The non-profit sector gained momentum in Nepal in the 1990s. Since then, the socio-political environment in which Non-Governmental Organizations (NGOs) operate has also changed significantly. They have gained increasing influence over national policy and priority as government allies in delivering various services. NGOs in Nepal have become more prominent and assertive across a broad spectrum of interventions. From building social capital to infrastructure development, they have contributed enormously to enhance peoples’ capacity to bargain with the state and hold it to account.
With greater influence and prominence, calls for greater scrutiny and public oversight of the non-profit sector have become louder than ever. In recent years, NGO accountability and transparency have become buzz words in countries like Nepal where this sector mobilizes more than Rs 10 billion annually. Globally, the value of non-profit sector is at over US $1 trillion a year. With colossal resources being channeled into this sector, it has become imperative that NGOs, regardless of the location they operate in, demonstrate high standards of transparency, accountability and zero tolerance to corruption.
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Post-conflict situation, political transition and bad governance, among others, have made the non-profit sector productive in Nepal. But lack of effective control mechanisms, lax oversight and weak monitoring have concurrently made this sector a profiteering enterprise as well. Accountability, transparency and internal governance issues are still considered a taboo within the Nepali NGO fraternity. No one dares question their integrity, transparency and poor governance, not even the government which has the authority to check, regulate and monitor their activities.
Corrupt practices and scandals involving some influential NGOs recently must be a wakeup call for the government. These instances of misconduct, corruption and poor financial governance should not be brushed aside as isolated incidents. Regulating this non-profit sector in Nepal is long overdue. Crucial policy reforms are urgent to ensure legitimacy, accountability, transparency and effectiveness of their mandated functions. According to the Social Welfare Council, there are around 35,000 registered NGOs in Nepal. A growth in their number and increasing visibility has led to mounting pressure on the non-profit sector to be more accountable and transparent, both from within and outside.
Syndicated membership, non-transparent working culture, weak internal control system, nepotism and family hegemony are some traits that best characterize the composition of most NGOs in Nepal. There is a syndicate in membership distribution. This has encouraged a coterie of family members and trusted persons to keep control over administrative, financial and decision making processes of the majority of these social organizations. This has resulted in poor internal governance and conflict of interests among the NGO promoters. Thus, a policy that restricts membership distribution to family members and close relatives is urgently required to limit family control over these social institutions.
Non-profit sector manages and mobilizes a significant proportion of aid funds. Thus, the risks of corruption in allocation and mobilization of such grants are strongly felt. Most NGOs don’t yet have internal anti-corruption policy and mechanism to manage these corruption risks. Though we have focused much on public sector corruption in the last two decades, we have not even initiated adequate public debate to bring the emerging yet highly vulnerable private sector within the purview of anti-corruption law. Whenever any corruption occurs within the NGOs, our anti-graft body dismisses it for being out of their legal mandate. This has largely allowed the perpetrators of corruption in the non-profit sector to function with impunity.
The District Administration Office (DAO), the sole government agency to penalize NGOs for misconduct, is already overburdened with other tasks and has failed to take action against the perpetrators. Despite the reports of corruption and misconduct that have surfaced recently, no initiatives have been taken so far by the DAO to investigate the issues. In two decades, we have not heard of any non-profit organization being disciplined or deregistered for unlawful activities. There is a policy deficiency in bringing NGO corruption within the purview of anti-graft legislation.
Donor community that doles out substantial financial support must also partake in the ills that NGOs have long fostered. They do not look into internal governance issues, membership size and family hegemony while providing assistance to the NGOs. Donor community should start looking for these traits among members in executive boards and other internal dimensions as strong basis for providing or rejecting financial support to NGOs. Brand name and financial turnover alone should not be sole criteria for selecting NGOs for support in the days ahead. Such change in donor policy and approach will definitely make the non-profit sector more accountable and transparent.
In many countries, the non-profit sector has been practicing self-regulatory mechanisms. But they have been ineffective in the absence of enforcement and strong monitoring. An inherent weakness of the self-regulatory mechanism has been its voluntary nature. NGOs in some countries, where civil society has a constructive and mutually trusting partnership with the state, have preferred government regulation to self-regulation to lower cost and increase their success rates. CIVICUS Civil Society Index indicates that NGOs in democratic countries such as Northern Ireland, Slovenia, and the Czech Republic encourage the government to develop and implement stricter regulatory policies.
From self-regulatory mechanisms to certification through third party monitoring to stricter government policies, countries have put in place different mechanisms to regulate the non-profit sector. The Nigerian code of conduct identifies the need for greater transparency to beneficiaries and the importance of having complaint mechanisms for raising and addressing concerns. The Pakistan NGO Forum’s code of conduct even goes further to commit NGOs to communicate financial information in a way that is accessible and intelligible for the beneficiaries. Similarly, Australia Association of NGOs has developed a complaints and redress system. The Philippine Council for NGO Certification has pioneered a partnership with the government to develop a peer review process to certify and monitor their performances.
Learning from other countries’ experiences, Nepal government must undertake immediate measures to amend existing law and policies. A functioning and enabling legal regime must ensure three things. First, it should provide a clear space for NGOs to freely pursue their mandate. Second, it ought to clearly outline rights, responsibilities, and standards of accountability and transparency. And third, it should establish robust check and balance so that the authorities can use legal powers to prevent and penalize unlawful activities.
The legal regime should also explicitly bar NGOs’ executive board members from getting involved in consultancies or other benefit sharing works of the same organization. Being social institutions, their remuneration structures should be made transparent and all financial details and decisions opened to public scrutiny. To strengthen internal governance, terms of office for executive board members must be fixed and properly monitored to prohibit the same individual from assuming the top executive position repeatedly.
Complaints hearing procedures must also be ensured to facilitate the reporting of wrongdoing. The best way to address this is through the legal protection of whistleblowers. The government must put in place credible mechanisms to protect the professional and personal interests of the whistleblowers. Only when the government undertakes these bold yet challenging measures to reform its legal regime, will the non-profit sector in Nepal be accountable, transparent and high-integrity social institution, and redeem its deteriorating public image.
pbhattarai2001@gmail.com
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