Plan's treasury singled out for best practice foreign exchange

Plan’s approach to foreign exchange processes has been labeled a best practice in a new report commissioned by Stamp Out Poverty, the affiliation of UK charities that includes Oxfam, Christian Aid, Save the Children and War on Want.

Specifically, Plan’s global treasury operation was singled out in the report, ‘Missing Millions’, for introducing competitive tendering into its foreign payment policy, resulting in significant savings that can, in turn, be reinvested into development projects. 

Significant savings

Plan’s treasury department handles hundreds of millions of euros every year, so spending even tiny fractions of a cent extra for each dollar or euro exchanged for a local currency can quickly add up. Many non-governmental organizations (NGOs), including Plan until 2008, use their respective local bank within development regions to exchange incoming dollars for the local currency.

“It’s understandable that millions are lost this way,” says Plan’s Group Treasurer Annemarie Moore. “The banks that charities use in local countries are often small, local, easy, have a long relationship with the NGO and provide free banking. The cost of foreign exchange is often not considered a price that can be open to competition.”

“But in fact the organizations are losing out,” she adds. “And when you’re talking about hundreds of millions of euros every year, as our operation is, those extra fractions turn into a significant amount at the end of the year.”

Competitive quotes

The new policy, which was implemented in the 2008 financial year, now means that many Plan countries are receiving local currency purchased by Plan’s international treasury team, having sought competitive quotes from at least two providers where possible.

In addition to price, a significant factor in selecting the parties that Plan uses for purchasing local currency is the ability of the provider to transfer the currency efficiently.

Read the 'Missing Millions' report via the Stamp Out Poverty website.

Read 'Plan's Worldwide Annual Review and Combined Financial Statements 2009' to learn more about our progress toward our vision and mission between July 2008 and June 2009 and how our partnerships have helped to improve children's lives across the world.