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HARVARD TRANSITION PANEL: Early Lessons Learned & Promising Practices-Transitioning to NGOs Wednesday, August 11, 2010 3:00-4:00PM 8 th Annual Track 1.0.

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Presentation on theme: "HARVARD TRANSITION PANEL: Early Lessons Learned & Promising Practices-Transitioning to NGOs Wednesday, August 11, 2010 3:00-4:00PM 8 th Annual Track 1.0."— Presentation transcript:

1 HARVARD TRANSITION PANEL: Early Lessons Learned & Promising Practices-Transitioning to NGOs Wednesday, August 11, :00-4:00PM 8 th Annual Track 1.0 ART Program Meeting

2 Introduction: Two NGO Models: Lessons and Challenges oJohn Lichten, PI/Executive Director, Harvard PEPFAR Program Transition in Nigeria: Independent NGO Model oProsper Okonkwo, CEO, APIN, Ltd. Transition in Botswana: Linked to Track 1.0 Partner Model oRia Madison, COO, BHP, Ltd. Elements of Successful NGO & Challenges of the NGO Model oJohn Lichten, PI/Executive Director, Harvard PEPFAR Program Challenges of Transition oMark Barnes, Chair, Harvard PEPFAR Oversight Committee Agenda

3 Introduction: Two NGO Models-Lessons and Challenges Harvard has two models: Fully Independent NGO, and NGO with Harvard Presence Fully Independent: Governance includes no Harvard representatives PEPFAR is primary program and primary source of revenue (i.e. Nigeria) Harvard Presence: Governance includes Harvard representatives PEPFAR is only one of several active programs/projects Harvard has longstanding activities in-country prior to PEPFAR (i.e. Botswana and Tanzania)

4 Transition in Nigeria: Independent NGO Model: APIN APIN slides

5 Botswana Harvard AIDS Institute BHP Ria Madison, Chief Operating Officer August 11, th Annual Track 1.0 ART Partners Meeting

6 Agenda Development of BHP Introduction Governance Phases of Transition Management Systems Current Status Future Steps

7 Introduction and History BHP – Botswana Harvard Partnership formed in 1996 between Harvard School of Public Health and the government of Botswana to conduct scientific research and provide technical assistance in the area of HIV/AIDS Africa’s first national program to provide free ARV therapy to HIV/AIDS patients started in 2002 BHP, LLC established in 2008 BHP, LLC officially started operations September, 2009 Annual Operating Budget: o20% from PEPFAR o80% from sponsored research

8 Governance Board of Members and Board of Directors Majority from Harvard Representation from MoH PEPFAR Management Sub-Committee HRSA/CDC Review of Governance Next steps – develop agreement on model

9 Transition Workplan Work plan development by: - Activity- Responsible Person - Status - Deadline for completion Categories of Activities - Finance- Human Resources - Administration - Reporting - IT - Grant Administration - Governance - Activity- Responsible Person - Status - Deadline for completion

10 BHP Management Systems Review of Accounting/Financial Softward systems Review Laboratory and asset inventory/management systems Review of automated payroll system Review of internal controls Review workflow and reporting structures –develop new organizational design Review time & effort and expense allocation methodology

11 BHP Status HRSA ClASS Assessment February, 2010 Revised and updated workplan with corrective action for: Financial Systems Grant administration and management Governance Finalize sub-contracting and migration of financial operations to BHP from Harvard

12 BHP Future Actions Follow-up HRSA Assessment findings Recruit key staff positions Complete remaining transition workplan tasks Finalize BHP Long range plan HRSA Readiness Re-Assessment, Spring, 2011

13 Summary Elements of Building a Successful NGO and Challenges of the NGO Model Five Comparative Advantages for NGO success (Macro-Level) Capacity to reach those most in need – focused service provision Promote local participation and implement projects in direct collaboration with target beneficiary groups Operate at low costs Able to be innovative, experimental, adaptive and flexible Promote strengthening local institutions, organizations and empower marginal groups (Henrik Secher Marussen, “NGOs, the State and Civil Society,” Review of African Political Economy, 1996: 408).

14 Elements & Challenges for Successful NGO Common Elements for Success (Micro-Level) Dynamic, strong, experienced, committed: oCEO, COO, CFO, CIO oSenior Staff oEngaged Board of Directors Mission and scope must be clear Short and long range plans must be developed

15 Elements & Challenges for Successful NGO Organizational Structure via Strategic Management Theory Organic structure/Loose Strategic Planning (great flexibility that permits innovation and creativity, adapting to change, greater stakeholder involvement, redefine actions to best align with goals/mission) Mechanistic structure /Tight Strategic Planning(defined rules, procedures, objectives and goals – management by objectives/outcomes) Organic vs. Mechanistic: “indigenous” NGOs will likely depend on mechanistic but need organic structures to achieve sustainable development; need to distinguish mechanistic at the costs organic (Irene M. Herremans et al., “Ch. 16: International New Ventures, Organization Structure, and IC Management”, 2010)

