India’s NGOs in troubled waters

The voluntary sector in India has been under regulatory pressure for one reason or the other. The Supreme Court has reiterated the need for a law to regulate the activities and funding of non-governmental organisations (NGOs).

According to the Central Bureau of Investigation (CBI), there were 3.3 million registered NGOs and voluntary organisations but less than 10% of them, 307,000 lakh to be precise, filed their audited accounts. It is certainly symptomatic of a deep malaise that calls for cleansing.

On the FCRA [Foreign Contribution (Regulation) Act] front there have been huge implications. Mostly NGOs dependent on foreign funding have been struggling. There were 18 international organisations on the banned list and they have all started closing shop. The FCRA accounts of Henri Tiphagne's organisation, People's Watch, was closed and they had to lay off their employees. Other smaller NGOs have closed down because they have no money to pay salaries. NGOs being supported by CORDAID (Catholic Organisation for Relief and Development Aid) or DAN Church Aid have all had to shut down or pare down their operations. There has been a shrinking of the sector.

The NGOs, including local arms of global organisations and homegrown groups, work on a wide range of issues such as livelihoods, gender rights, road safety, human rights, microfinance, environmental protection, healthcare, agriculture and sustainable energy. They are an integral part of development and serve as the crucial interface between the government and the community.

Going by the figures provided by the CBI, one finds that the number of NGOs is double the number of schools in the country, and 250 times the number of government hospitals. There is one NGO for every 400 people as against one policeman for every 709 people. Though there are many NGOs doing commendable work, the impressive numbers do not always translate as impressive work.

The role of NGOs as agents of development and change is well-documented. They have proved to be reliable and innovative solution providers, especially in last-mile situations. The development history of rural India, particularly the tribal areas, is studded with a high degree of commitment and sacrifice of countless grassroots workers. India's rural transformation would have been impossible without their selfless dedication to development.

NGOs are influential because of their expertise and their access to important sources of information. As a result, a significant share of development aid and humanitarian relief is now channeled through them. However, the sheer number of these organisations as well as their diversity make it difficult for them to develop a coordinated approach to certain problems. NGOs perform a variety of functions. They provide information and technical expertise to governments, often supplying local information unavailable to governments. They are also actively engaged in advocacy work on behalf of specific policies and they may provide humanitarian relief and development assistance. They share the basic belief that principled individuals working together can do much to solve human and environmental problems through grassroots organising, the creative use of information, and sophisticated social and political strategies.

Sadly, not all NGOs are necessarily formed for altruistic reasons, and in a number of cases NGOs are promoted because they make good economic logic to the founders. However in a democracy the government must be cautious and should not, in the name of legal disciplining, crack down on legitimate NGOs that don't follow the government line. An autonomous civil society is highly critical to a nation.

There is a growing tribe of NGOs which exists, metaphorically or literally, purely in files, websites and documents and all their work is based on fictitious reports intelligently drawn up in their offices They make huge money and are now euphemistically called brief case NGOs .They have expertise in drafting proposals and accessing western donors ;most of the funding they receive goes into the pockets of the promoters. Many not-for-profits are known for money laundering, misusing funds and even funding anti-national activities.

This is no surprise. After all the NGO promoters come from the same society that all of us come from and there is no reason to believe that only the most honest will be involved. Many briefcase NGOs begin with noble intentions. But international funding agencies often set their own agendas and priorities, causing cash-strapped NGOs to chase funding and align their mission with donor objectives. As a consequence of chasing funding, organisations shift their focus from their core mission, resulting in what is popularly called in NGO discourse as "mission drift". It is this phenomenon that has given rise to briefcase NGOs.

The civil society is one of the key pillars of national governance serving as an informal watchdog and a key safeguard for human rights and fundamental freedoms. India has, however, been experiencing an exponential growth of the sector without the commensurate improvement in the quality of their governance. In fact the past few years have seen degeneration and unethical practices creeping into what was once a noble sector. Most NGOs are painfully mired in corruption and misappropriation of funds. "The relationship between civil society and bureaucracy in India is a complex one, characterised by mutual suspicion and hostility", according to N.C. Saxena, a former bureaucrat, who served as member of the erstwhile Planning Commission.

