9 February 2011 | Adam Leach
Oxfam could
save up to £1.5-million-a-year by purchasing foreign currencies in the UK and
sending them out to international branches.
A report,
co-authored by Stamp Out Poverty
and the Charity Finance Directors' Group,
featured a number of case studies of charities, including The British Council,Water Aid and Build Africa.
In the case of Oxfam, it revealed that by handling all the
transactions in the UK, the charity could make efficiency savings of 5 per cent
per transaction. This amounts to an overall saving of up to 1 per cent on all
currency that is converted – equivalent to £1.5 million-a-year.
Previously, the charity
distributed funds to its foreign branches by sending hard currency (pounds
sterling, US dollars or Euros), which would then be exchanged into that
country’s currency. Oxfam, which happened to already be examining this issue,
is now trialling a scheme that enables it to make savings from transactions by
centralising currency purchasing at its UK head office. The benefits of more efficient
conversion of funds far outweigh the costs of centralising procurement, the
report said.
Oxfam, which had an income £318 million over the 2009/10 financial year, began
assessing the effectiveness of its currency conversion scheme two years ago.
After consulting with financial services companies, it decided the best way to
increase efficiency was by taking advantage of the trading opportunities in the
UK.
David Hillman, director of Stamp Out Poverty, said: “In the course of gaining
this knowledge, it became apparent to us that organisations in the charity
sector were likely to be paying considerably over the odds for the currencies
they needed to operate in the developing countries in which they work.”
