Case Study: Emergency Relief Funds Parked in a Fixed Deposit

After severe flooding in a district where it operated, the funder gave Rs 45 lakh within 72 hours for rations, tarpaulins, water purification tablets, hygiene kits and shelter materials. Speed mattered more than paperwork.

Six months later the CSR head asked for the utilisation report. It took eight weeks and several reminders to arrive. It showed Rs 27 lakh on relief for 1,800 families, Rs 8 lakh on logistics, Rs 6 lakh on volunteers and Rs 4 lakh on administration: exactly Rs 45 lakh. For a programme that had ended months earlier, these figures should already have been in the books. A report that takes eight weeks to prepare raises the question of whether it was assembled to match the grant.

• Rs 6 lakh was supported by receipts from identifiable retailers. Northrop checked 4 of them: 3 confirmed the sales, and 1 confirmed a sale about 30% smaller than its receipt showed.
• Rs 5 lakh was supported only by receipts prepared by a field coordinator who had since left. The vendors named could not be found.
• Rs 4 lakh was recorded as Rs 500 a day for 80 volunteers over 10 days. Of 20 volunteers called, 12 confirmed being paid, 3 said they volunteered but were never paid, and 5 were unreachable.

Northrop visited 3 of the 8 distribution points, covering about 600 of the 1,800 families claimed, and spoke with village leaders, ASHA workers and households. About 280 families confirmed full kits, 40 received rations only, and 280 had received nothing from this NGO (some had received help from government or other agencies). Extrapolated, about 950 of the 1,800 families were reached (Grade C).

This finding needed no interpretation. The NGO explained that the Rs 18 lakh was being held for a rehabilitation phase once floodwaters receded. Holding back funds for rehabilitation can be legitimate when the donor agrees to it. Here, the waters had receded six months earlier, no rehabilitation plan existed, the donor had not been told, and the utilisation report described the money as already spent.

 The funder asked for the fixed deposit back with interest and received about Rs 18.8 lakh, which it redirected to a relief organisation with a verified distribution record. Its emergency giving policy now releases funds in three tranches (30% immediately, 30% after verified distribution to half the target families, 40% after full distribution), requires independent verification within 30 days, and prohibits investing emergency funds without the donor's written consent.

In an emergency, speed is right. But speed of release should come with speed of verification. Thirty days after the money moves, someone independent should be in the field.