In past years, we’ve written that we had significant concerns about the financial reporting and financial management of the Schistosomiasis Control Initiative (SCI), one of our top charities since 2011. Our concerns have included:
- We had not been able to learn important and basic financial information about SCI. Despite substantial effort, before 2016 we were not able to determine the total amount of funding that SCI held at any one time. We also had very little information on what SCI’s funds were spent on within country programs.
- We found that SCI’s financial reports were prone to containing errors.
Due to these concerns, we decided to focus our research on SCI in preparation for our June 2016 top charities update only on the quality of its financial reporting and financial management. We felt that seeing significant improvements in the quality of SCI’s finances was necessary for us to continue recommending SCI.
Our main takeaways from our research on SCI so far in 2016:
- SCI has begun producing higher-quality financial documents that allow us to learn some basic financial information about SCI, including the total amount of funding it holds, how much funding has been allocated to its upcoming budget year, and how it spent restricted and unrestricted funds by country in the previous budget year. We have also been able to learn somewhat more about how its funds are spent within national deworming programs.
- We learned of two substantial errors in SCI’s financial management and reporting. 1) a July 2015 grant from GiveWell for about $333,000 was misallocated within Imperial College, which houses SCI, until we noticed it was missing from SCI’s revenue in March 2016; and (2) in 2015, SCI provided inaccurate information about how much funding it would have from other sources in 2016, leading us to overestimate its room for more funding by $1.5 million.
- The clarity of our communication with SCI about these financial errors and its plans for the upcoming year has improved in comparison with previous years.
SCI’s financial documents in 2016
As of the beginning of April 2016, SCI had $15.8 million ($8.6 million in restricted funding and $7.2 million in unrestricted funding) available to allocate to its April 2016 to March 2017 budget year, according to its recent financial documents. Despite our discovery of additional financial errors this year (discussed below), we feel fairly confident that this information is accurate. We’ve seen transaction-level detail for each of SCI’s accounts, asked SCI’s new Finance and Operations Manager questions about the data, and largely received clear and reasonable answers.
SCI also sent us detailed breakdowns of in-country spending in its 2015-16 budget year for six of its country programs. Although this spending data gives us some information about what SCI’s funds were spent on within country programs last year, we note that we have not seen spending breakdowns for the eleven other deworming programs supported by SCI in 2015-16 (additional concerns about this spending data are discussed in our full review of SCI.)
Despite the improvements in SCI’s financial reporting that have allowed us to learn some basic financial information, we remain concerned about SCI’s use of Imperial College’s accounting system, which seems ill-suited to SCI’s needs. SCI has told us that it began using new accounting software in April 2016; we’re uncertain about the degree to which this will alleviate our concerns.
Financial errors we learned about in 2016
We’ve learned about two financial errors this year:
- Not realizing that it had not received a transfer of funds from GiveWell: In July 2015, we granted $333,414 to SCI, which included all donations we received designated for supporting SCI between February and May 2015. After reviewing SCI’s financial documents in March 2016, we informed SCI that the July 2015 funding did not appear to be accounted for. After investigating the issue, SCI found that the funds had been misallocated by Imperial College to a different part of the college. SCI did not receive the funds until April 2016. SCI has asked Imperial College why the error occurred, but has not yet received a substantive response.
- Underreporting available funding from DFID: In October 2015, SCI sent us its target treatment numbers for each national deworming program it supports, amounts of funding available from DFID and other large donors, and the amounts of additional funding required to deliver the targeted number of treatments and cover central expenditures for its April 2016 to March 2017 budget year. In March 2016, SCI sent GiveWell documents that indicated that around $1.5 million more funding was available from DFID to allocate to SCI’s 2016-2017 budget year than indicated in the October 2015 document. SCI told us that the October 2015 document included funding that was available from DFID to allocate to national deworming programs, but omitted $1.5 million in funding available from DFID to allocate to SCI’s central expenditures.
We consider both of these errors to be substantial. We are uncertain whether SCI would have ever received the funding from donations we collected on SCI’s behalf between February and May 2015 if we had not brought the issue to SCI’s attention. Our room for more funding analysis is a major factor in determining our funding recommendations to donors and to Good Ventures; an overestimation of SCI’s room for more funding by $1.5 million could have caused us to recommend donations to SCI that would have been better allocated to filling other funding gaps.
Our communication with SCI
Although we think that the financial errors we learned about in 2016 were substantial, we believe that it is a good sign that we were able to learn of these errors by communicating with SCI. In the past, we’ve noted that we’ve struggled to communicate effectively with SCI’s representatives, which sometimes meant that we were unable to clear up our confusion about inconsistencies we found in SCI’s documents.
We also feel that we’ve communicated clearly with SCI about its plans for the upcoming year and gained a better understanding of the factors that limit the delivery of additional deworming treatments in different contexts.
Given the improvements, we continue to recommend SCI now and think that SCI is a contender for a top charity recommendation at the end of 2016. We plan, in the second half of 2016, to expand the scope of our research on SCI to include looking at recent monitoring and evaluation, cost per treatment, and room for more funding in 2017 and beyond. We continue to have some concerns about SCI’s financial reporting and management (most notably, the errors noted above) and will be following up with SCI about our outstanding questions.