Most funders are now tending to steer clear of issues and organisations that might be construed as politically sensitive or that risk government censure. They, therefore, find it easier to work in areas such as education, healthcare, financial services and livelihoods, than those that deal with human rights, accountability, or patriarchal and casteist power structures.

While the large sized ones have become increasingly professionalised over the last two decades, the smaller ones are now deeply mired in dubious practices. Altruism and voluntarism no longer remain key defining characteristics of the sector. Sadly, many of these NGO have been found to have anti national motives and dubious sources of funds. NGOs have become a big cottage industry acting as conduits for flow of funds with little transparency and accountability.

It is not surprising that NGOs have rarely have a fixed objective or mission or expertise. They change their objectives to suit the need of donors. A project is announced and new NGOs spring up with their mission aligned with the mission of the project. Once the project is over, the mission is redefined to suit the new project. Some local NGOs do not have the institutional resources to spend even a fraction of the funds they receive.

This is the reason why very few NGOs lack a track record of expertise because are driven by short term objectives that are framed primarily to fit into the funding criteria of the donors. Once a project is completed and a new has to be approached a total overhaul of the mission takes place. Thus the NGO is never able to internalise a permanent vision or philosophy.

Thus, project proposals are prepared to reflect the requirements set by these far-removed planners in terms of methodology and outcomes. Demonstrating compliance on paper ends up more important than getting the job done. As a result, recipients of developmental funds spend significant time preparing reports that will find approval with the planners to qualify for continued funding, and less time worrying about what actually benefits the beneficiaries of the project. Creative plans that run counter to the conventional wisdom at the core of most programmes seldom qualify for funding. Thus, project proposals are prepared to reflect the requirements set by these far-removed planners in terms of methodology and outcomes. Demonstrating compliance on paper ends up more important than getting the job done. As a result, recipients of developmental funds spend significant time preparing reports that will find approval with the planners to qualify for continued funding, and less time worrying about what actually benefits the poor.

NGOs working in the humanitarian and development sectors won official approval in the 1980s and 1990s, but there are signs now that they are losing favor. The NGO sector stands accused by some of complacency and self-interest, on the one hand, and of being ineffectual and irrelevant on the other. NGOs are increasingly challenged to demonstrate their legitimacy as representative voices of civil society. NGOs themselves are taking a hard look at their mandates, their core values, and their role particularly when many of them have got embroiled in ideological controversies.

Some fundamental attributes of good and committed NGOs are:

1. Clarity of vision – knowing exactly what the NGO want to achieve.
2. A well-developed theory of change – clarity and understanding of how change happens in the lives of the poor.
3. An ability to demonstrate that change has happened in lives of the poor; whether it is directly and / or exclusively attributable to the efforts of the said NGOs.
4. Good internal governance mechanisms, with systems of checks and balances in all functions.
5. A clearly defined accountability to all stakeholders; the poor, donors, partners, governments.
6. Transparency in operations – NGOs are after all custodians of public money.
7. Diversity in terms of staff.
8. Sensitivity to local cultures and customs. With this comes the unwavering commitment to maintaining and enhancing the dignity of the poor they work with.
9. An ear to the ground demonstrated by participation of the poor in planning.
10. Learning mechanisms to help respond to changes in the environment, most of the time complex.

The flip side of the problem of mismanagement is over-bureaucratisation of NGOs, which results in inefficiency and inertia. Many donors and their local partners sometimes incorrectly overemphasize institutionalisation over effective service delivery. Some of them actually want NGOs to replicate corporate administrative structures so as to effectively take care of cash flows and other human resource problems. Such bureaucratisation and corporatisation of NGOs has entrenched new bureaucracies similar to the ones that the state has and which are equally cumbersome and inefficient.

My involvement with the NGO sector for almost four decades has been a story of disillusionment. I have seen so many NGOs existing only in eye-popping websites and fancy brochures. There is often a total lack of professionalism and transparency, exploitation of staff which is grossly underpaid and much of the grant money is siphoned off in to the personal coffers of NGO promoters. The sector has lost its sheen and most NGOs have become notorious for corrupt practices. It has tarnished the image to such an extent that donors have become wary of investing funds.

