|NGO Guidelines for Good Policy and Practice (Commonwealth Foundation)|
|Part I: NGOs: what they are and what they do|
|7. The legal and institutional frameworks within which NGOs operate|
all text © Commonwealth Foundation
This Chapter begins by examining the political aspects of NGO work and then discusses a key feature of the external environment in which NGOs operate: the laws and associated regulatory processes within which they operate. Widespread limitations apparent in both are noted, and the scope for improvements are set out.
Democratic societies are characterised, inter alia, by giving their citizens the right and freedom to associate. The exercise of this freedom produces the wide array of organisations and associations which operate in civil society. These include, as noted earlier, political groups, religious organisations, trade and labour unions, professional groupings and a wide range of cultural, artistic, sporting, recreational, trade, commercial and business entities. It is within this general freedom to associate in democratic societies that NGOs, too, are formed and operate.
In many countries, indeed, voluntarism, as the voluntary act of association to form NGOs and more general volunteer work are sometimes called, is actively promoted by governments. It is at the heart of the first defining characteristic of NGOs.
As previously noted, a key general characteristic of NGOs which enables them to be distinguished from many other organisations operating in civil society is the fact that their objectives focus on disadvantage and/or action on concerns and issues which are detrimental to the well-being of people or society as a whole. Whilst this is a means of broadly distinguishing NGOs from organisations and associations which have more self-serving objectives and activities, there remains the question of how to distinguish NGOs from those other main types of organisation in civil society - political groups, labour unions, businesses and religious organisations - that would also legitimately claim to be serving the interests of society generally.
It is not possible to produce watertight distinctions, either in theory or practice. NGOs, political groups, labour unions, businesses and religious organisations share, albeit to varying degrees, one common feature: a concern with the conduct and affairs of society as a whole. There, in wider society, the causes and potential cures often lie. An NGO involved in work with the poor may seek to influence the price of bread. A religious group may lobby against the national lottery. A business may voice its concern over import restrictions. A labour union may be active in seeking the establishment of a national minimum wage. All five types of organisation thus engage in political action.
In the past the distinctions between these five types of organisation could be characterised broadly as:
- care and welfare;
- labour unions: conditions in employment and the workplace;
- religious organisations: matters relating to faith, human conduct, relationships and morality;
- political groups: overall governance and advancement of society;
- businesses: "the business of business is business" (Henry Ford).
But it is no longer possible to make such distinctions.
Change in society, as discussed in Chapters 1 and 2, manifest in the emergence and growing importance of the change and development function of NGOs, has brought them more and more into the arena of societal governance and advancement.
Similarly the enormous changes in economic functioning, employment levels and practices, and conditions in the labour market have brought labour unions and businesses into the same arena. In many countries and among a number of different religions the blurring of boundaries between church, temple, mosque and state has been much in evidence in recent years.
It has also been manifest in public expressions of concern by religious authorities about social and economic affairs, and in the tide of so-called religious fundamentalism or extremism in a number of countries.
As organised labour, businesses and religious organisations have become more and more involved in the governmental and political arena, so too have they become increasingly involved in NGO fields. This does not make them NGOs, as defined in this report, but it does mean that the fact that they are involved to an extent in what have been termed NGO activities needs to be recognised. Reciprocally, NGOs have broadened their concerns into those of the other organisations. Their increasing involvement in the economic field, for example, has seen them becoming involved in businesses, for production, job creation or income-generation purposes. At the same time, business organisations have become more involved in NGO-type activities. In many countries businesses practice as well as preach what they call programmes of "corporate social responsibility". They have done this not just out of a sense of charity or to become involved in the care and welfare of employees, their families and communities. They commonly describe what they are doing and why they are doing it as "enlightened self-interest".
Thus the boundaries between the five principal constituent parts of civil society have all become blurred. It is important to understand this and try to find some clarity about the blurring. As far as NGOs are concerned, two observations can be made:
NGOs engaged in activities that lie at the change and development end of the spectrum are likely to be more political than those that are more engaged in care and welfare work. In addition, some aspects of disadvantage, marginalisation or broader societal concern are more sensitive than others.
An important difference between NGOs and purely political groups is that NGO political activity will frequently stem from a focus on a particular concern. The NGO will focus on securing general public attention in order to bring about change on that concern. The activities of political groups, on the other hand, will frequently stem from a broad general platform of concern for change, on which particular policies and actions may then be based. Their activities will also be partisan.
