Anthropology of NGOs Part I: History of NGOs and Accountability

History of NGOs and Accountability

The massive emergence of NGOs endeavoring to alleviate world  poverty, unfair government practices, abuse, and environmental degradation has been termed the ‘boom in civil society’ (SustainAbility 2003a:2), the rise of the “fifth estate” (Eizenstat 2004), a post WWII phenomenon equated in impact with the rise of the nation State (Salamon et al. 2003:6-7) But its viability is being threatened by waste and corruption and, more than anything else, a failure to do anything about it.

It is hard to imagine anyone agreeing that it would be a good idea to keep the accounting practices, pay, efficiency, and impact of NGOs a secret. Yet, in practice, this is exactly what most often occurs. In a University of Warwick survey of 600 NGO directors, most respondents gave no thought to their own accountability (Scholte, 2003); the Global Accountability Project (GAP) found that many NGO directors considered NGOs above accountability (GAP 2009); in a study of 300 Uganda NGOs Burger and Owens (2008) found that despite claims to the contrary, 69% of the NGOs did not consult the community before or after they initiated an activity and 25% of those who claimed to provide financial information on request did not do so or lied about it; in the Philippines, Abella and Dimalanta (2003) concluded their study of NGO accountability with the observation that many guard their financial information like they were “state secrets.”

Perhaps this secrecy is part of the reason for the second threat to the credibility of the NGO sector: they have failed to alleviate poverty.  William Easterly (2006) calls it “the other tragedy of the world’s poor.” The original tragedy is the afflictions of hunger, treatable and preventable diseases, infant mortality, and unnecessarily high illiteracy rates. The other tragedy is the dollars wasted trying to address these problems; money stolen outright or lost to ineffective and mismanaged NGO programs. For example, credible estimates of aid money lost to corruption in Africa exceed 50 percent. But that is just part of the waste; the number of successful efficiently managed projects is, by anyone’s count, pathetically meager fraction of the total.

Whatever the reason for the cause of corruption and failed projects the solutions are obvious:  accountability, transparency, and feedback. The fact is that in almost every developing country in the world NGO accountability is not yet a reality. With the exception of the sporadic monitoring and evaluation attached to State provided aid—most of which is self-monitoring and self-evaluation – one can count on the fingers of a single NGO director the serious efforts to regulate the 9 million NGO workers and 1.1 trillion dollars annually spent in the sector. A visit to the websites of these organizations reveals how painfully ineffective they have been.

• Credibility Alliance in India has 308 members out of the estimated 1.2 million NGOs in that country,
• Humanitarian Accountability Project (HAP), an agency seeking a voluntary system of accountability for the 40,000 international NGOs has, after 6 years of existence, a mere 36 members,
• Société Générale de Surveillance (SGS)–the world’s leading for-profit inspection, verification, testing and certification company–has, after 6 years of existence, certified a grand total of 68 of the world’s approximately 10 million NGOs,
• USAID funded ForeignAID Ratings, also in existence for 6 years, has certified a grand total of three NGOs,
• InterAction, in existence for five years and the most prominent international NGO regulatory agency,has a better but still discouraging record of 180 members,

The most obvious reason for the lack of success among the regulatory agencies is the fact that they are overwhelming self-regulatory, self-monitoring and even self-certifying (see Songco 2003:11-13 for a summary). When donors require stringent evaluation and monitoring regulations, the work  is almost always in-house or conducted by “independent experts” paid for by the NGO in question.

It should go without saying that self anything is emphatically not accountability; and seeking approval from a consultant hired and paid by the organization that seeks the approval is a gross conflict of interest.

Another problem is that NGO leaders have reversed the logical order of the tasks that confront them. Rather than first tackling what Avina (1993) calls “short-term functional accountability” (‘accounting for resources, resource use and immediate impacts’), NGO regulatory agencies have skipped the basics and jumped straight to “strategic accountability” (‘impacts on the actions of other organizations and the wider environment’).

While coordination and long term planning are the obvious goals of everyone concerned with alleviating poverty, the consequence of skipping the basics is that, as seen, genuine cooperation has been half-hearted; meanwhile, no one even knows how many NGOs are out there:  India, for example, might have one million (Credibility Alliance 2008) or maybe 1.2 million (India Guidestar 2009), or maybe five million (ibid). Russia may have 260,000 (Chicago Tribune 2008), or maybe 450,000 (Flounders 2006). Even Britain could have as many as 500,000 NGOs (Adair 1999); or maybe closer to the 170,000 that are registered (University of Kent 2008).

The very few developing country accreditation agencies—the only ones–include Pakistan Centre for Philanthropy (PCP) Certification Program. Begun in 2003, PCP has followed the course of those agencies mentioned above and rather than first focusing on “functional accountability,” focused instead on “long term strategic accountability.” And similar to those organizations, it has had limited impact: in six years of operation, the PCP has reviewed 194 of Pakistan’s estimated 8,000 to 16,000 registered NGOs.

