HARVARD TRANSITION PANEL:
Early Lessons Learned & Promising
Practices-Transitioning to NGOs
Wednesday, August 11, 2010
3:00-4:00PM
8th Annual Track 1.0 ART Program Meeting
Agenda
 Introduction: Two NGO Models: Lessons and Challenges
o John Lichten, PI/Executive Director, Harvard PEPFAR Program
 Transition in Nigeria: Independent NGO Model
o Prosper Okonkwo, CEO, APIN, Ltd.
 Transition in Botswana: Linked to Track 1.0 Partner Model
o Ria Madison, COO, BHP, Ltd.
 Elements of Successful NGO & Challenges of the NGO Model
o John Lichten, PI/Executive Director, Harvard PEPFAR Program
 Challenges of Transition
o Mark Barnes, Chair, Harvard PEPFAR Oversight Committee
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)
Transition in Nigeria: Independent
NGO Model: APIN
APIN slides
Botswana Harvard AIDS Institute
BHP
Ria Madison, Chief Operating Officer
August 11, 2010
8th Annual Track 1.0 ART Partners Meeting
Agenda
 Development of BHP
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Introduction
Governance
Phases of Transition
Management Systems
 Current Status
 Future Steps
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:
o 20% from PEPFAR
o 80% from sponsored research
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
Transition Workplan
 Work plan development by:
- Activity
- Status
- Responsible Person
- Deadline for completion
• Categories of Activities
-
Finance
- Human Resources
- Administration - Reporting
- IT
- Grant Administration
- Governance
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
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
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
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).
Elements & Challenges for
Successful NGO
 Common Elements for Success (Micro-Level)
 Dynamic, strong, experienced, committed:
o CEO, COO, CFO, CIO
o Senior Staff
o Engaged Board of Directors
 Mission and scope must be clear
 Short and long range plans must be developed
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)
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)
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?
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
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)
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
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
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

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
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
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
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
Thank You!