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The International Journal
of Not-for-Profit Law

Volume 6, Issue 3, June 2004

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

Table of Contents

Letter from the Editor

Accountability and Transparency

Introduction--Coming Clean: Civil Society Organizations at a Time of Global Uncertainty
Kumi Naidoo

International Humanitarianism: The Dark Sides
David Kennedy

On the Issue of Trust
H. Peter Karoff

Fostering Accountability in Zimbabwean Civil Society
Ignatius Adeh

Canadian Federal Budget Increases Transparency for Charities
Robert B. Hayhoe

The Crisis Facing Associations and Other Nonprofits in the United States
John H. Graham IV

Articles

Charities and Compliance with Anti-Terrorism Legislation in Canada: The Shadow of the Law
Terrance S. Carter

Corporate Philanthropy and Law in the United States: A Practical Guide to Tax Choices and an Introduction to Compliance with Anti-Terrorism Laws
Thomas Silk

Legal Mechanisms for NGO-Government Partnership in Ukraine
Alexander Vinnikov

The State-Civil Society Relationship in Kazakhstan: Mechanisms of Cooperation and Support
Vsevolod Ovcharenko

Comment: Defining Civil Society
Miguel Angel Itriago

Reviews

BETTER TOGETHER: Restoring the American Community
By Robert D. Putnam and Lewis M. Feldstein
And
THE GREATER GOOD: How Philanthropy Drives the American Economy and Can Save Capitalism
By Claire Gaudiani
Reviewed by Michael Edwards

A VOICE FOR NONPROFITS
By Jeffrey M. Berry with David F. Arons
Reviewed by Michael Bisesi

THE GOVERNANCE OF NOT-FOR-PROFIT ORGANIZATIONS
Edited by Edward L. Glaeser
Reviewed by Peter Frumkin

- - - - - - - - - -

Editorial Board

Fostering Accountability in Zimbabwean Civil Society

By Ignatius Adeh*

Introduction

Transparency and honesty have become pressing issues in the NGO business in recent years. "Only a few NGOs seem to be transparent in their activities," The Nepal News (2001) has observed. Mike Moore (2001), Director General of the World Trade Organization, has called for a code of conduct that would require transparency from NGOs. Such demands simply ask NGOs to deliver what they demand of others: transparency, honesty, and accountability. After all, he who seeks equity, it is said in law, must come with equity.

Transparency is an indispensable aspect of accountability: effective accountability requires a statement of goals, transparent decision-making and relationships, and honest reporting of resource use and achievements, which can emphasize the honesty and efficiency with which resources are used or the impact and effectiveness of the work (Ramesh: 1996: 8). Access to relevant and timely information about NGO activities is crucial to ensure that internal and external stakeholders can hold the organization to account.

Not only must NGOs be transparent and honest, they also must be perceived as such. Otherwise a government can politically isolate them, leaving them unable to generate voluntary support for their work. In Zimbabwe, for instance, the newspapers often publish sickening slams on NGOs by the government or by members of the public. It is not uncommon to read such headlines as “Unholy alliance: Washington finances anti-government NGOs” (Zimbabwean Chronicle 9/17/02). Such headlines have fueled public mistrust. An example can be seen from an informal interview with an observer during the NGO exhibition conference in Harare in October 2002. Pointing to newspaper headlines and to 4x4 vehicles parked outside the exhibition hall, he said: “Now, you have a situation where NGO resources have increased but the people still do not see any apparent impact on the ground or a noticeable change in their lives. So where do all these funds go to?” He maintained that a large part of such monies end up in flashy 4x4 vehicles and private pockets, while the people for whom the funds are meant languish in hunger and diseases. Indeed, increased resources have left problems seemingly unchanged, producing public disgust, apathy, and discontent. People are increasingly calling on NGOs to show greater transparency and honesty.

Who might oppose greater transparency? Transparency can conflict with the principle of confidentiality and the right to privacy, which are entrenched in the laws of most states. The concerns over confidentiality and privacy are legitimate, but a wealth of information can still be made available to stakeholders and the wider public (GAR 2003: iv). There is also the selfish desire of rent-seekers to hide their ill-gotten gains, coupled with the fear of losing power to the newly informed (Florini 1999: 3, 22). In some cases even where it is in an institution's interest to be transparent, individuals within the institution may prefer secrecy in order to cover up incompetence, to protect opportunities for rent-seeking, or simply to avoid public scrutiny (Stiglitz: 1998). Finally, transparency requirements can mandate additional activities and, in turn, place additional burdens on an NGO's already-scarce resources. 

