Good Governance in Civil Society Organisations

Dr. R. Madhavan, Assistant Professor of Sociology,

SASTRA UNIVERSITY, THANJAVUR

Civil Society and Governance

Historically, Civil Society Organisations (hereafter CSOs) have always been an integral part of
the institutional structure that influences the governance of the society. However what is
new in the modern era is the geographical spread and scope of action of CSOs: it
encompasses a wide arenas of social life. There is a large number of CSOs operating in every
corner of the world. This large number includes international CSOs with sizeable operations
that spread across national boundaries.

A number of them work with broad ideals like empowering marginalised groups, respect for
environment, human rights, social justice, labour rights and advocacy. By the very nature of
their operations and in their roles as pressure groups, lobbyists and decision-makers, CSOs
enter into different types of relationships with the state and the business sector. This
obviously brings in a new dimension to the Voluntary Sector (VS) which the CSOs are located
– a dimension that confers on them a consultative role in national and international
policymaking processes. Many organisations in the VS, as part of their advocacy and
campaign strategy, lobby to influence public opinion, shape public policy and persuade
political leaders to introduce national and international laws, regulations and codes of
conduct covering the activities of industry, commerce and professions.

CSOs as Watchdogs
Given the nonprofit status of CSOs and their increasing importance as watchdogs and
whistle-blowers of the society, they are required to develop a high level of trust among
various stakeholders, not least of all, the public. This is the juncture at which governance of
CSOs assumes its present salience. In their role as ‘watchdogs’, the VS has critiqued the
accountability structures and efficiency – key features of governance – of the State and
business in meeting their obligations to the society. Governance is generally regarded as a
domain where national and provincial governments are the chief actors. However, with the
increasing influence of globalisation processes and decentralisation of powers, civil society

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has emerged as an important arena that shares the governance needs of the society. Over
the years, the VS has come to undertake many of the functions of the governments such as
the delivery of public services, especially where there is a failure of governments. The sector
operates alongside the state in undertaking developmental activities.

Governance of CSOs
This obviously raises several questions about governance of the VS. Who are the CSOs
accountable to? How efficient are these organizations in pursuing and achieving their
objectives? In short, the VS has to face up to the very same questions that it has been asking
other sectors! This logically necessitates that credibility – defined by elements such as
legitimacy, transparency, integrity, accountability, financial and human resource
management, assumes critical importance not only in the ‘running’ of the CSOs, but also in
their ability to generate trust among various actors. It becomes imperative for the VS to
subject itself to the accountability standards that are expected of them, by the public, the
State and other stakeholders.

For long, the VS had nominal regulations and faced minimal scrutiny of its activities. This has
invited condemnation from various quarters. It has to be remembered that the two other
sectors that have a central role in the governance of the society - the state and the business,
are adequately covered by various mechanisms like electoral system, constitution,
corporate law and the like. Thus their accountability is ensured, at least, theoretically. There
are other factors which render accountability and good governance as critical issues in the
VS. For instance, CSOs are viewed as agents of social change and development. This
obviously requires responsibility in their modes of functioning where accountability and
transparency are expected in fulfilling their designated roles. Fundamental information
about the organisation, namely the mandate and sources of funding should be made
available to all stakeholders. Secondly, it must be recognised that the VS is a major
employer globally. Labour Standards, Human Resource Policies and Gender Parity laws are
of utmost importance in the context of Governance. A recent study by Participatory
Research in Asia (PRIA) and John Hopkins University (JHU) estimates that there are nearly
1.6 million non-profit organisations in India, employing almost 20 million persons and
contributing 14.8% to the Gross Domestic Product (GDP). The figures for Europe and North

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America are equally massive: it employs nearly 12% of the work force and has an annual
expenditure that amounts to 15% of the GDP! The Home Ministry, Government of India
reports the sector received Rs. 45.35 billion in foreign grants in 2000-2001. The involvement
of such huge sums stresses the need for responsibility and accountability.

Who sets standards for CSOs?

It has been recently articulated, not unreasonably within and outside the VS, that a
mechanism should be evolved to ensure good governance within the sector. Although there
is now a perceivable sense of urgency to issues of governance within the VS, the question
itself has been discussed for more than a decade in the Indian context. In the mid-1980s, an
attempt was made to develop a code of conduct for the VS, but it failed to make much of
headway. One of the reasons for the resistance encountered by what is now called ‘The
Bunker Roy Initiative’ was the perception that the State followed a top-down approach in
implementing it instead of adopting a consultative process with the VS. The other important
attempt in the Indian context was the attempt by the Voluntary Action Network of India
(VANI) in the 1990s to develop “voluntary guiding principles” for the non-profit sector. The
principles laid down the characteristics, mission, governance, values, organisational
integrity, accountability, transparency and financial management required for a CSO. There
were other efforts too like the Non-profit Ratings by the Indianngos.com and ‘Validation’ of
non-profits by the Charities Aid Foundation India and the Planning Commission of India.

