How a global NGO increased its program impact by 57% while saving millions of dollars
Posted by Ton Dobbe
I recently interviewed Jesús Pizarro, Vice President of Enterprise Accounting and Controller at Heifer International, a global NGO who's mission is to help end world hunger and poverty while caring for the earth through self-reliance & sustainable intervention strategies.
My first question: Jesus, what are you passionate about?
Pizarro: "It's contributing to making an impact that's recognized, sustainable and meaningful. Recently our external auditor said to us that, “few organizations in the world have the global visibility of the financial data that Heifer International does”. And a compliance auditor from the US government said: “Heifer was one of two NGOs in my 30+ year career where I didn’t have any findings.” That makes me proud, not only because it’s a recognition of the power of our financial accounting system, but primarily because of the impact this has on what we fight for every single day: to end world hunger and poverty.
Question 2: Can you elaborate on the impact you see?
Pizarro: "Achieving our current level of global visibility of financial data helped to reduce costs by more than 27% and increase program impact by 57%. To put that another way, when we started our journey in 2011 we helped 1.9 million people on an annual basis...., today we help over 3 million. That's impact."
Question 3: What's the bigger picture that drives this?
Pizarro: "Nearly 870 million people around the world don’t have enough food to eat. Research shows that when investments are made in the world’s 2.6 billion small-scale farmers, agriculture can make twice the impact on poverty reduction. Our focus is to equip these small-scale farmers, who produce approximately 80 percent of the food consumed in the developing world, to provide enough food for everyone. We give them the tools, education, and livestock to bring about positive transformation."
"Heifer’s Theory of Change is our planning and evaluation method for social change. It’s the tool we use to focus our work and what helps us map the progress to sustainability and results that last. The separate pieces work as interconnected building blocks. We use outcomes, dimensions and impact measures to create the equation to the pathway for change. Key focus areas include income, nutrition, environment, women’s empowerment and social capitals."
"To make an impact is to understand the impact we're making. Only then you can grow and become better. And that requires everyone in our global organization to be empowered - all the way from our management to our people 'on the ground' who work on a day to day basis with our partners. Their impact is influenced by their ability to make decisions based on relevant, timely, comparable and understandable financial information in real time."
Question 4: Obviously you came from a different situation. What triggered Heifer to say 'stop, we have to change'?
Pizarro: "Eight years (2008) ago the organization was struggling to keep up with the speed of change that was happening in the world.
Our financial visibility was poor with data stored in country offices which we didn't have access to from headquarters. Consolidation had to be done manually. There was no integration between systems. Donors, private foundations, other NGOs, government, and communities required more detailed and frequent reports. In other words, the new normal demanded more transparency, lower G&A cost, and real time responsiveness."
"Long story short: We realized we had to do something about our inability to scale-up and increase the impact of our projects more quickly. The writing was on the wall. In a world facing ongoing conflicts, corruption, corporate greed, unsustainable food systems, and the consequences of climate change, doing nothing was not an option. "
"So Pierre Ferrari, CEO of Heifer Int’l, challenged the organization to build an infrastructure of best in class systems to support growth, diversification of revenue, and increase scale of program impact. These global systems had to support large-scale projects, and meet the demands of accountability and transparency required by sophisticated donors. A significant risk in this transformation was our decision to replace our ERP system with Unit4's Business World application.
Question 5: What impact did that have?
Pizarro: "In a nutshell, we have increased program scale and impact by 51% resulting in an ability to help +3M people per year (vs. 1.9M in 2011) with a stable footprint of people (~900 FTE)."
"Contributors to this increased impact are for example:
- Managers are able to make decisions based on real-time information, so they are more decisive, relevant, informed and timely.
- We could benchmark (and instantly improve) our programs due to the ability to compare results achieved across Heifer’s entities."
"Beyond project impact, we've also become a much leaner organization resulting in a 27% reduction in general and administrative expenses which equates to an average saving of $2.3M per year since 2011."
"A number of new efficiencies contributed to these savings:
- The ability to constantly review and slice overhead cost through centralization.
- A reduced Financial close from 2 months (and 15 FTE) to literally the press of a button by simplifying the Year-End closing process and preparation of consolidated financial statements.
- A simplified revaluation process without manual calculations.
- Reduction in the complexities associated with a multicurrency environment."
"Last but not least we have also improved trust among our donors:
- Donors can now follow their dollars throughout the organization as a consequence of our significantly increased financial transparency.
- This same transparency provides a high level of confidence to auditors. Our last management letter from the auditor report: No Deficiencies.
- Fraud and abuse of our limited resources can be detected more quickly due to increased internal controls."
Question 6: Heifer is involved in all kinds of highly visible, life-changing projects around the world. Can you give some examples?
Pizarro: "On April 25, 2015, an earthquake with a magnitude of 7.8 killed nearly 9,000 people and injured nearly 22,000 in Nepal. Hundreds of thousands of people were made homeless with entire villages flattened, century-old buildings destroyed. Heifer was able to respond immediately because of the donor's community and systems in place including Unit4 Business World. Heifer International assisted more than 31,000 families and distributed $2.5 million in 40 affected communities.”
As a result of its impact in Nepal, the Hilton Prize Coalition selected Heifer as one of six NGOs to prepare a film “On Shifting Ground”. An auditor from USAID/ OFDA said: “Heifer was one of two NGOs in my 30+ career where I didn’t have any findings.
Having a robust financial accounting system such as Unit4 Business Word has provided Heifer with the ability to respond fast and with 100% transparency to its donors.
And there are many other examples such as China’s earthquake in April 2013, Philippines ‘s Typhoon Hagupit in December 2014, Philippines’s Super Typhoon Lando in October 2015, Ecuador’s earthquake in April 2016 and Hurricane Matthew in Haiti last October 2016. In the case of Haiti, we are now accepting contributions in Bitcoin.”
Question 7: What are the three lessons you've learned?
Pizarro: "There are many lessons I could share about the implementation of an ERP, but let me summarize the three that I call our key success factors:
- Tone at the top. Support from the executive leadership is critical along with total engagement from employees.
- Standardization of business processes is a critical success factor for a successful ERP roll-out. Without standardization, the project will fail. For example, standard accounting principles and job descriptions.
- Technology is only as good as the people who use it. Investment in training is fundamental for a return of investment.
“Making the right bets and choices all adds up. What started with a donation of 17 cows 72 years ago, has grown into something much bigger that has the power to change the world. We believe strongly that together, we will win the fight against hunger and poverty.”