“Account”ability - a development perspective - challenges for NGOs

Rosemary Viswanath

I would in this brief paper wish to share some trends and some reflections on the
development sector, and the challenges that face it – more as a backdrop to the
other more pointed and specific issues this group will address. I believe this
backdrop is important in terms of the task of evolving regulatory frameworks and
standard practices. Non-profits have basically built on the spirit of service,
participation, dialogue and privileged civil society’s role in building just and
sustainable societies. Regulations are most effective when they aim to strengthen
and not merely to control. In that sense understanding the ethos, realities and spirit
of the non-profits is essential to any debate on their accounting and their
accountability.

The canvas of non-profits

When addressing the issue of accountability and accounting standards it is important

that we understand the nature of the non-profit sector in India, the challenges it
faces and the wide variety of spaces it inhabits and roles it attempts to perform

Some key facts about the spread and nature of the nonprofit sector in India comes
up with somewhat startling revelations:
 India has 1.18 million NGO’s : 53% in rural areas, 47% in urban
 Of the 20 million persons involved, 85% are volunteers, rest are paid staff
 73.4 % of these have less than one paid staff, 8.5% have above 10 paid staff
 26.3 % are religious groups

There are two factors that I would like to highlight here – if a large number of
organizations are in rural areas, and given the spread of our vast country, one has a
huge challenge in terms of communication, access to trained resources and capacity
building. Also added to that is the reality of number of full time staff. Valuing the
cost of voluntary contribution in economic terms has for long been a unresolved
debate. Any attempt at guidelines and standards that are mandatory must take
these realities into account. This by no means implies that accountability both as a
value or as criteria is inapplicable to nonprofits.

Historical Context of NGO’s in India

Apart from the spread and variety in the kinds of nonprofits, it would be useful to
focus also a little more on the history of the kind of nonprofits that many of us are
involved with ( social change, human rights and advocacy) and how these nonprofits
responded to the needs and issues of their time.

1960-70 : Rehabilitation, Rural Development, Disasters, Displacement

This period (in fact civil society involvement was perhaps at its peak pre-
independence and post with the nationalist movement and freedom struggle) focused
on very basic issues of development with the vast rural areas of India needing to be
Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18th 2003 New Delhi
included in the development agenda. The language of rights and obligations, and
in particular the obligations of the state were articulated through the choice of a
nehruvian –socialist- centralist form of government. Gandhian thought and practice
also inspired the NGO space.

The 1970’s saw the emergency, the event responsible for the political
conscientisation of many second-generation NGO activists and leaders today. The
realization that democracy and civil and political rights were not givens but
needed to be guarded and fought for gave birth to many non-profits working in that
broad area.

The 1980’s saw the consolidation of and convergence of several vibrant movements
– the environmental movements – (Chipko), people’s movements - dalit, tribal,
narmada, fisher folk, and the women’s movement. The voice of the marginalized
claiming their space to define development and not just get their due share was the
defining theme. The space occupied by the rights debate expanded to include these
concerns as rights. A series of NGOs also addressed these issues.

1990 onwards – saw the spotlight on the crimes of development – with the
majority of the world people (poor) questioning the current forms of development
and its benefits to them. Current economic models, the rules of world trade,
neocolonialism, corporate globalization and its proponents have come under sharp
scrutiny and attack, while issues of religious, ethnic, minority rights and identity,
localization & local governance, diversity, sustainability and peace are being keenly
debated.

Unfortunately none of the basic issues – poverty, health, basic rights, social justice
has been “solved” to any level of satisfaction and have only been exacerbated. And
with the passage of time each of these periods has contributed a new layer of
complexity and more inter-linkages to existing debates.

The context in which non profits operate

The wider political and civil society context

There has been an aggressive market led growth of northern capital softened by a
stronger civil society concerns in the north itself
Southern societies face the compulsions of electoral /other politics – the last decade
has seen the fragile move to more democratic polities and the ousting of many
oppressive dictatorial regimes in Asia and Africa and in eastern Europe and the
Americas. There has been rising aspiration and articulation of the under-classes and
much more evident civil society and judicial activism.

NGO are much more in the public domain – in the media, in decision-making spaces
of various hues and in the alternative spaces that they create as a symbolic political
statement (e.g in large WTO meetings or meetings of the governments or
multilateral agencies and international financial institutions of the world economic
forum etc). Thus being in the public glare is a reality for most and as a result
managing public perception has also become an inevitable task of the NGO.

The criticism and scrutiny has also increased correspondingly. NGO’s are coming
increasingly under pressure to increase their transparency and accountability – e.g
Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18th 2003 New Delhi
FCRA and related regulation, and often the pressure (targeting) comes from right
wing, partisan organizations intending to quell civil society dissent

Paradigm shifts in development cooperation

Increase in direct aid from northern governments, bilateral, multilateral and

international aid agencies (often bypassing northern NGO’s)- leading to increased
state control over funds and a fear of being “co-opted”.

There has also been an increase in collaboration between NGO’s and the state.
NGO’s are being relied upon more than governments or commercial interests to
“deliver” development (leading to a new breed of “government-ngo!) .

While there is a trend particularly in Indian non profits of shrinking funds – as new
priorities and urgencies “divert” funds into areas such as the least developed
countries, Africa, and eastern post communist Europe, the reality also is that in real
terms the number of NGO and the funds they work with has almost doubled in the
last decade.

What is undeniable is that development funds are getting marketised. NGO’s need to
be efficient and professional in accessing and managing scarce resources as there
are competing demands.

What are the demands on and challenges before NGO’s ?

This makes new demands on NGO’s to meet stringent market criteria to access aid:
cost-effectiveness, proven organizational and institutional capacity to achieve and
monitor results, and have transparent systems of accountability.

However, in order to respond more effectively to these complex issues that they deal
with, NGO’s have created new forms of organizations – networks, campaigns,
clusters, and alignments – oftentimes trans-regional, transcontinental, and
sometimes virtual. This is a clear - a shift from the traditional geographically
bounded project or implementation mode of nonprofits . Managing these new forms
of organization itself is a significant challenge in terms of leadership, managerial and
organizational skills. The management of finances becomes a new challenge as well,
because many of the earlier assumptions about inflows and outflows and sharing of
resources simply do not hold.

Added to this is managing the increasing legal statutory and political and policy
space (hurdles) as well as increasingly tight donor requirements.

In order to survive and remain effective, non-profits need to be able to focus on the
inside-outside simultaneously. This implies serious and concerted work on:

 The organizations vision (and its percolation to the rest of the organization)
& practiced values
 Ability to operate in a truly public space
 Financial accountability & transparency
 Work culture aligned with values
 Deliverables in a complex macro-environment
Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18th 2003 New Delhi
 Leadership
 Professional and management skills in a resource deficit space

Hopefully the debate on accountability will keep in mind these realities and trends
while encouraging nonprofits to be effective organs of civil society aspirations.

References:

Invisible yet widespread: The Non-Profit Sector in India

National Report on PRIA's study on the Non Profit sector in India, conducted as part of a global
comparative study of the John Hopkins University, USA, 2001

Paradigm Shifts in Development Cooperation NGO Dilemmas and Options . Dr Jose Murickan
SJ. R Mohan Raj, Kurian K Kattikaren Indian Social institute Bangalore, 2000

Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18th 2003 New Delhi