Defining Transparency

The Chambers Dictionary defines transparency as “being completely open and frank about things.” In European Community discussions, it is the catchword for the openness of EC operations to public gaze (Safire 1998). In business politics, it has been defined as “the release of information that is relevant to evaluating those institutions” (Florini 1999:5). In finance, it is “a process by which information about existing conditions, decisions and actions is made accessible, visible and understandable” (Group of 22: 1998). In institutions and organizations, it is “the process of sustaining trust based relationships with stakeholders through open exchange of information and knowledge" (Williams 2002: 5).

Stakeholders, including the general public, require information from NGOs in order to assess and evaluate their activities. In this realm, transparency means access to such information. Transparency builds trust and confidence on the part of stakeholders and the public in general.

For the sake of this article, I adopt the following working definition: “Transparency is a process whereby relevant information of an organization is made accessible to the stakeholders, including the public, to enable them to assess, evaluate, and make their own judgment about that organization.” My particular focus is on the availability of information about how NGOs manage development funds. People seek information from NGOs to learn how money meant for community development was spent. It is in this context that NGOs need to explain and justify their actions.

Relative Transparency

Some NGO leaders assert that their organizations are more accountable than some governments, and with some justification. The treaty establishing the European Commission, for instance, guarantees any European Union citizen access to EU parliament, council, and commission documents. But when the organization Statewatch sought a document setting out far-reaching changes to the code of public access to EU documents, the Council turned down the request on the remarkable ground that its "release could fuel public discussion on the subject."

The government of Zimbabwe does not have encouraging record on the issue of transparency either. Although the right of access is guaranteed by the constitution and some international instruments, the government has used controversial legislation to narrow the space for public debate, silence those perceived as critical of its policies, and shield itself from domestic and international scrutiny. Civil society organizations and human rights activists have also been targets of state intimidation and harassment. Many have been forced to work in increasingly restrictive and oppressive conditions, facing threats, disruption of meetings by the police, ongoing surveillance by state security agents, and arbitrary arrests. In November 2002 the Minister of Justice, Legal, and Parliamentary Affairs, Patrick Chinamasa, published a list of NGOs that he claimed represented a threat to peace and security in Zimbabwe. Among those on the list was Amani Trust, a Zimbabwean human rights NGO that provides support to torture victims (The Independent: 2002).

Factors Influencing Transparency in Zimbabwe

Transparency and honesty in the NGO sector depend largely on the interconnection of external and internal factors. External factors shape the environment in which NGOs operate, such as cultural values, socioeconomic and political exigencies, and the influence of donors. Internal factors relate to the NGO's own organizational capacities and structures.

In my study of NGOs in Zimbabwe, I found that socio-political developments have exerted enormous impact. NGOs in Zimbabwe have gone through series of challenges with regard to their legal framework, their formation and legitimization, their priorities and methods, and their strategies and the way those strategies are implemented, coupled with demands to show increased transparency and demonstrate honesty in the administration of resources. In fact, all aspects of NGOs’ work have been influenced by the changes in the socio-political arena.

The government's attitude towards NGOs varies: sometimes indifference, hostility, reticence, and wait-and-see; other times, direct involvement, supervision, and welcoming. The hostile attitude has taken precedence as a result of political crises occasioned by the 2000 election, which the opposition political party, NGOs, and the international community condemned for flaws and widespread voting irregularities. The government has decided to implement stringent policies to stifle NGO activities and especially clamp down on critical organizations, all on the pretext of correcting NGO financial mismanagement and lack of control. These anti-NGO policies, coupled with harsh economic conditions, pose daunting challenges to NGOs.

Other external factors are also important, including HIV/AIDS, droughts, poverty, poor economic policies coupled with poor management in the public sector, and the monstrous corruption that has eaten deep into the body politic.

In terms of internal factors, NGOs in Zimbabwe are plagued by inadequate organizational capabilities—poor leadership, bad governance structures and management, wastage of resources, and insufficient skills to get the job done.

The Transparency Deficit and Its Roots

I find that many NGOs in Zimbabwe do not publicly disclose necessary information within the country. The stakeholders and the general public are entitled to information about the management of development funds. A majority of Zimbabwean NGOs display increased transparency of this sort to their foreign donors, but not to other stakeholders. In respect to finances and remunerations, many Zimbabwean NGOs are not transparent toward the communities that benefit from their interventions.

Why? Transparency and honesty indicators—such as budgeting and monitoring, auditing and evaluation, producing reports and press releases, holding public meetings, properly exploiting information and communication technologies, and project management in general—all require skills, capacity, and dedication. Skills and capacity often are lacking. Although staff motivation and dedication are high, further, available data indicate a gradual decline in motivation due to high inflationary trends, which have reduced staff remunerations to mere “peanuts.” Most NGOs also exhibit inadequate financial resources and lack of financial sustainability plans, shortcomings that are blamed primarily on lack of capacity to identify new needs and develop viable projects that can attract foreign donors.

