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The International Journal
of Not-for-Profit Law

Volume 15, Issue 1, March 2013

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Changing Legal Environments for Civil Society Organizations

The South African NPO Crisis: Time to Join Hands
Ricardo Wyngaard

Bill on Societal Organizations (RUU Ormas) and Freedom of Association in Indonesia
Eryanto Nugroho

What’s New in the Governance of Canadian Not-for-Profit Corporations?
Terrance Carter

Articles

Responsible Investments by Foundations from a Legal Perspective
Dominique Jakob and Peter Picht

My Brother’s Keeper: Challenges in Gifting in the Kenyan Context
Henry Otieno Ochido

The Role of NGOs in Independent Tajikistan
Firdoos Dar

A Network Approach to NGO Development: Women's NGOs in Mongolia
Byambajav Dalaibuyan

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Editorial Board

My Brother’s Keeper: Challenges in Gifting in the Kenyan Context

By Henry Otieno Ochido[1]

NGOs in Kenya are largely unsustainable and dependent on northern donors to support their activities. Support from local donors for their activities is almost nonexistent, despite the fact that Kenya has a longstanding tradition of social giving and mutual help. Almost all communities have a term to define the concept of mutual help.[2] Collective action is often pursued as a strategy to access resources critical to the livelihoods of vulnerable families. Traditionally, women formed informal associations in order to assist each other, for instance in labor-saving activities.

It is generally agreed that the tradition known as Harambee has its grounding in Kenyan society, particularly the principles of self-help and cooperative work. Harambee was popularized by the late first President of Kenya, Jomo Kenyatta, who used it as a rallying call and a tool for mobilizing Kenyans to raise resources to help develop the young nation. Kenyans have participated actively in Harambee, thereby promoting its cardinal values of mutual assistance, joint effort, mutual responsibility, and community self-reliance. Through Harambee, numerous schools, health centers, cattle dips, and even roads have been constructed.

Traditionally, then, giving in the Kenyan context has taken the form of mutual help. In the absence of a welfare state, the citizen has often assumed responsibility for providing support to needy relatives and neighbors. Indeed, the typical Kenyan worker supports not only members of their nuclear family but a string of members of the extended family as well. To illustrate the foregoing, remittances by Kenyans in the Diaspora to relatives back home are the third largest source of hard currency, after horticulture and tea exports. In 2008, total remittances were $611.2 million.[3]

Yet despite Kenyans’ obvious capacity to mobilize resources and their clear willingness to give to those who are vulnerable, anti-poverty NGOs, which serve as conduits for funds from givers to recipients, have been unable to tap into this generosity.

Why have NGOs in Kenya been unable to take advantage of this tradition and mobilize resources locally to fund their activities? Concurrently, why do Kenyans appear to lack the same level of enthusiasm for NGOs that they have for Harambee projects and mutual-benefit organizations?

Do Kenyans lack appreciation for the work of NGOs? This cannot be the case, considering that vast areas of Kenya—for instance, the Northern part of the country, where government presence in terms of providing basic services is almost nonexistent—depend on NGOs to provide services such as health and education. It is estimated that NGOs contribute upwards of US $1 billion annually to the Kenyan economy.[4]

However, most of this money is generated from foreign donors. A study by the NGOs Coordination Board[5]showed that 99% of funding by NGOs came from western donors, with an insignificant percentage being raised from local donations. On the other hand, research by the Institute of Development Studies of the University of Nairobi[6] indicates that mutual-benefit organizations, such as welfare organizations, and self-help groups, were relatively stable financially, funded mostly by resources mobilized from members.

What, then, explains Kenyans’ low interest in making donations to NGOs? It is our contention that the problem reflects two factors.

First, NGOs have failed to integrate the traditional culture of mutual giving, which is usually both financial and non-financial, in their fundraising. Traditional giving is not necessarily based on the rich giving to the poor. Gifting in the traditional context and even through Harambee is flexible. It allows even those who are disadvantaged to participate, such as through providing labor and voluntary services. Giving then becomes both a vertical and a horizontal process. In the western model, by contrast, giving is mostly vertical: the better-endowed give to the poor.

Second, NGOs fall short on accountability. In their governance, decision-making, and accountability, NGOs are essentially private organizations. When local communities have no opportunity to participate in the management of an NGO, it can seem untrustworthy. In mutual-benefit organizations, by contrast, the decision-making process is more open and even egalitarian. The accountability systems in these organizations are generally drawn from traditional values consisting of religious beliefs, taboos,[7] and peer pressure. NGOs do not have the same pressures to account for their resources, because they do not draw from these traditional accountability systems and because they are generally beholden to third-party donors.

NGO accountability in Kenya can fall short not just under traditional social systems, but also under the common law model. While NGOs do not feel compelled to account to local communities due to their private nature, at the same time they fail to reconcile their private voluntary and public benefit status, particularly its requirement that they observe the highest standards of probity through self-regulation and continuous demonstration of public benefit. They have tended to focus on their responsibility to the donor and not their responsibility to the recipient of the aid.

