A per diem (Latin for “per day”) is a payment made to cover travel related expenses, such as accommodation, transport and meals, for employees and program participants. Because collecting receipts can be time consuming (or sometimes impossible in the case of tuk tuk drivers or market food stalls), per diems are normally set at a flat rate and if the actual cost is less the individual gets to keep the difference.
While per diems have been abused in both developed and developing countries, this post focusses mainly on aid programs in developing countries. A review by the U4 anti-corruption resource centre found that although per diems have some benefits, NGO and government staff often view them as a way to supplement their salaries. This can lead to people attending unnecessary meetings and workshops in order to collect per diems (preventing them from doing their real job), skimming the per diems of subordinates, or falsifying participation records. NGOs and donors can also become involved in a per diem arms race, in which they offer higher and higher per diems to get people to attend their meetings and workshops.
I’ve often wondered what I can do as an international development professional to help prevent the abuses associated with per diems. Thanks to the U4 per diem policy analysis toolkit, and a useful report by the The Norwegian Agency for Development Cooperation (Norad) I now have some concrete actions to implement:
1. Only use per diems to pay travel related expenses.
Government staff, volunteers and program participants often have very low salaries. It’s a normal reaction to want to help them by supplementing their income or providing monetary incentives. However, per diems should not be used for this purpose. If you want to provide a monetary incentive or income supplement this should be a separate line item in your budget, not part of the per diem. Keep per diems just for reimbursing travel expenses.
2. Set per diems based on a survey of costs in different locations, and respect any government guidelines or donor community agreements.
Many of the per diems rates used, particularly by international NGOs, are far higher than the actual costs of travel. This makes them more of an incentive or perk. To set the per diem rates for your organisation you should do a survey of hotels, transport and meal costs in different parts of the country and then create a set rate for each area. The same per diem rate should not be used for the entire country – locations should be classified into a low, middle and high band.
In some countries a group of donors and/or the government have agreed on a set of standard per diem rates in order to prevent unnatural and rapid escalation of per diems. If that is the case you should always use the agreed rates. It’s also important to understand how big the per diem is relative an an individual’s salary. If they can make half their monthly salary by attending one NGO training session (as is often the case with government staff and program participants) then the system is more likely to be abused.
3. Use the same per diem rates for everyone and make them publicly available in an official policy.
It’s common for employees of different ranks to receive different per diem allowances, so that higher per diems are seen as a benefit of getting a promotion. To prevent this, only one rate should be used for everyone if they are having the same meals, transport and accommodation. If you want to reward people of higher rank then this should be done by paying them a higher salary, not by inflating their per diem. The per diem rates should be part of an official organisational policy, which should be made publicly available.
3. Book large travel expenses (accommodation, transport) for the individual, and reimburse the actual cost.
To reduce the amount of money paid as per diems it is better if large travel expenses, such as accommodation and flights, can be booked in advance so that the actual cost is known. The individual can then be reimbursed based on the real expense when they submit a receipt, rather than including it in their per diem. Per diems should be limited to covering small costs, such as local transport (taxis, motos), meals, and in cases where accommodation cannot be booked in advance.
4. Where possible, transfer per diems electronically rather than in cash, directly to the person receiving them.
Per diems are most often paid in cash, and in some cases they are paid to a manager who is responsible for giving it to their subordinates. In many instances cash in the only option for participants who don’t have bank accounts, but for employees it may be possible to pay their per diems electronically, which improves record keeping. Per diems should also be paid directly to the individual receiving them to avoid the possibility of their manager taking part of it. Regardless of how they are transferred, the individual should always have to sign a receipt for the amount that was received.
5. Don’t allow the person receiving the per diem to decide how many days they need to travel, or how many training sessions or workshops they need to attend.
One of the biggest problems with per diems is that some people will deliberately schedule meetings or training in faraway locations to maximise the amount of travel required. To avoid this, the person making the final decision on whether a workshop or travel is needed should not be the same person who will be receiving the per diem for attending. Of course, employees should still provide input into their travel schedule, but with enough oversight to make sure the travel is really necessary. Workshop organisers can also falsify participation records in order to collect other people’s per diems if they do not show up. Preventing this requires careful monitoring and auditing of records.
6. Only pay the full per diem at the end of the meeting or workshop.
Another common behaviour is for some people (particularly senior officials) to attend multiple workshops on one day, staying only long enough to collect their per diem before leaving. This can be avoided by recording attendance throughout the day, and only paying the full per diem at the end of each day, or at the end of the whole workshop.
7. Only run essential meetings and workshops, and only accept people who were actually invited.
Per diem abuse is exacerbated in situations where NGOs, donors and government run excessive numbers of training sessions, meetings and workshops that no-one is really interested in attending. Even when people are interested the person who was actually invited is often replaced by their superior (who just wants the per diem) or by another person. This is counter productive because the replacement person often doesn’t contribute anything.
So one of the most important things you can do is to only schedule meetings and workshops that are essential – and only accept the participants who were actually invited (not random replacements). You could even ask people complete a brief form that summarizes what the event is about, how they will benefit, how your organization will benefit, and “next steps” following the event.
Photo by bradipo.