There are many historical examples in several countries of political groups emerging from NGOs, and vice-versa, and of NGOs playing important roles in the instigation, restoration or extension of democracy.
There is a wide variation between countries in the extent to which the general and specific issues concerning the blurring of the boundaries of NGO activity with those of other sectors of society are recognised and given attention. But on one aspect of this there is little variation:
The law lags badly behind the reality of NGO activities and structures in many countries.
The essence of the problem here is that increasing NGO diversity is generally not reflected in the laws under which they operate. In many countries laws relating specifically to NGOs were framed years ago, and thus reflect the NGO scene at the time the legislation was passed. In general this means that the laws are suited to NGO work in care and welfare activities but less so to others. The laws of many countries typically refer to NGOs as welfare organisations or as charities. In doing so they reflect the context in which 19th Century charitable law was framed. In broad terms these allow NGOs to pursue objectives which are related to the relief of poverty, the advancement of education, and other objectives which are termed "beneficial to the community" (including in some, the "advancement of religion"). In one African country, for example, the legislation concerning "welfare organisations" (1967) defines these as:
"...any body or association of persons, corporate or unincorporate, or any institutions, the objects of which include or are one or more of:
a. the provision of all or any of the material, mental, physical or social needs of persons or families;
b. the rendering of charity to persons or families in distress;
c. the prevention of social distress or destitution of persons or families;
d. the provision of funds for legal aid;
e. the prevention of cruelty to, or the promotion of the welfare of, animals;
f. such other objects as may be prescribed;
g. the collection of contributions for any of the foregoing..."
This example gives a flavour of how the language of the 19th Century lives on in legislation across the world. That is one problem: the language is outdated. It also illustrates how legal definitions, however outdated their language, do nonetheless tend to be broad enough to allow many NGO activities to be carried out, through terms such as "such other objects...".
But where the purposes of charitable or welfare organisations are thus generally defined, as they are in many countries, they tend to permit objectives, activities and organisations which some feel should not be within the realm of NGOs. In some countries these may include proselytising religious organisations and purely educational bodies, so that private schools can be registered as charities. Yet even such broadly-framed law can exclude many current NGO purposes and activities. Such terms as "other purposes beneficial to the community" or "such other purposes as may be prescribed" are open to interpretation.
They can therefore in practice be as restrictive as the statements in some laws which enable administrators to disallow (to take the words used in one country's laws) "such other bodies, associations or institutions as may be prescribed".
One example of how even the enabling catch-all of "other purposes beneficial to the community" produces restrictions is that the creation of jobs or generation of income, even when these are to be done within non-profit forms of organisation, is not allowed as a charitable purpose in part of one country, yet is allowed in another part, where charitable law is administered and interpreted differently.
The laws of some countries use more specific statements. In one country for example no fewer than 27 different specified types of permitted "charitable purpose" are set out in the relevant legislation, passed in 1985. The legislation nonetheless permits charities in such fields as the "provision of schools, colleges, universities and other like institutions" and "the maintenance of the efficiency of the armed forces and the police force and their welfare".
This is not to single out particular countries for praise or criticism, but to illustrate that the law does not reflect the current NGO reality and causes confusion. The problem is that there are no laws which are based upon the definition of NGOs set out in this report. In consequence some legitimate NGOs and activities may not be recognised, and, conversely, some illegitimate ones are permitted.
Many other problems and confusions regarding the laws under which NGOs operate have been identified. These include:
- the ambivalent or restrictive attitude the law in many countries has towards the realities of the control and management of NGOs, and especially of participatory organisations.
Charity and welfare organisation law frequently vests responsibility for the control of NGOs in a Board or committee of nominated, worthy individuals who oversee paid staff or volunteers, who in turn attend to the needs of what are often termed the beneficiaries. It thus broadly favours the private form of NGO. The reality of such practices as empowerment of those served, and of participatory forms of control and management is not reflected, or in some cases the law often does not allow for them and even forbids them. Thus it can restrain NGOs from adopting the activities, structures and systems of management and control which they feel most truly reflect their objectives.
- the ambivalent or restrictive attitude the law has towards the more political activities of NGOs. As noted previously it is possible to distinguish between that form of political activity which emerges from NGO work and that form of political activity which is usually termed "party politics". At present, however, no example was found in which the law and the manner in which it is interpreted reflects this. the changes in the ways NGOs secure their income. In the charitable past, such income came from grants and donations, including directly from the public. It was not, in other words "earned". Now many NGOs derive income from payments for services rendered under contracts and from trading. Again, the change is not adequately reflected in many laws: while they commonly do not forbid trading by NGOs, they often permit it only to a limited extent. in some countries there are no laws regarding NGOs.