16 Elements & Challenges for Successful NGO Challenges: Start-up expenses (e.g., local attorneys, local accountants, filing fees, bank accounts, office rentals, office equipment, telecom, etc…) Human Resources (e.g., recruitment and retention, “poaching,” maintaining morale in uncertain times) Developing Organization Structures (e.g., policies and procedures, communications, MOUs, compliance environment, IT environment, grant administration capacity, insurance) Solve Basic Operational Challenges (e.g., needs for operating/working capital, need for unrestricted funds, economies of scale and future funding, diversify business)

17 Elements & Challenges for Successful NGO Recommendation: Track 1.0 Transition offers a great opportunity to assess optimum model/approach: NGO, FBO, Governmental Authority, and Direct Funding of Service Provider Future Research Question: Is one model better than another in terms of providing highest quality care and continuity of services to those in need, and in terms of costs and sustainability?

18 Challenges of Transition CDC Country Plans and Transition RFAs Primary objective must be to assure continuity and quality of clinical services “Ownership” of sites by partners, governments and local NGOs must take a back seat to assuring services to clients Uncertainty in countries about CDC transitional plans “Regionalization” during and after transition Possible CDC direct funding of local clinics, bypassing governments and local NGOs Are Track 1.0 partners to compete with local NGOs in the RFA process? Track 1.0 partners and local NGOs need clarity, consistency, and predictability in transition planning in each country HRSA and CDC in-country offices need to work together in the development of RFAs, for consistency of approach and message

19 Challenges of Transition “ Gap” Period HRSA vs. CDC fiscal year for grant funding “Gap” unfunded period from March 1-July 31 Carryforward funding can no longer sustain this funding shortfall Consequences of a truly unfunded “gap” (e.g., MDH in Tanzania, APIN in Nigeria)

20 Challenges of Transition Indirect Cost Disallowance for Non-U.S. Partners Local partners have no ability to recover expenses through indirect cost recovery Leads to great implications for impaired capital flow capacity (no cash “cushion”) “Eliminating all Harvard ‘indirect costs’ in the process of transition will save money, with no loss to local clinical programs” – WRONG! The costs still exist for the local NGOs, and failure to fund them will prevent effective NGO functioning Either an indirect cost recovery mechanism for NGOs must be developed, or all “indirect” costs must be included as direct costs in NGO budgets

21 Challenges of Transition Operating Capital for the Local Partners Cash flow challenges –operational demands vs. USG funding “lags” Downside of local partner’s establishing line of credit with a local bank is extremely high cost (exorbitant interest rates) Few alternatives – in many cases, lines of credit may not be available at all Consequences of failing to provide operating capital are potentially disastrous for the NGO

22 Challenges of Transition Management and Disposition of Equipment and Drugs Drugs and supplies need to be co-mingled between Track 1.0 partner and local partner during transition period Undesirable alternative is to keep two sets of books, and two separate supply inventories, which is increasingly complicated as site transitions accelerate Goal is to keep costs low and supply chain logistics manageable Forbearance needed by CDC and HRSA toward A110 requirements to achieve “sharing” mechanism. CDC and HRSA should formally sanction this approach. HRSA and CDC need to specify process and timetable for approving these transfers of ownership of supplies

23 Challenges of Transition “Indigenous control” of local entities There is a need for greater flexibility to the requirement for local majority control of local partners Local NGOs are answerable to many funders and regulatory requirements, not just PEPFAR: EU, Gulf States foreign aid assistance, corporate funders, national requirements Example of Botswana and BHP: PEPFAR represents only ~20% of BHP’s activities and funding Harvard currently plans the BHP transition to local control to have a longer timeline than the transition of PEPFAR to BHP If forced to adhere to strict local control requirements, the alternative is to establish a second NGO solely to satisfy PEPFAR requirements, at high financial cost and diluted staff attention

24 Challenges of Transition Grants Administration Issues in Transition Planning and Execution Occasional lack of understanding by some USG staff of our serious concerns about grants management issues Harvard staff sometimes perceived to be “making up” problems or inventing obstacles Harvard’s goal is to discharge fiduciary obligations under cooperative agreement We are answerable to OIG and GAO, not just HRSA and CDC When grants administration issues are raised, it is because we see them as real problems

25 Challenges of Transition Close-out Funding Partners will need some decent interval (perhaps 9-12 months of funding) to support required close-out activities This assumes that “no cost” extensions will not be permitted

26 Challenges of Transition Reporting Need to clarify which organization (Track 1.0 partner or transition entity) reports data elements during transition HRSA, CDC, and government entities need to clarify how targets will be reported during “gap” period, along with adjusted targets

27 Thank You!


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