NGO Monitor Analysis (Vol. 3 No. 6) 15 February 2005

USAID FUNDING UPDATE - FATEN -
PALESTINE FOR CREDIT AND DEVELOPMENT

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As noted by NGO Monitor, USAID has taken consistent measures to avoid the abuse of humanitarian funding for politicized objectives. In addition, USAID's "Certification Regarding Terrorist Financing" lists a range of commitments required from NGOs that operate in the West Bank and Gaza. They include a pledge that NGOs will not engage in activity with groups deemed as terrorist, such as Hamas, Islamic Jihad, and al-Aksa Martyrs Brigades.

Under these guidelines, and according to a USAID press statement of 18 January, FATEN - Palestine for Credit and Development, has recently received a $2 million cash injection, the first being in 1996 when USAID gave FATEN $4.5 million. The statement acknowledges that: "Between 2001 and the end of 2004, USAID was reluctant to release funds obligated to FATEN because of risks associated with the Intifada. USAID did, however, support FATEN's operational expenses. In late 2004, Save the Children and FATEN had cut operational expenses and established an internal auditing unit and USAID decided that they could effectively manage new funds."

According to its institutional profile, FATEN "is an independent, Palestinian not- for-profit corporation fully dedicated to providing micro-finance services. It emerged out of a micro-finance program; the Group Guaranteed Lending and Savings (GGLS) program, launched in Palestine by Save the Children (US) in January 1995." It defines its mission "To provide Palestinian micro-entrepreneurs with sustained access to financial services, to offer diverse credit products and other consultancies, to combine cost-effective methodologies with exemplary client services, to become financially sustainable institution and contribute to solving the problems of unemployment." FATEN maintains five offices in the West Bank, five in the Gaza Strip and a headquarters in Ramallah.

In addition to USAID, FATEN's donors include Save the Children (USA), Ireland Aid, The Rockdale Foundation and the UK Department for International Development (DfID).

FATEN claims to be "accountable for the wise and effective use of funds contributed by several donors who are committed to facilitate the provision of financial services to the poor. Above all, FATEN is accountable to the clients it serves." Indeed, the organization's website displays transparency; including financial reports carried out by respected accountants Ernst and Young and KPMG, as well as defining FATEN's organizational structure.

In its 2003 Annual Report, FATEN attributes difficulties in its operations due to the situation caused by the outbreak of violence in September 2001, including "Daily bombings and continuous attacks" which "destroyed many of FATEN's clients and staff houses" and claims that "Some of FATEN's clients and staff lost family members on the daily Israeli incursions and a number of FATEN's clients were killed." The report describes restrictions on movement of Palestinians including closures, checkpoints and curfews. There is, however, no mention of the Palestinian terrorism that necessitated such Israeli measures. Similarly, FATEN describes difficulties for the Palestinian population due to the construction of what it misleadingly terms the "security wall". Again, FATEN ignores the reasons for the security barrier.

However, FATEN does not engage in the active demonization of Israel practiced by a large number of other Palestinian NGOs. Its description of difficulties attributed to the situation in the Palestinian territories, while avoiding blatant politicization is, as noted, lacking in context, and fails to hold Palestinians responsible for the deterioration of conditions in the West Bank and Gaza Strip. In addition, FATEN has links with the Save the Children Fund which has previously engaged in politicized activities, as analyzed and documented by NGO Monitor. Nonetheless, when compared with most other Palestinian NGOs, FATEN is an example of an organization that fulfils its mission statement, distributing loans and grants to needy Palestinians without pursuing a politicized agenda.