In others the laws apply only to certain types of NGO, while some leave the status of NGOs unclear.
- in some countries the laws are or have at times been very restrictive. In some cases they disallow the existence of all forms of NGO. In others there are demanding legal, registration, regulatory and other institutional requirements that NGOs must satisfy. For example, some require separate registration procedures for organisational purposes, for tax purposes, and for purposes of obtaining foreign funding, currencies and imports. In some countries NGOs have to satisfy the requirements of both national and state/regional laws.
- in some other countries, at the opposite extreme, the requirements are relatively undemanding, or even non-existent. This makes it easy for unscrupulous or ambitious individuals to establish fraudulent NGOs and for organisations which are not NGOs to represent themselves to be them.
Where there is law which sets out the various requirements NGOs must satisfy in order to be registered, it typically sets out arrangements for their regulation after they have registered and commenced operations.
Commonly the law vests the task of regulation, including legal registration, in a Registrar, Commissioner(s), Board or other national body, which is either in, or closely related to, a government department. Very often this department is that concerned with social welfare. Sometimes Ministries of Home/Interior/Legal Affairs, Foreign Affairs, Labour, or Industry have all or some of the responsibility. Where responsibility is vested in the Ministry of Foreign Affairs, the Ministry's role is often concerned with the registration and monitoring of external NGOs wishing to operate in the country. Where Labour or Industry Ministries are involved this is often because some NGOs register as companies rather than as charities or co-operatives.
In some countries central units, sometimes in Central Planning Units of Prime Ministers' departments, co-ordinate both regulation and other NGO matters, especially when several Ministries are involved with them. As noted above, provincial, regional or state governments may also be involved in regulation.
Typically, regulatory requirements mean that NGOs must submit annual accounts to the regulatory body. Sometimes, though more rarely, annual reports of work done and a list of Board members or staff may also be required. It may also be a requirement that these state who the members and Boards of the NGO are.
Commonly expressed problems concerning regulation include:
NGOs in some countries feel that initial registration and the fulfilment of regulatory requirements are complex and time-consuming, especially where the requirements of several different agencies have to be satisfied. For example, an environmental NGO may relate primarily to the Ministry of Natural Resources, but be registered and regulated by the Ministry of Social Welfare and/or Ministry of Justice/Legal Affairs. It may need the permission of theinistry of Foreign Affairs to secure funding from a foreign source, and to register its youth and women's sections with the Ministries of Youth and Sports and of Women. This is but an example of the complexities of some forms of NGO regulation!
Government officials in a diverse range of countries have expressed the view that the growth in number and diversity of NGOs has outstripped the ability of registration and regulatory arrangements to keep up with them.
Overall, it is clear that to an extent, inadequate or inappropriate regulatory arrangements stem from the inadequacies of the law.
But in addition it is clear that adequate and appropriate regulation will flow from a proper understanding of what information is actually required. The definition and typological components set out earlier suggest, it is hoped, what is needed.
Taken together, trends and developments noted in earlier chapters are beginning to produce a basis on which problems related to regulation, set out above, might be addressed.
Improved operations within NGOs represent in a very real sense, them taking more steps to regulate themselves. The more such developments can be encouraged, the less should be required in terms of external regulatory mechanisms.
At the same time, improved networking among NGOs is leading to more and more consensus- based collective regulation, at the very simplest level by enabling NGOs to measure themselves against the benchmarks of others, and at a more sophisticated level, by the collective determination of standards. Such standards have been set down by the collective action of NGOs in a number of countries. These commonly take the form of Codes of Ethics or Codes of Conduct. Those produced by the Association of Development Agencies in Bangladesh (ADAB), the Lesotho Council of Non-Governmental Organisations (LCN), and the Association of Non- Governmental Associations (TANGO) of The Gambia are good recent illustrative examples.
One specific area in which the collective determination of standards is emerging is that relating to gender sensitivity.
Through the collaboration of local and international agencies as well as gender researchers, increased attention has been given to how NGO programmes and projects impact on women, and how the different social experiences of men and women can be taken account of in such activities to make programmes more effective.
There will always be a need for NGOs to be regulated by law to protect the public interest. But the extent of such external regulation should, however, be influenced by the level and extent of collective and self-regulatory arrangements put in place by the efforts of NGOs themselves. Funders and governments should thus encourage and support such efforts, as some already do.