transfers from the central pool to the individual activities. To balance these transactions, the central pool would need to report disbursements to the individual activities of an equal amount. And as a final step, incoming funds from donors would be reported in the central pool (and only in the central pool), plus additional "incoming funds" transactions for miscellaneous income, carry-over, etc as required to make the total of incoming funds transactions balance to the total funds available of the organisation.

Michelle Levesque

[~573] that is how IOM does it for certain funding.  We have an ID for where we collect all the contributions and when that fund decides to spend the money on some particular activity, the donor of the specific activity is listed as the fund itself. In those cases, we use IOM's IATI ID but then the narrative will list the fund. If you look at our data you see it with our IOM Development Fund (IDF) which works that way. Beating to death the cake analogy, it is like mixing all in one bowl and then pouring into multiple cake pans. You still don't know what comes from the UK or Germany on the activity end.  But that is the nature of unearmarked or softly earmarked or pooled funding.  You simply can't trace it all the way through because it isn't meant to be traced all the way through.  That is the goal of what governments, organizations and the UN signed up to when we signed the Grand Bargain.  We say want things un- or softly- earmarked but donors still want details as if it is tightly earmarked.To use a very bad pun, we want our cake and eat it too and we simply can't have it both ways. :-p      

Justin Senn

Thanks Michelle. The idea is growing on me :-) I'd be happy to discuss it further with the IATI Secretariat, particularly in the context of the minimum data set for UN publishers and in the interests of consistency of reporting for UN agencies.

matmaxgeds

Enjoying the cake analogies very much........when the programming required to automate the edge cases ceases to be worth it, entering an 'unspecified source, value of X' at least allows us to know how big the cake tin was. Big thanks for pushing the envelope here.

Amy Silcock

To me there's a difference between double counting between organisations and double counting within an organisation.

The first, as [~494] mentioned we can't yet avoid (we don't have enough data to apply a robust methodology). Organisations publishing all funding details and specifying which external organisation the money is coming from or to definitely helps.

The second, each organisation has responsibility for not reporting internal double counting. Care is needed that each incoming fund (from an external organisation) is only reported once, and likewise for expenditures and disbursements. IATI is not currently (or not yet) set up to capture internal transfers of funding. The Dutch guidance tries to capture this by using commitment transactions but this inflates the commitments making it look like publishers haven't spent what they said they would.

I agree with Michelle's comments that all 'new' money should be reported somehow, but not all the 'gory' internals.

IMO, options for capturing internal funding are an IATI version 3 question.

 

 

Sarah McDuff - IATI Secretariat

What a great discussion! There is a lot to respond to here but just want to add a couple of things.

So end users (specifically governments) don't need to know which organization provided the resources (i.e. for a pot of money mobilized at the hq level they don't care which donors provided this money) but the issue in IATI is that it's unclear whether the donors are also reporting these resources. Maybe some are and some aren't but it's because of this lack of clarity that the detail is needed. As such, this could probably be most easily addressed with methodology/guidance to donors that they shouldn't record this money in IATI. 

This doesn't only apply to UN agencies though but also for pooled funds, joint mechanisms, etc. 

 

Michelle Levesque

Oh boy I need a white board for this because spelling out these things in words without a diagram and without using actual IATI terms is only going to make matters worse. This is also why I constantly say that any IATI guidance should use word problems (like when we all learned algebra for the first time) so that real life scenarios can be turned into IATI "equations" and I'll add here, suplemented by diagrams.  (People learn differently)

Putting it simply, I don't know that I agree with Amy Silcock about not publishing internal transfers because it leads to doublt count. If the proper traceability references are there then even if an organization publishes the internal transfers it should work.  And then any user could figure out that the five cakes (aka activies) were made from the same big mixing bowl (pooled, unearmarked activity) that has all the ingedients (external donor funds).  

That is how accounting works (debits equal credits :-) ) and while IATI isn't an accounting system, when it comes to the financial data that gets into IATI, it is coming from an accounting system that has this sort of dual entry.  

I hope that makes sense and speaks to what both Sarah and Amy are saying. 

 

Thea Schepers

Hi Michelle, good question! I haven't read all the replies but I can tell you what we did when I still worked for an INGO.

External funding came from all donors, IATI publishers or not, and were published as incoming funds (sometimes the donors were anonymous). Everything else usually was one lumpsum of what we called internal funding. In our case, previously received through marketing campaigns and such, small private donations. That was an incoming fund too, but we always felt uneasy about that because there was no actual transfer of money. I think we changed it to an incoming commitment eventually, not sure.


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