Overall, Zimbabwean NGOs appear to be above average in honesty. True, many NGOs exaggerate their successes while playing down their failures. Some also address desperate financial situations by engaging in practices that one might describe as dishonest. But many are transparent and honest about their strengths and weaknesses.

Fraud and corruption are ordinarily predicated upon personal benefit. In Zimbabwean NGOs, kickbacks, fudged receipts, and project funds illegally diverted to non-project activities are often driven not by a desire for personal benefits, but rather by a desire to assist the organizations’ activities and thereby help attain the project goal. Such practices, however, undermine transparency and honesty standards. They should therefore be discontinued. At a minimum, such practices should be specifically negotiated with donors and other stakeholders.

Of the great number of NGOs in Zimbabwe, only a small proportion are truly fraudulent. The activities of such a small group will not tarnish the internationally recognized good work of the many other NGOs. Increased transparency in NGOs should diminish the corruption: dishonest conduct would be easier to detect, and therefore to deter, through honest reporting, monitoring, and evaluation.

Communicating NGO Accomplishments

It is noteworthy that despite the hurdles, NGOs are still able to engage and organize villagers into groups and committees, thereby giving them the opportunity to discuss common problems and prioritize their strategies. NGOs continue to render services to their beneficiaries despite fears of intimidation, arrest, and torture. They also manage to network with partners and maintain good rapport with foreign donors. Other strengths of NGOs include teamwork within individual organizations and fairly good communication with all stakeholders other than the government.

Weaknesses include inadequate management skills; poor planning in relation to identifying issues systematically and strategizing goals; the inability to clearly identify the beneficiaries of a given project; the inability to counter the misinformation of the government-controlled media and thereby eradicate public bias; and the lack of proper documentation of activities and practices, which hinders learning and exchange of ideas. Additionally, they have not been able to adopt a common national code of ethics.

While NGOs have adopted various means to communicate their efforts to the public, without a nationwide, coordinated approach to their common problems, the circumstances necessary for NGO transparency and honesty will remain elusive. In particular, Zimbabwean NGOs have not been able to come together as a force to confront or engage the government. In a less hostile socioeconomic and political environment, NGOs would be able to manage the available resources (human, material, information, and financial) in a transparent and honest manner acceptable to all parties. But do NGOs have the full backing of donors and other stakeholders to confront or engage the government, bearing in mind the tense political environment? NGOs might improve their situation by strengthening their advocacy and awareness-building networks. With increased promotion of their activities, the successes and the failures alike, they will be able to win the hearts and minds of donors and the general public, thereby fostering a positive image of themselves while at the same time rebutting the vindictiveness and bias of the government information system. 

Recommendations

1. From the NGO's Perspective

Access to information: With today’s information and communication technology, e-mail and websites are becoming the cheapest and fastest vehicles for delivering information. Independent radio stations can also play a significant role. Through these avenues, NGOs can break through the bias of the government-controlled media. The result will be enhanced public awareness of what NGOs do and whom they represent. Only then can NGOs get the support they need from their beneficiaries and the wider public.

NGOs are not secret cults but private institutions that carry out public functions. They are part of civil society, and are therefore expected to be open and accountable. NGOs should endeavor to show increased transparency to their beneficiaries and the wider public through making public their reports. Transparency and honesty require NGOs to show their successes and their failures. It may be wise, in fact, for NGOs to publish their annual reports in newspapers, just as private businesses do at the end of every fiscal year 

Members of an NGO's staff should have access to all relevant information about the organization. This will ensure that they properly represent the organization. They should undergo compulsory orientation and have access to the founding document or constitution.

If NGOs want to prove themselves transparent and honest, they should also make available their reports, records, and other relevant information to social scientists seeking to survey their experiences, successes, failures, and problems. The outcome of such analyses will in no small measure contribute to knowledge. This sector of scientists, in fact, could serve as a laboratory for NGOs, carrying out clinical diagnosis and evaluation of NGO strengths and weaknesses. In Zimbabwe as in most developing nations, these people are virtually ignored, which leads to wasted resources. Such collaboration and interaction with social scientists will educate NGOs and the public, and it will help policymakers as well as existing and potential donors. In Zimbabwe, this would be particularly useful because trust has become a scarce commodity. The public could rely on the findings of social scientists who, with nothing to gain or lose, can produce unbiased analysis.  

Language: Language is a key component of information sharing, especially where the majority of beneficiaries or recipients are illiterate. To maximize information sharing, reports, records, documents, and other materials must be made available in multiple local languages and in a simplified form that the majority of people might understand. Radio programs must also reflect the peoples’ languages. For instance, thematic programs, interviews, and discussions should take local languages into consideration. In areas where this is not affordable, the usual word of mouth can still be relied upon.

