DFAT Recognised Development Expenditure (RDE) Webinar March 12, 2014

10 – 11am 2 – 3pm

Presenter: Geoff Simkiss Financial Assessor

Agenda

• • The RDE Principle Purpose of RDE • AFS Link & Good Practice • Unpacking the RDE Worksheet • Common errors, issues • Questions

The RDE Principle

• • RDE is the total eligible contribution that each NGO receives

from the Australian community

for the organisation's

own development assistance

,

emergency relief

or

rehabilitation activities overseas

and

development education in Australia

. • Eligible contributions include donations of

cash, gifts in kind and volunteer services

.

Up to half

of the RDE can be for

eligible volunteer services

.

eligible gifts in kind

and / or

Purpose of RDE

• To measure Australian support • To use RDE in allocating funds RDE does NOT • assess the financial viability of an NGO • provide an indication of the effectiveness of an NGO

AFS Link & Good Practice

Why link to an agency’s audited financial statements?

• • • It has been checked and signed off as audited by an independent appropriately qualified person It should accurately reflect the agency’s true financial situation The amounts in the RDE Worksheet should clearly reflect the amounts and notes in the audited financial statements • Provides greater transparency and consistency

Unpacking the RDE worksheet

2013 Recognised Development Expenditure (RDE) Worksheet Due: 31 March 2013 NGO:

………………………………………………..

(Insert Organisation Name)

Based on NGO's Financial Year Ended:

…………….

(eg 30 June 09 or 31 Dec 09)

Refer to the RDE Explanatory Notes when completing this RDE worksheet. Refer to the ANCP Guidelines for further information on eligibility.

Refer to the ACFID Code of Conduct Summary Financial Reporting Format for definitions.

$ DISBURSEMENTS

1 Total Disbursements as per Audited Financial Statements (AFS) 2 Value of Gifts in Kind / Volunteer services ( if incl in

Total Disbursements

in AFS) 3

Net Total Disbursements DEDUCTIONS

4 Disbursements that relate to funds received and interest earned from: (a) AusAID (b) (c) (d) Other Australian Government Depts &/or Accredited NGOs Overseas (organisations or individuals) Tsunami Appeals 5 Disbursements that relate to: (a) (b)(i) (b)(ii) Welfare, Evangelistic and Political activities Channelled Funds International Partners, Alliances or Affiliates considered ineligible (c) (d) (e) (f) Domestic Projects (other than community education) (as per AFS) Fundraising costs (as per AFS) Administration costs (as per AFS) Administration &/or promotion costs of international / regional affiliates 6

Total Deductions TOTAL CASH RDE

7

Total Cash RDE

(Disbursements less Deductions)

NON-CASH RDE: GIFTS IN KIND AND VOLUNTEER SERVICES

8 Value of

eligible

Gifts in Kind (if incl in AFS*) 9 Value of

eligible

volunteer services (if incl in AFS*) 10

Total Non-Cash RDE

(* but must not exceed Total Cash RDE - i.e. line 7)

TOTAL RECOGNISED DEVELOPMENT EXPENDITURE

11

TOTAL RDE

(Cash RDE + Non-Cash RDE)

Unpacking the RDE worksheet

Total Disbursements Less Deductions A B Cash RDE NON CASH RDE GIK Volunteer Services

TOTAL RDE

(A-B) = C D C+D( ≤C)

E

Unpacking RDE – Total Disbursements

Unpacking RDE – Disbursements based on Source

Unpacking RDE – Disbursements based on Eligibility

Unpacking RDE – Welfare 5 (a)

Welfare means assistance to maintain individuals in a particular condition on a longterm basis, such as institutionalised care programs provided by orphanages, child sponsorship (that is, funds given directly to children or their families, and not funds drawn from child sponsorship and used for development purposes), hospital care programs, hospices, and costs for the maintenance of structures for institutionalised care programs (for example, schools or orphanages) • • • • Welfare is implemented independently of other sustainable community development activities Welfare includes no strategy for integration into a broader, community development program Welfare is provided on an individual or family basis, rather than on a community basis, and is unconnected to emergency needs Welfare activities are implemented on a long-term basis with no clear exit strategy

Unpacking RDE – Channelling 5 (b)(i)

For an item to be included in the RDE calculation the Australian NGO must be able to demonstrate that it:

• has knowledge of the activity or overall program and receives relevant information from the implementing organisation which enable it to engage in a meaningful way with the activity. Examples include financial reports, progress and evaluation reports; • is able to influence activity or program direction; and • has the ability to withdraw funding or initiate action where an activity or program is not aligned with Australian NGO priorities or Australian Government policy requirements

Unpacking RDE – CASH vs NON CASH

Unpacking RDE – NON CASH

• • Value of goods-in-kind as recorded in AFS, and sent overseas for development Value of eligible volunteer services as recorded in AFS • Two approaches to inclusion of Volunteer Services in AFS • in the financial statements and the notes; or • notes only • must disclose amount and valuation

Unpacking RDE – Non Cash - Example AFS recording

Unpacking RDE – Non Cash - Example AFS recording

Unpacking RDE – Non Cash - Example AFS recording

Unpacking RDE – Valuing Volunteers

Volunteer services may be professional or non-professional, in Australia or overseas (some restrictions) • volunteer contributions in Australia and overseas for the delivery of overseas development projects; • volunteer contributions in Australia for the delivery of community (development) education projects.

Unpacking RDE – Valuing Volunteers ctd

• • • • Value is estimated according to market pay rates and conditions that would cost to hire staff For consistency, standard pay rates provided DFAT based on levels Offset value for any payments made to volunteer (not living allowances) Maintain appropriate records (capable of audit)

Common Errors

• Deduction of Grants received rather than grants dispersed • Utilisation of Prior years RDE worksheets • • • • • • Errors relating to Volunteer Services (VS) & Gifts in Kind (GIK) • Deduction of VS & GIK from Total Disbursements when not included in AFS • Inclusion of VS & GIK in RDE when not included in AFS Non cash RDE > Cash RDE Inclusion of overtime when calculating value of VS Incorrect rates used when calculating VS Inclusion of gifts not sent overseas when calculating value of GIK Inclusion of gifts related to tsunami programs when calculating value of GIK • Not taking into account ANCP Administration allocation

Common Errors ctd

• • Double counting – ie fund raising costs also included in admin Inclusion of ineligible disbursements, such as • International partner disbursements (office administration, network fees) • Administration (audit fees, bank charges, losses incurred on investments, depreciation, COGS) • • Fundraising Disbursements relating to funds received from international partners and government bodies • Disbursements relating to funds received from AusAID interest income • Inclusion of ineligible projects in RDE calculations • Welfare, evangelistic and political activities (not development orientated) • Channelled funds (lack of evidence of NGO involvement in the project) • Simple addition / transposition errors

Questions

Geoff Simkiss – Financial Assessor [email protected]