Any such mechanism should address the criticism of corruption and malpractice, which are
not unheard of in the sector. Fair management practices – labour standards, gender and
conflict resolution, internal democracy, participatory decision-making, financial and ethical
accountability are the other ideals that would be promoted through such a mechanism.
Financial sustainability is one of the critical considerations for CSOs. A mechanism that
enhances the legitimacy and trust of CSOs among various stakeholders would contribute to
their financial sustainability by facilitating greater flow of funds from the donors.

Institutionalisation of Good Governance

Such a mechanism can be institutionalised through two different approaches: one that
regulates from outside the sector and the other that emerges from within the sector. It is

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here that the heterogeneity of CSOs, their objectives and size emerge as critical factors. An
external mechanism that operates through donors or the State could impinge upon the
autonomy of the VS. On the contrary, an internal mechanism, which is sensitive to the needs
of diverse CSOs, could prove more effective – provided that the norms and codes evolved by
the mechanism are multi-layered and evolved through a consultative process. The self-
regulatory approach would also address the autonomy concerns of the VS, like safeguarding
the identity and fidelity to the vision of the various CSOs.

Any internal mechanism to foster good governance in the VS would immediately contend
with two factors – acceptability and compliance among the diverse CSOs. This can only be
achieved through wide-ranging discussion within the VS and by following a participatory
approach. It should also involve an assessment of the capacity of the different types of CSOs
in terms of their size and function. As different CSOs have different capacities, their ability to
meet the costs of adhering to such a mechanism, both in terms of material and personnel
would also differ. As the mechanism evolves, it can become multi-layered, catering to
different sub-sectors of CSOs. Clearly, the starting point of any such attempt should be with
delineation of a basic set of norms that the CSOs need to comply with to be a part of the
mechanism. The basic norms may include information about a) vision and mission, b)
governance structures - governing body, stakeholders and their obligations, staff
compensation, c) operations – congruity of programmes with organizational objectives –
their success and failures, and d) financial accountability. This may further evolve into other
sets of norms and good practices. Once the basic norms gain acceptance among the CSOs,
through dialogue, experience sharing and participatory approaches, the mechanism can be
taken to a higher plane to make it more functional and credible. Transparency and
publication of annual reports, fair human resource practices and adoption of good
accounting procedures are fundamental. Information about fund-raising methods,
percentage of funds allocated to the cause, sources of funding and publication of reports
regarding the same could form some of the additional layers of the mechanism.
Accountability, transparency, autonomy, identity and integrity of the CSOs should be the
themes addressed by the mechanism. The mechanism should in itself gain acceptance and
perceived as credible by the various stakeholders like State, business, beneficiaries and the
public at large.

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The latest attempt has been that of the the Credibility Alliance (CA), a collective of CSOs
working towards enhancing good governance, transparency and accountability of the VS. As
part of the initiative, CA has conducted numerous workshops involving more than 2000
CSOs to elicit their views before formulating the norms. The minimum norms so developed
have been translated into nine languages. Feedback from different quarters was an analysed
before giving final shape to the minimum norms. CA envisages enrolment of the CSOs who
will adopt these norms as its members. The enrolment itself would be based on voluntary
disclosure of all relevant information regarding the adoption of minimum norms. The logical
way forward for such efforts should be to evolve further sets of norms – that would set
higher bench marks for governance and transparency which the CSOs can voluntarily adhere
to, once it gains confidence and the capacity. This will take care of the varying needs of the
organisations that have different foci, capacities and operating environments. Ultimately,
making information available to the public is critical, so that it can be accessed to assess the
credentials of such organisations. This could provide the platform for CSOs to advocate with
Donors, Central and State Government Agencies for the endorsement of its norms and
enforcement of the same with their partners.

Good Governance as Vision

he force of consensus among CSOs and their compliance to the mechanism would instill the
credibility and legitimacy of the mechanism among various stakeholders. Only such ongoing
initiatives would provide a platform to articulate the interests of the sector while raising the
standards of governance within the sector. It generates greater trust among public, media
and all the stakeholders. Higher standards of governance would instill the moral authority to
the sector to discharge its duties as part of its advocacy and campaign objectives. Above all,
good governance in itself is a vision and an ideal and not something that should be adhered
to on the basis of fear.