I spent an hour recently with Paddington Muskwe, a chartered accountant and registered auditor. He audited nonprofits for years. Then he ran finance inside one of the largest health nonprofits in South Africa, funded by the biggest names in global health. Then he spent two years inside an agricultural partnership working across several African countries on far thinner resources. He now runs his own practice, and he agreed to be quoted here. He explained something in four sentences that I have been circling for years.
Two organizations, one difference
The well funded organization worked for a reason nobody likes to say out loud: the funding covered its indirect costs. That paid for qualified finance people, proper systems, and the discipline to run them. Clean audits followed. Donor confidence followed the audits. More funding followed the confidence. The underfunded organization had the same intentions and none of that machinery. Reporting slipped. Audit findings piled up. And the pressure from every side was to spend on delivery, never on the infrastructure that would have made delivery fundable. Same sector, same donors, same kind of people. The difference was whether the organization had ever been allowed to build the capability to be trusted.
The threshold
In his experience there is a financial threshold. Below it, an organization cannot build adequate capability no matter how well it is led. Above it, the systems and the qualified people let it secure major funding almost routinely and set its own terms. I have started calling it the capability threshold. It explains something I see constantly: two organizations doing comparable work, one raising money with ease and one unable to get past a first conversation. The difference is not the mission or the leader. It is which side of the line they started on.
It also reframes what the sector calls a competence problem. The organizations below the threshold are not worse at finance. They were never funded to be good at it, and then judged as if they had been. That is the same argument we made about the deregistration wave. Not unwilling. Never given the means.
Why the overhead argument is not enough
The sector's usual remedy is to lobby funders for higher indirect cost rates. He was blunt about that. In his view it is a drop in the ocean, because it treats a structural problem as a percentage. A few extra points on one grant does not build a finance function. It slightly reduces the deficit on one project while the organization stays exactly where it was. One nuance from me, because the overhead advocates have moved real money and deserve credit for it: their argument is not wrong, it is incomplete. Better rates stop the bleeding. They do not carry an organization across the threshold.
The cycle underneath
Put the pieces together and you get a loop with no natural exit. An organization below the threshold lacks the systems to build donor confidence. Donors, reasonably, withhold serious funding from organizations without systems. So the organization never gets the resources to build the systems that would earn the funding. Nobody in that loop is behaving badly. It is simply where a great deal of good work in this region quietly stalls.
There is a cultural floor to this too, and he named it plainly. A sector that has run for decades on grant money develops habits a business could not survive. He has watched a chief executive insist on premium travel while no monitoring system existed underneath. Systems are not only how you earn trust. They are how discipline becomes possible at all.
His provocation, and my conflict
Then he proposed something I want to report faithfully. The largest funders should collaborate to build and mandate one inexpensive platform that every organization receiving their money must use. One system, one standard, a level field. I have to say the obvious before I respond: I work for a company that builds an operating system for nonprofits, so read my view of that idea with that in mind.
Here is what I think is true whoever builds anything. The appeal is real. Shared standards would carry thousands of organizations across the threshold at once, and funders would finally see comparable data. The risks are just as real. One mandated vendor is one point of failure, and organizations already have too little say over their own tools. So the durable version of his idea is not a single platform. It is a single principle, that funders should pay for capability and not only for programs, and a shared standard for what capability means, which any qualifying system could meet. Mandate the standard. Let the platform be earned.
What you can do below the threshold
If you lead an organization on the wrong side of the line, the threshold is real but it is not fixed, and the cheapest way across it is not a hire. Three moves. Put every regulatory deadline for your country on one shared calendar with reminders, because compliance is the first thing donors check and the easiest thing to get right. Log every expense against a program budget as it happens, so the picture a funder asks for already exists. And build one honest relationship with a qualified accountant or auditor, because that seat is the one thing a system cannot replace. The system does the remembering. The professional does the judging.
Paddington's parting observation is the one I keep repeating. Organizations above the threshold do not have better missions. They have better machinery, and they were funded to build it. Until the funding model changes, machinery is the part a small organization can still choose. If you want to know which side of the threshold you are on, the NGO Readiness Assessment is free at readiness.alleviate.org. And if you are an accountant or auditor who sees this line every day, write to me at lisa at alleviate.org. This conversation started with one of you. It should continue with more.
Lisa Attoh is Regional Director, Africa at Alleviate Technologies. She works with NPO leaders, and with the accountants and advisors who serve them, across Southern Africa.
