Goal is nimble on ground but funding model creates strain during inquiry

As US investigates corruption allegations, Goal’s lack of unrestricted funds slows cashflow

 

It started with a single lorry. In it were Goal field workers, bringing their first supplies to Harem town, in Idlib province in north Syria. Winter was coming, so the lorry was filled with blankets.

As they crossed the border from Turkey, the team entered a landscape that was already posing some of the biggest challenges the world’s aid agencies had ever encountered.

It was October 2012, more than a year into the Syrian war, and the conflict was escalating at an alarming rate. Having begun when protests were violently suppressed by the government of president Bashar al-Assad, in March 2011, the war was metastasising and the death toll soaring.

When Goal’s advance team began assessing needs and building relationships, 10,000 people were already estimated to have been killed. The economy was collapsing, people were fleeing and poverty soaring.

Sometimes, when wars break out or natural disasters occur, the world’s multi-billion dollar aid sector already has a well-developed infrastructure on the ground. That was the case when a deadly earthquake hit Haiti in 2010. As Haiti was already reliant on development aid, many international organisations knew the terrain and had a presence there.

Syria was different. Agencies were starting from scratch. “When Goal went into northern Syria first, it was basically: find out what can be done,” says one source familiar with the organisation.

The Syrian emergency response sat comfortably with Goal’s strengths as well as its own self-image. For many years, the Dún Laoghaire-based agency had built a reputation as the outfit that could get to the most dangerous and difficult environments and get there faster than anyone else. It was the speedboat that made other Irish aid agencies look like oil tankers.

When the British government went looking for an agency to set up frontline clinics in Sierra Leone and Liberia during the Ebola outbreak in 2014 – the sort of assignment that would make more cautious agencies baulk – it turned to Goal.

It had a reputation for efficiency, agility and, critically, speed. “They are extremely nimble. They’ll have people on the plane, on the ground and on the radio back here when everybody else is just waking up to an issue. They are remarkable,” says a senior figure in another aid organisation.

From that first foray in 2012, Goal’s operation in Syria grew at a stunning pace. Having agreed huge contracts with USAID, the US government’s foreign aid arm, it built a sophisticated operation centred on the delivery of food and essential non-food items such as blankets and tents across Idlib province.

Aid workers killed

Today, two million people benefit directly from its projects. It keeps industrial bakeries running by paying salaries and fixes water networks to provide safe water.

As the programme grew, so did Goal’s infrastructure. Today, 80 staff work out of Goal’s base in Antakya, on the Turkish side of the border. A further 400 are in Syria, while it pays the salaries of 1,000 people who keep vital infrastructure running.

And as violence levels have increased and territory has changed hands, the risks have become more acute and the process of dealing with rival factions has grown more complex. Three Goal employees have been killed in the Syrian conflict.

Huge amounts of money have flowed through Goal’s Syria set-up. Last year it got grants worth more than $100 million from USAID, making it one of Washington’s biggest aid partners in the field. In many ways, Goal’s Syria operation was the culmination of a strategy it had pursued for the past five years. But within both the operation and the broader strategy lay vulnerabilities that would emerge in time.

Goal’s business model has more in common with some of the world’s biggest aid agencies than other Irish groups. While it actively solicits donations from the public, through events such as the Goal Ball and Goal Mile as well as emergency appeals, its fundraising base is relatively modest. Instead its key relationships are with institutional donors – principally USAID, but also the British government’s aid division, the Department for International Development, and the EU. These relationships helped drive Goal’s phenomenal growth in the past five years.

In 2011, Goal’s income was €52 million. In 2013 it rose to €65 million, but by 2014 it had almost doubled to €121 million. Figures for 2015 have not yet been published, but The Irish Times understands turnover last year was €210 million. That makes Goal by far the biggest Irish aid organisation.

A key figure behind the strategy was Jonathan Edgar, an Englishman who was hired by Goal founder John O’Shea and remained as chief operations offers after the arrival of Barry Andrews as chief executive in early 2013.

Edgar was in effect running the organisation during the interregnum between O’Shea’s acrimonious departure and Andrews’s arrival, and it has been widely felt within the organisation that there have been two centres of power ever since: one around Andrews and another around Edgar. Notwithstanding that, Goal was thriving, and reaching far more of the world’s poorest people than ever before.

Allegations

The first stirrings of what was to become a large-scale investigation by the US Office of Inspector General (OIG) into aid operations on the Turkey-Syria border came last November, when a routine audit in a large international aid agency identified a possible irregularity and the Americans were notified. Six OIG agents began to investigate. As the months passed, 14 outfits were drawn into the probe, including the International Rescue Committee, run by former British foreign minister David Miliband, the International Medical Corps and Goal.

