MSF 2007-2011 Growth Analysis

Busting the Myths - by B. Jochum / C. Stokes

MSF has been growing too fast. MSF has been growing in the wrong areas i.e. HQ growth is higher than field growth. Field growth is mainly driven by salary increases. Budget growth has not translated in more assistance or better medical quality, but fewer patients!

 These statements have increasingly permeated the movement. They show a healthy critical concern for how we use our resources to achieve our social mission goals, but do they hold true when we examine the numbers?

Although limited to dynamics at a macro level, with a lot of dimensions still to be examined, this first analysis – attached at the bottom of this page - produced for the Excom/IB by OCG and OCB often goes against such pre-conceived ideas prevalent in the movement. And for MSF, the first results are more reassuring than anticipated.

  1. Compared to the growth pattern of similar aid organizations, MSF does not stand out. MSF has broadly followed the growth of the humanitarian or development sector, apart from in 2010 due to the earthquake response in Haiti, which is to be expected for an emergency medical organization. In 2011, our growth realigns with the sector average.
  1. There is a growing disconnect between the economic dynamics of the countries where MSF has programmes, versus countries where MSF fundraises. In constant currency, MSF’s growth is only marginally higher than the GDP evolution of some of the countries in which we operate (least developed countries), but the difference becomes striking in comparison to the countries where we fundraise (Europe, US, Japan..) which experienced 0% over the 5 years.
  1. Inflation and foreign exchange effects account for more than 1/3 of the growth. MSF’s budget has grown by 56% over the past 5 years, but after correction for foreign exchange and inflation the number is actually 36.6% or 8% average per year. Therefore, an annual budget growth of 3 to 4% allows only keeping up with inflation and FX variations, with zero increase of activity.
  1. The second driver for growth is human resources, but unit labour costs remained almost stable when excluding adjustments related to inflation.The 30% increase in HR costs corresponds almost entirely to the increase in number of FTEs. This finding contradicts the usual assumption that staff policies have made HR more and more costly, which is not apparent over the last period. It also questions whether national staff salaries really increased beyond mere inflation adjustments. The relative weight of staff costs in field expenses however remains stable at around 50%.
  1. The number of patients treated and projects have significantly increased, within a range that seems globally proportionate to the additional means invested.With 36,6 % more budget compared to 2007, and 30% more staff (all categories included), MSF has, according to the 2011 typology, performed more:
  • inpatient hospitalizations (+ 29%)
  • surgeries (+36%)
  • deliveries (+72%)
  • ITFC admissions(+98%)
  • ATFC admissions (+219%)
  • MDR TB treatments (+68%)
  • ARV treatments (+81% on 1st line, +169% on 2nd line)
  • neglected diseases’ treatments with Chagas (+264%) and Kala Azar (+82%)
  • cholera (+203%)

while keeping approximately the same number of malaria cases (+6%), OPD consultations (+0%), TB and HAT treatments, as well as NFI distributions.

The increase of activities has mainly taken place in the field of hospital care, nutrition and long-term treatments; all of them are very labour intensive. Vaccination campaigns are too variable from year to year to draw any valid conclusions.

The number of projects has risen by +40% also matching budgetary growth at year end with only a small evolution in annual cost per project (+5% per year). 

  1. For field expenses, medical costs (+65%), national staff  and logistics have risen faster than any other family (apart from freight, directly linked to the big emergencies and notably Haiti).
  1. Key ratios improve over the period, with HQ growing less than operations. The London ratio increases from 65% to 67,5%, while the social mission ratio reaches 81,6% up from 81%. Field expenditure has therefore been increasing slightly as a share of overall spending.

In constant euros, field programme costs have increased by 41% compared to 28% for the HQ despite the major catch up after 2010.

There are no significant differences between the average patterns for OCs and partner sections, although there are major discrepancies inside these categories: the slower growth in MSF USA cancelling out the faster growth of some other PS. It should be noted that during the same period the impact of new entities accounted for 10% of the total headquarter growth and 14% of the fundraising, following strategic investments made by the movement.

  1. Fundraising accounts for 37% of the FTE increase in the MSF headquarters, and has shot up by 62%This is likely due to the development of labour-intensive new techniques (Face to face...), but also to the international FTE freeze up to 2010 which did not apply to fundraising. Extra support (FTE) for the social mission only increased by 18% and management by 20%.

More still has to be done in terms of detailed analysis and establishing the link between MSF political, operational and medical orientations and resource allocation.

However, it may be concluded after this analysis that:

  • There is no obvious disconnect between medical activities in the field and extra resources injected for programmes by MSF: on the contrary, the results in terms of number of patients matches broadly the growth of resources. Ratios have in general evolved in a positive way. Indeed these numbers raise the question as to whether quality has evolved during the period, as we often like to think, or whether the increase has only been quantitative.
  • Fundraising is by far the main explanation for FTE growth at HQ level, which is linked to new techniques, new investments but also to the policy of private funds which has built-in costs.
  • Although conducting many more operations, MSF has not privileged support to the social mission (operations, technical capacities) in its strategic choices but rather administration and fundraising. Further investigation should be made to confirm or not the hypothesis that the operational teams (cell members) remained stable during the period. This could imply either greater efficiencies or on the contrary more risks in terms of implementation of the social mission and ability to reach objectives in quality.

The impact of inflation/foreign exchange is very significant on the levels of budget growth, MSF starts to really increase its activities only above 3 to 4% of annual budget growth.

This raises questions about the real consequences of the growth level agreed to within the RSA 2 framework for the 2012-2015 period: what impact may it have on MSF’s level of assistance to be embarked on a “zero growth activity” period and what may be done about it? 

Key choices lie ahead for the strategic executive and associative levels: how can we adapt to a period of planned stagnation in terms of growth, what ambitions should we prioritise if there is no growth? what new avenues can we explore in terms of fundraising to allow the extra growth to take place on chosen priorities ?

 

By: Association Intern