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7. Financial Arrangements

7. Financial Arrangements

Good financial management is essential to all projects and when embarking on a community development expedition it is important that clear arrangements are in place from the start.

Financial arrangements and control in the UK

There are strict rules laid down in "Policy, Organisation & Rules" for all accounts. These must be adhered to at all times. There are also strict rules in relation to fund raising which must be followed.

On most community development projects there are usually two separate funds namely:

These cover the personal costs of participants and include items such as airfares, food & accommodation, insurances, excursions etc.

These funds relate directly to the development project and cover such items as materials, freighting charges, local labour and transport.

Clearly all funds donated to the project should be kept entirely separate from expedition funds.

Financial arrangements and control whilst overseas

It’s most important to establish who is responsible for individual items of expenditure at an early date. The local community should make a contribution to their project. This need not necessarily be a direct financial contribution but could be in the form of food and/or accommodation. You should also stress the importance of community participation in any building work prior to agreeing to a project. General labouring should be donated by the community. The cost of specialist skills, such as hiring stone masons or drivers, should be met from project funds. In so doing you are creating employment and positively supporting the local economy.

To ensure that materials are on site before you arrive, it may be necessary to forward finance in advance. This can be done through bank transfer. If you are engaged in a large scale project which cannot be completed during your visit you may wish to arrange stage payments for work in progress. If such an arrangement is entered into, you should insist on accounts and it is a good idea to request photographs of the completed stages.

In the UK we are moving increasingly towards a cashless society. This is not the case in most developing countries. It is quite normal to pay large accounts in cash.

A local bank account is very useful for transferring funds: both stage payments and also in case of emergency.

You will find that cheques are not widely accepted, particularly in rural areas. It is not generally advisable to hold large sums in the currency of most developing countries as there may be restrictions or tax liabilities on large amounts.

Most expeditions find traveller's cheques the best way of holding funds. These should be spread between party members for security.

Most developing countries have very strict exchange control regulations. Before departure, be sure to find out from the national Embassy/High Commission what they are and how they affect you. Stick to them!

Financial arrangements and control on-site

1. No account should be paid without a receipt. If necessary, carry your own receipts.

2. Ensure that a reliable local person is consulted regarding local purchases and prevailing prices.

3. Where a Government agency is involved, "local orders" may be used. This is a good way of ensuring that there are no disputes at a later date.

4. When goods are to be delivered, arrange for cash on delivery.

5. When dealing with local traders it is not good policy to have "accounts". Cash payments ensure that there are no disputes at a later date.

6. Ensure that a written agreement is obtained regarding project responsibilities and funding.

7. Proper accounts should be kept and copies supplied to partner groups.

8. If works are not completed during your stay, any balance should be left with your partners in order that work can continue. If a substantial sum is involved, it may be best to return to the UK with the funds and arrange a stage payment system.

9. Keep a contingency reserve at all times.

10. Visit the banks often. Do not keep large sums of money on site. If large sums are required for a transaction, arrange for the trader to accompany you to the bank.

11. Where local labour is employed, it is normal to pay on a piece work basis.

12. Expect long delays in banks.