The OIG has not officially released details on its investigation, but The Irish Times understands that the claims centre on alleged bid-rigging and bribery in the procurement process as well as alleged product replacement – a practice whereby an inferior product is substituted somewhere in the supply line, with someone in the middle pocketing the price difference (Goal has been cleared of any product replacement claims, it is understood).

In the massive aid scene that has built up in southern Turkey in recent years, procurement is where the big money moves. When aid agencies need 40,000 tents and 20,000 tarpaulins, they can’t go to the Great Outdoors. A relatively small number of companies in Turkey are big enough to source such huge quantities of goods and deliver them to warehouses in Syria, and those companies were in heavy demand among aid agencies.

One of the allegations being explored by OIG agents, The Irish Times understands, is that some suppliers were colluding to fix their prices. For this to work, the colluding suppliers may need someone inside an aid agency who understands, for example, where possible cracks in the system exist or the level of the lowest tender offer from rival suppliers.

In Goal’s case, The Irish Times understands, inquiries are focused on one person and on one instance of procurement for items valued at $170,000. No potential loss was found from the remainder of the €147million Goal spend in Syria, sources say. In the office in Antakya, meanwhile, staff are demoralised by the cloud hanging over the operation. One source says that Goal Turkey passed 44 external audits in the past four years. “They have been audited up and down and they came clean out of it,” the source says.

Goal’s difficulties have been exacerbated by connections between Noble House, a private firm under investigation by OIG, and three people linked to the charity.

In late 2013, Goal became aware that three people with ties to the organisation – two employees and a consultant – were directors of Noble House, set up earlier that year to provide logistics support to aid agencies. The charity, seeing this as a conflict of interest, told the three their involvement in the firm was unacceptable.

One of the employees, Edgar, was already in the process of severing his ties with Noble House. The second employee and the consultant decided to leave Goal to avoid any perceived conflict of interest. (Edgar resigned last month, although there is no suggestion of wrong-doing on his part).

Pending the outcome of its investigation, the OIG told Goal in April to suspend procurement of non-food items using US money. The suspension affects about €6.2 million of the €113 million Goal receives from USAID, though so far it has been able to keep up the flow of supplies to its beneficiaries in Syria by handing over the procurement element to other agencies.

Goal has also sacked two employees in Turkey, terminated a consultant’s retainer and commissioned accountants BDO to carry out an inquiry – a 14-week trawl of 2.4 million emails, WhatsApp messages, Skype chats and 33,000 documents.

Goal suffered another serious blow in June, when the Department of Foreign Affairs decided to withhold €2.95 million in humanitarian funding earmarked for the charity, according to documents released under the Freedom of Information Act. It withheld a further €7.16 million last month. Although Goal has said no Irish money is linked to the OIG investigation, the department says it wants “further clarity” on the US investigation.

As the crisis has developed, it has become increasingly clear, according to multiple sources, that Goal’s rapid growth was not matched by a corresponding evolution in internal controls. Speaking yesterday, after announcing he was stepping down as chief executive, Andrews acknowledged this and said he took responsibilty for it.

A more pressing concern lies in Goal’s funding base. The organisation’s emphasis on foreign government donors is partly a legacy of Goal’s development: under its founding chief executive, John O’Shea, who stepped down in 2012, the fundraising operation was comparatively small. That helped Goal keep its overheads low, as fundraising is expensive, but it also carried risk.

Donations

Usually, individual small donations are unrestricted. The money flows into an agency’s bank account by direct debit and the agency can use it as it wishes, whether on field programmes, salaries or lightbulbs. Goal has relatively little unrestricted small donor income.

Instead, Goal’s unrestricted income comes from deals it agrees with its big funders as part of each grant. Big institutional donors recognise that to implement a programme, an aid agency needs money to run an efficient administration, so they include a certain proportion – often 5-10 per cent – of each large grant for this.

Goal relies very heavily on that income stream, in particular the unrestricted percentage it gets from USAID (it is called the Negotiated Indirect Cost Rate Agreement, or Nicra). It uses the Nicra to fund its offices and to get into countries where wars or disasters strike but where it does not yet have contracts signed. For the same reason, funding from Irish Aid, even though it accounts for less than 10 per cent of Goal’s total income, is critically important because it is regular, substantial (about €15 million a year) and a certain portion of it is unrestricted.

When things are running smoothly, the model works superbly. But now Goal finds itself in a position where the loss of Nicra or Irish Aid funding will have a grave impact on cashflow. Goal’s task now is simple and urgent: it must reassure its funders and persuade them to keep the taps running.

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