The Indian laws that govern NGOs are very weak and since most NGOs have political affiliations, political parties have a vested interest in not arming the regulations with stronger teeth. The two laws that govern them were framed over a century ago by the British, when social and political ethics were of the highest order and the administration of laws was very stringent. These two legal regulations are: Societies Registration Act, 1860 and The Indian Trusts Act, 1882.

With a mammoth size of the NGO sector, it is impossible for the State to effectively monitor and supervise these. The corporatised NGOs are subject to stringent supervision by the RBI, whereas the ordinary NGOs, which account for 90%, operate almost without any supervision. Critics are quick to point out that NGOs don't practice what they preach, avoid accountability and transparency and are quite averse to any form of regulation which they feel could be intrusive to their autonomy. Financial management and accounting is one area where they will fiercely resist external scrutiny.

In several countries governments have reacted to the growing power and influence of NGOs by accusing them of being undemocratic and accountable only to those who provide them with funding.

The idea that NGOs constitute a middle space between the public sector on the one hand and the private sector on the other is problematic. It was thought that they would be free of the profiteering and corporate methods of the private sector and the corruption of the public one. But in reality, NGOs have both features, a tendency to go after corporate salaries and perks as well as the tendency towards less transparency and accountability than is desirable

With some large NGOs having become heavily corporatised entities, where staffs earn above market-based salaries and where foreign money flows affluently, it is natural to expect some kind of transparency and accountability. This includes accountability for salaries being paid to the right people and for the right purposes as well as ensuring that foreign funds are spent on the projects they are meant for.

The non-corporate NGOs sector, which is still huge, continues to attract huge grants, but continues to be plagued by inept financial management, poor transparency, and weak governance. When, in the past, governments have talked about bringing in new and broader legislation, NGOs have been quick to term such efforts as politically motivated curbs on their freedom to act. Many NGOs are working on projects which some political parties or the government may not endorse due to ideological reasons. If there exists a strong government regulatory body to oversee the working of NGOs, the fate of such projects and the NGOs working on them will heavily depend on whether a government approves of their work or not.

The burgeoning and unregulated NGO sector is certainly not a welcome sign.It signals continuing manifestation of corruption and misuse of scarce and precious grants and donor funds meant for charitable purpose. At a time when the world is desperately starved of funds for relief work in areas where local populations face abysmal conditions of health, sanitation ,sanitation ,water and in very many cases precarious living conditions verging on hunger we cannot afford such misappropriation of funds.

While transparency and stringent audits are keys to ensuring proper utilisation of funds, it is equally important that the objectives of funding are properly aligned with the need of end user groups. Funders need to work more with local communities to understand how capabilities, needs, and aspirations can be addressed in the funding mandate. While community partners sometimes have different priorities, this doesn't inherently have to be in conflict with the idea of doing well. Clarity on positive, mutually-beneficial relationships between local organisations and funders is a key to putting scarce and precious funds to produce more lasting and productive impact.

When funding sources come from elite billionaires operating in rarefied air out of their own capitalistic and political agendas, they will always protect the systems that they created. In the book, "The Revolution Will Not Be Funded," they make the point that right wing organisations spend top dollars on funding think tanks. Those think tanks shape the social and political conversations that mold public opinion. Money comes with strings that can undermine a revolutionary's mission.

As with any institutional structure the need for transparency and accountability is crucial. Full adherence a country's laws and systems is in fact a sign of the vibrancy of any organisation. Civil society is expected to inspire the confidence of the people because it symbolises their voice and aspirations. It is all the more important for those working in rural areas because the people in the hinterland are not adequately empowered with the necessary knowledge to monitor them and safeguard their own personal interests. It is necessary that NGOs look inward and sets their house in order. That is the right way to regain the lost credibility which they have built through sacrifices of so many committed grassroots activists.

The degeneration of NGOs is a recent phenomena and it should not deflect us from the worthwhile contribution it has made particularly in humanitarian work. NGOs are actually one component in the broader development network but in certain conditions, they happen to be the most powerful tool. It has all to do with how we position them and how we leverage their potential. While governance and accountability are necessary to ensure they stay on course, politicians should be wary of the bad consequences of their narrow ideologies. They should not overstep and attempt to throw the baby out with the bath water. This will be to the detriment of all.