NGOs in Kenya are defined as public benefit institutions based on the common law.[8] The fundraising model adopted by NGOs is therefore drawn from the common law, in which donors largely give anonymously through an intermediary in a relationship overseen by a government regulator. This form is the hallmark of charitable giving for public benefit. It works well in the west, but it remains to a large extent foreign to the Kenyan experience. As has been stated, the culture of giving in Kenya relies on mutual help. This culture has spawned thousands of mutual benefit organizations, ranging from women merry-go-round groups[9] to welfare societies and funeral committees. The NGO form is therefore far removed from Kenyans’ experience. Indeed, the fact that NGOs in Kenya largely depend on gifts given anonymously by donors in faraway countries has tended to alienate them from the communities that they seek to serve and, in turn, has made the communities feel absolved from a sense of responsibility to support the NGOs.

What, then, can Kenyan NGOs do to attract funding from Kenyans and reduce their dependency on foreign donors? It is fairly obvious that they must find a way of integrating the two modes of giving: first, the longstanding Kenyan mode, based on mutual help, with accountability resting on traditional value systems; and, second, the common law model, based on vicarious giving for the public benefit, with accountability resting on the state through legislation and codes of conduct. NGOs particularly have to incorporate traditional accountability mechanisms into their governance if they hope to win the trust of communities and therefore potential donors.

Further, the state can spur public giving through tax incentives and other forms of inducement. The Kenyan government, for instance, in 2007 enacted the Income Tax (charitable donations) Regulations 2007. The Regulations provide for individuals and organizations to deduct any cash donations to charitable organizations from their income tax. While this is a step in the right direction, few people have taken advantage of the provision, seemingly because public awareness of it is low. It is apparent that NGOs, as potential beneficiaries of the provision, would wish to take a leading role in promoting it.

An obvious challenge will be convincing the giving public that the state can be trusted to mediate the gift relationship through regulation. In a nation where the state is generally associated with the betrayal of the public trust, and where agencies are continually engulfed in financial scandals, this will be a hard sell.

The situation is not helped by the fact that public benefit organizations (PBOs) in Kenya are currently registered under a number of regulatory regimes implemented by different organizations: the NGOs Coordination Act 1990, Societies Act 1998, Companies Act 1959, and Trustees Act 1981. Of these organizations, only the NGOs Board has the capacity to regulate PBOs. In effect, then, PBOs registered under the other laws can largely escape regulation. Moreover, the NGOs Board’s capacity to regulate is compromised by a weak legal and regulatory framework as well as insufficient financial and technical capacities.

Nonetheless, the NGOs Coordination Board is currently engaged in an ambitious program to improve the legislative and enabling framework for NGOs, with a view to not only strengthening compliance but enhancing public trust as well. Part of this process will involve an ongoing review of the legal framework. It is essential to have a modern law that incorporates best practices in the regulation of NGOs and empowers the Board to take proactive measures as necessary to protect NGO assets and the public from abuse. All public benefit organizations should be brought under one legal framework to ensure effective regulation.

Even so, winning public trust, which is a critical ingredient in promoting charitable giving, will take time. It can only be hoped that the measures being taken by the NGOs Board as well as the wider public sector reforms being undertaken by the Kenyan Government will have positive effects on public trust.

In the final analysis, however, ultimate responsibility for public giving in Kenya rests with NGOs themselves. They must comply with the law; adapt their fundraising to integrate traditional giving and accountability mechanisms; and reconcile themselves to the fact that, though they might be privately run organizations, they are expected to demonstrate a public benefit and submit to official oversight.

Notes

[1] Henry Otieno Ochido, hochido@ngobureau.or.ke, is Head, Operations, Compliance and Research, NGOs Coordination Board, Nairobi, Kenya, http://www.ngobureau.or.ke/.

[2] Njuguna and Valdivia in Motivation for Collective Action: A Case Study of Western Kenya.

[3] Reuters, Monday, 23 March 2009.

[4] Source: NGOs Coordination Board.

[5] The NGOs Coordination Board is the government regulator for NGOs in Kenya.

[6] Karuti Kanyinga and Winnie Mutulah, The Non Profit Sector in Kenya :What We Know and What We Don’t Know.

[7] Here is an example of one taboo: In many Kenyan communities, it is believed that misusing money collected for the vulnerable, such as orphans and widows, can lead to personal misfortune.

[8] Non-Governmental Organisations Act 1990.

[9] Merry-go-rounds are a popular method of mobilizing resources. Members contribute a specific amount of money at regular intervals. They work in a cyclical manner, with a different member receiving the money raised at each cycle, until everyone has benefited.

 
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ISSN: 1556-5157