Perhaps the only NGO that is based in a single developing country and focuses on accreditation of other NGOs, is the PCNC of the Philippines. Grounded firmly on mechanisms of functional accountability and given teeth by the Philippine government’s mandate that NGOs be accredited, PCNC has logged and certified 1,000 of that country’s NGOs. They have also reportedly brought the estimated number of organizations acting as NGOs in the Philippines down to 6,000–from estimates of 60,000 and even 249,000 to 497,000 (Songco 2003).

With perhaps the single exception of PCNC—which does focus on short term accountability–developed-world charity watch groups have had the greatest impact. The success of watch groups like Charity Navigator and the BBB dramatically illustrate the importance of focusing first on functional accountability. Watch groups have taken what should be seen as the first and critical evolutionary step in closing the feedback loop between NGO clients and donors by using financial data to evaluate soundness, organization, and probable sincerity. For example, GuideStar Nonprofit Compensation Report uses IRS data to report on the financial soundness of 99,827 NGOs;  also using IRS data, Charity Navigator assesses the financial health of over 5,000 of the U.S.A.’s best-known charities; and the Better Business Bureau’s Wise Giving Alliance, arguably the most informative and effective of the watch groups (because it interviews NGO officers and provides a feedback mechanism through its online grievance and complaint service), lists information for 1,800 U.S. charities.

Sound good? Not so fast. Not a single one of these NGO watchdogs has any mechanism for actually verifying that what NGOs say are true, meaning that the projects they have on the ground are doing what they say they do or, for that matter, if the projects even exist. All they do is verify that the organizations exist, that they handle money, that they pay their staff and taxes. We have no idea if what they claim to do for beneficiaries is in any way true. In other words, the only assurance we have that anything is good is being done comes from the mouths of the same people we saw at the outset of this post who lie, embezzle, double dip, exaggerate and fail to report at absurd rates.

It bears repeating that the point is emphatically not that we should ignore “strategic accountability.” Planning, coordination, and monitoring improve the effectiveness of NGO programs and are, by anyone’s standards, the ultimate goal of a responsible NGO sector. But “functional accountability” is the first evolutionary step toward achieving “strategic accountability.” It involves first identifying the NGOs and then using accreditation and an online mechanism for complaints and feedback to expose those that are fake and predatory . Only then can funds be effectively channeled to responsible institutions; only then can we hope to develop effective methods of strategic accountability in partnership with other NGOs, donors, recipients, and the government sector; only then can we hope to effectively defend ourselves in the “war against NGOs;” and arguably, only then will an end to world poverty and environmental degradation become a reachable goal.

A quote from Owen Barder at Center for Global Development (2009) sums up the task at hand,

By investing in greater transparency and accountability of aid agencies, making more use of market and network mechanisms and closing the feedback loop we can change the context in which aid agencies operate and make faster progress on reducing poverty.

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Notes

For other discussions and references to the revolutionary impact of the rise of NGOs see Bagci  2003; SustainAbility 2003b, Clinton 2006.

See also Songco (2007) for CODE-NGO which only got 50% of its member to provide profile information, some explaining that . that they did not want their information to get into the “wrong hands.”

For summary of total aid dollars lost to corruption in Africa see Bovard 2005.

For examples of fraud see NGO Monitor Digest 2005 for OLAF’s investigation of widespread systematic fraud in the form of double dipping among major NGOs; see . Gibelman, et al. 2000 for summary of major NGO fraud for 1998 to 2000. See Sangco 2006 (p. 4, 20); for the Philippine fraud cases that ignited the push to found of the PCNC—by many accounts the most successful regulatory agency in the world.

The talk of accountability is such that Jordan (2003) foresees the prospects of an emerging “accountability industry” and at least one observer claims that there are self-regulatory schemes in over 40 countries (Naidoo, 2003). Stories of embezzlement, misuse of funds, waste and corruption have given disgruntled corporate advocates an edge in what has been called “the war against NGOs, a concept common enough to have gotten a listing in Wikipedia.

Compounding the image of a civil sector rife with waste and corruption is the overwhelming failure to do anything about it. Critics ask how the NGO community let it get this far; in an industry targeted with addressing the abuse of people and the environment does anyone really believe that that all of the 19 million people attracted to employment in an unregulated industry that spends 1.1 trillion dollars are ethical.  As will be seen below, some apparently do.

Financial support for NGOs appears to have peaked in the late 1990s. For declining economic support for NGOs see CODE-NGO, 2000; Thindwa; NGO Position Paper, UNCSD. And now, with funds falling, the public exasperated, and “the war against NGOs” waging stronger than ever, it behooves us to heed Kumi Naidoo, Secretary-General of Civicus, who warns NGOs to “perform or perish” (SustainAbility 2003:10). Indeed, the entire NGO sector must adapt lest the poor experience a third tragedy: the decline of the  NGO sector before it has eliminated poverty and helped humanity achieve a balance with the environment.

