Promoting Democracy: National Endowment for Democracy's Management of Grants Needs Improvement
NSIAD-91-162
Published: Mar 14, 1991. Publicly Released: Mar 14, 1991.
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Highlights
GAO reviewed the National Endowment for Democracy's programs and operations, focusing on the Endowment's: (1) evaluations and reports of program effectiveness and results; (2) grantees' compliance with financial controls and administrative procedures; and (3) Board of Directors' role in providing oversight and direction over Endowment activities.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| United States Information Agency | The Endowment is responsible to the U.S. Information Agency (USIA) for compliance with procedures to ensure that grant funds are used for purposes intended by the enacting legislation. USIA should ensure that the Endowment's Board of Directors improves its capability to evaluate and report on the effectiveness of the Endowment by identifying more specific and measurable goals and priorities, including specific budget targets for individual regions and countries. |
Closed – Implemented
The Endowment's Board of Directors established an evaluation committee. In August 1991, the Board established a subcommittee to help develop a broad strategic plan and a new annual priorities document for 1992. The strategic plan and new annual priorities document were completed and approved by the board on January 17, 1992. The priorities document identified goals, priorities, and budget targets.
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| United States Information Agency | The Endowment is responsible to USIA for compliance with procedures to ensure that grant funds are used for purposes intended by the enacting legislation. USIA should ensure that the Endowment's Board of Directors improves its capability to evaluate and report on the effectiveness of the Endowment by including in annual reports to Congress an assessment of Endowment program results for the past year based on Endowment goals and priorities. |
Closed – Implemented
In its 1991 annual report, the Endowment reported on the degree to which it was successful in allocating resources as planned in its annual priorities documents, and include analyses of individual projects' accomplishments and multi-project evaluations of completed projects with similar characteristics.
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| United States Information Agency | The Endowment is responsible to USIA for compliance with procedures to ensure that grant funds are used for purposes intended by the enacting legislation. USIA should ensure that the Endowment's Board of Directors improves its capability to evaluate and report on the effectiveness of the Endowment by establishing a capability to: (1) independently evaluate selected core and discretionary grantee programs; (2) assist grantees to develop more specific and measurable evaluation objectives; and (3) review grantees' and subrecipients' compliance with evaluation procedures. |
Closed – Implemented
In March 1992, the Endowment's Board of Directors approved a strategy for independent program evaluation. Each year, the Endowment will earmark funds for independent evaluation and develop an annual plan that will select projects to be examined, and the purpose and scope of each evaluation. During 1992, NED hired consultants to conduct independent evaluations of projects NED funded.
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| United States Information Agency | The Endowment is responsible to USIA for compliance with procedures to ensure that grant funds are used for purposes intended by the enacting legislation. USIA should ensure that the Endowment's Board of Directors requires progress reports to include more detailed information that will enable the Endowment to better monitor compliance with financial controls. |
Closed – Implemented
The Endowment modified quarterly progress reports to include questions about whether separate accounts are being maintained or interest is being earned. The Endowment is also requiring grantees and foreign subrecipients to provide verification that grant funds are being maintained in separate bank accounts.
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| United States Information Agency | The Endowment is responsible to USIA for compliance with procedures to ensure that grant funds are used for purposes intended by the enacting legislation. USIA should ensure that the Endowment's Board of Directors develops a detailed plan and strategy for conducting reviews and audits of core and discretionary grantee administrative costs and monitoring and verifying compliance by foreign subrecipients. |
Closed – Implemented
In response to the recommendation, the Endowment has made OMB A-133 requirements for all of its grantees. However, it still has not reached agreement with USIA on how A-133 should be applied to its foreign subrecipients. No further action is anticipated, so the recommendation should be closed. The Endowment has instituted an audit provision in its grant agreement in accordance with OMB A-133. It continues to work with USIA to develop a plan and strategy for conducting reviews and audits of foreign subrecipients. The Endowment is working with USIA to develop an alternative to A-133 that increases the threshold requirement of the foreign subrecipients to grants greater than $100,000.
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| United States Information Agency | The Endowment is responsible to USIA for compliance with procedures to ensure that grant funds are used for purposes intended by the enacting legislation. USIA should ensure that the Endowment's Board of Directors revises grant agreements to: (1) explicitly require independent financial audits of foreign recipients, including tests of compliance with grant terms and conditions; and (2) clarify foreign subrecipients' responsibilities for complying with financial controls. |
Closed – Implemented
The Endowment revised its grant agreement to require that grantees conduct audits in accordance with OMB A-133 guidance. This guidance requires grantees to audit foreign subgrantees. The revised grant agreement also required verification of separate bank accounts for the grantee and subgrantees. The Endowment developed a model subgrantee agreement for core and other U.S. grantees to use.
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Foreign aid programsFunds managementGrant administrationGrant monitoringInternal controlsNonprofit organizationsPolitical activitiesProgram evaluationReporting requirementsEndowments