Pressure from governments and other parties that provide funding to achieve economies of scale push International Non-Governmental Organizations (INGOs) to new organizational models as cost effective INGOs have better access to funding. Various organizational models and location strategies are possible, what is the most optimal set-up?
Shifts in focus of activities, sources of funding and complex geopolitics have a strong impact on the operations of INGOs. It is noticeable how state fragility, climate, youth, gender issues and inequality are gaining attention in addition to poverty. Moreover, powerful middle-income countries, such as China and India, and high net worth individuals, social investors and multinationals have become active funders besides Western governments. Last but not least, political dynamics, risks and information reach further and faster with changing technology and communications, contributing to a complex global environment.
As a consequence of all these shifts, along with organizational changes within INGOs, the geographical center of gravity of INGOs is slowly undergoing a change. A shift from classical locations such as London, Geneva, Paris and Brussels towards locations in the Global South can bring along cost benefits and a more efficient and locally engaged program management. Nevertheless, the right coping mechanism depends on the business case per INGO and pros and cons per scenario need to be thoroughly assessed.
BCI Global has identified four main scenarios for INGOs as a response to changing international landscapes.
1. Global Headquarters: One global center covering all services on a global level directing all country offices
2. Regional Support Centers: The support functions and some core functions relocate to country/regional support centers, while the headquarters with the majority of core functions stay in a central location
3A. Global Shared Services Center: The headquarters and core functions stay in a central location; however, the support functions are relocated to one global center with focus on specific shared services (e.g. Administration, Finance, HR, IT) for all offices worldwide
3B. Regional Shared Services Centers: Similar to scenario 3A, the headquarters and core functions stay in a central location; however, the support functions are relocated to two (or more) regional centers focusing on specific shared services (e.g. Administration, Finance, HR, IT) for a group of country offices (e.g. according to geographical time zones)
The choice of the organizational model leads to a tailored location strategy. A number of INGOs have relocated their headquarters or parts of their operations in order to improve their performance. ACORD and ActionAid were among the first to relocate their headquarters to Africa while UNICEF for example chose for a Global Shared Services Center in Central Eastern Europe (see case study).
A Global Shared Services Center was opened in Budapest, Hungary in 2015 for finance, human resources, payroll, information technology/global help desk, and master data management. UNICEF named the following benefits:
Source: UNICEF
Similar to the story of UNICEF, reconsidering your organizational model and related location choices can lead to clear benefits. However, the ongoing organizational reforms and complex global organizational structures make it hard to quickly align all stakeholders even within the organization. A fact-based study can provide clarity on what’s best for the organization in terms of optimizing the organizational structure. BCI Global has proven and transparent methodologies and a strong track record to share with you when it comes to cost, quality and risk aspects of different locations and business environments.
To find out how exactly BCI Global can help to make your INGO future-proof, contact Maurice Kuipers, Senior Consultant via maurice.kuipers@bciglobal.com or Cecília van der Last–Kardos, Consultant via cecilia.kardos@bciglobal.com. Both experts can also be reached at +31 24 3790222.