For how bad press hurts the NGO sector see Edwards and Hulme (1996b:9-19), Jordan (2003) and Marschall (2002);  for commentaries  regarding the damage single cases of fraud or misuse can cause see Dombrowski (2006); for sweeping calls to end foreign aid see Munyemesha 2003;  Moore 1997; Maren 1997; Laurent .  Note that it is no simply fraud that is at issue here. With no independent rating agencies, no independent means of guiding support to those NGOs that are sincere, and no control over predatory NGOs, unscrupulous individuals find opportunity to plunder while sincere NGOs are compelled to devote inordinately larger portions of their contributions to the competition to solicit more aid–rather than investing in aid programs themselves.

For summary of codes by NGOs specializing in conduct see Dombrowski (2006); Kunigi and Schweitz (1999); Sidel (2003); and Songo 2006: 37-38

Noteworthy ‘cries for accountability’ include Knight et al. 1996; Sphere Project 2000; SustainAbility 2009:49; specifically for a summary of the crisis of accountability see Ewards 2000, Slim 2002; Shiras 2003, Bonda 2009; B; Savedoff and Levine  2006; McGann and Johnstone, 2006: 66; Bonbright with Batliwala1 2007; Constantino 1997;  Commonwealth Business Council 2003,  Dombrowski 2006,

For the emphasis on and failings of self-regulation see Lloyd and Casas; Leader, 1999.

 

Specifically they are, 1) Credibility Alliance in Indian, 2) AusAID in Austalia (which does not really count here because it is government regulatory agency), 3) Philippine Council for NGO Certification (PCNC); 4) InterAction;  Humanitarian Accountability Project (HAP), 5) Société Générale de Surveillance (SGS),  6) ForeignAID Ratings.

Note that Accountability, Learning and Planning System (ALPS) of ActionAid International consists of a set of core requirements for planning and accountability of its affiliate organizations that involve the communities and partner organizations in the planning, budgeting, monitoring and reviewing of its projects (Dombrowski, 2005).

Not mentioned in the text or prior endnote—because it is so recent– is Paraguay’s Evaluation System of Organisational Development (SEDO) developed by the School of Organisations for Social Development, an umbrella group representing 25 Paraguayan development NGOs. To quote the One World Trust newsletter (October 2009), “SEDO is a certification and assessment tool for development organisations which focuses on the analysis of four organisational areas: transparency, management, impact and legality. The assessment is made using in-depth interviews, observation and document revision. Assessed organisations get a final score which determines their level of compliance with these standards using the following categories: institutionalised, established, emerging, rising and without qualification. The system also aims to become a guide for institutional capacity building.”

The failure to even count and verify the existence of NGOs—much less verify their resources, transparency, and activities and provide mechanisms of feedback and accountability–has meant that “strategic planning” is largely an empty gesture, a point underscored by the fact that until recently the NGO sector completely ignored the provision of grievance mechanisms to the people they are helping. Indeed, there seems to be this assumption among NGOs that everyone is good.

Why PCP has to estimate the number of registered NGOs is itself indicative of the failure to focus on functional accountability (see Tuifal 2006).

For information concerning the effectiveness and success of the PCNC see Songco 2003, Lloyd and Casas, 2006; Sidel, 2003; Dombrowski, 2005.

[xviii] Naidoo (2000) cautions that NGO regulation should not become a mechanism for “gate-keeping.” He argues that it should be open to reflection, evaluation and change, be educational and capacity building.

An excerpt from the PCNC site explaining its function and mission: “The PCNC certification process has evolved into a self-regulatory mechanism that determines whether the funds entrusted to NGOs and CBOs are utilized for the intended social benefits. The Philippine Government recognizes the value of this process and has entrusted to PCNC, under a Memorandum of Agreement with the Department of Finance, the authority to evaluate and certify NGOs applying for donee institution status based on specific standards. The certification serves as a basis for the Bureau of Internal Revenue (BIR) to grant tax benefits to entities donating funds to the certified institutions. A growing number of NGOs have sought certification from PCNC not only because of the potential tax benefits to their donors, but also because of the opportunity that the process provides for assessing and strengthening their organization’s development processes and internal controls.”

The BBB accomplishes this at the annual cost of  $1,127,467

[xxi] Alone, these type of ranking agencies are simply not enough. All but the BBB depend exclusively on IRS data; at most the BBB includes financial information provided over the phone or electronically.  Investigators who have taken look behind these figures are often shocked at the manipulation (see Maren 1997). The BBB grievance mechanism is perhaps the most efficient and powerful means of reaching behind superficial financial data and telephone interviews. This is especially true with the growing availability and use of the internet among impoverished populations.

As pointed out by Songco (2003), Global Accountability Project (GAP) of One World Trust has highlighted a fourth accountability dimension: complaint and grievance mechanisms (see Blagescu, Casas and Lloyd, 2005).