Hierarchy: Most NGOs in Zimbabwe have a hierarchical structure, with power concentrated in the director or chief executive. This model is no longer fashionable in today’s world, where transparency is a watchword for all institutions. A much more transparent approach can discourage dishonesty: namely, a decentralized form that places the local staff and the communities at the center of decision-making, thereby giving them the opportunity to move up the ladder within the management structure. Such a system should encourage engagement and negotiation between and among stakeholders.

Monitoring and control structures: All NGOs should have proper procedures for receiving cash, keep incoming funds separate from outgoing funds, and limit access to the safe and petty cash to specified individuals. Further, receipts for money paid out must be taken, and receipts given for money received. All staff must be given rudimentary training in accounting and handling of cash. In addition, occasional inspections must be made of purchases to ensure that receipts and invoices represent actual transactions.

Management and skill: Many NGOs in Zimbabwe need capacity-building in the areas of operational management, monitoring and evaluation, strategic planning, and report writing. Most of the managers and directors are self-made chief executives with little or no qualification. The management staff and field staff need more management training if they are to handle their ever-increasing tasks. Training could be provided by several local institutions or by institutions from abroad.

NGOs should also learn from one another. They might, for instance, register staff members with the National Social Security Authority, as two NGOs, the Legal Resource Foundation (LRF) and Zimcet, now do. In-house training can also send a signal of relative job security, which can improve staff dedication and output. Further, NGOs could develop a national database of skilled NGO personnel, modeled on the LRF project in Matebeleland called SAFDEM, which sought to create a database of qualified Southern Africans willing to undertake peace missions abroad.   

Delegation of powers: NGOs should adopt a framework where power is delegated to members of staff, who can make decisions on behalf of the organization in the absence of the manager or chief executive. Otherwise his or her absence prevents any meaningful activities from taking place.

Beneficiaries and the public: All NGOs should embrace Zimcet's approach of creating ownership in the beneficiaries by organizing villagers into committees, which in turn confront their common problems and participate in community projects. Documenting and disseminating information about best practices could be helpful in this regard, as could improved advocacy techniques.

Reporting systems, auditing, and evaluation: Most of the NGOs complained of a lack of qualified personnel for compiling reports for the various stakeholders, particularly donors with their varying demands for particular formats and procedures. In addition, NGOs commonly rely on high-paid outside auditors and evaluators. The fees drain much-needed finances from such organizations unless the donors pay for the services. Building and strengthening capacity is needed here.

Disciplinary procedures: NGOs must put in place disciplinary measures to deal with staff and members who attempt to gain personal benefit from the organization or its assets. Such behavior by a few staff or few organizations debases NGO values and morals. When disciplinary action is taken against erring staff, it should be made known to the public. In most African countries this would be an image booster: it would show that the NGO has a no-nonsense leadership able to drive out bad eggs.

NGO codes of conduct: While some NGOs have rules that serve as code of ethics, most do not. The majority said they desired a national code of conduct, which at the time of this study was nonexistent. However, my visit to Zimbabwe for data collection rekindled interest in a national code, and the National Association of NGOs (NANGO) undertook to create one. The first national conference for that purpose was held in Bulawayo, and indications are that a draft is underway. A national code of conduct that commands the support of the majority of NGOs is necessary to serve as benchmark for judging NGO actions.

Lack of focus: Initially, an NGO's constitution or foundation document may establish a goal, but over the years the organization moves from one goal to another without fully attaining the initial goal. Almost all the shifts in focus were toward relief and welfare, resulting from bad government policies, corruption, political violence, and the drought of the late 1990s that left millions, particularly women and children, in dire need of food and shelter. Experience has shown that NGOs that have a focus and stick doggedly to it tend to record higher marks in transparency and honesty. It is recommended that NGOs reject funds that may divert them from their goals, funds that may decrease their efficiency, and funds that do not adequately provide for overhead costs or what are generally known as non-project essential activities.

Coalition-building and networking: Most Zimbabwean NGOs have improved in this area, but more needs to be done, especially in seeking partnerships locally and regionally rather than only from northern countries. A wealth of experience exists locally, and it is not known to a lot of NGOs. They must do better of reaching out to other like-minded NGOs locally and within the region to share information and identify common interests. This will also affect transparency and honesty within the NGO sector. Along with developing a code of ethics and organizing more exhibitions, NANGO, the consortium of NGOs in Zimbabwe, should come up with a framework for all the representatives of the consortium to exchange ideas and experiences.

2. From the Donor's Perspective

Donors should bear the additional costs of increased transparency and honesty. The cost of creating a web page or exploiting other information and communication technologies should be negotiated with donors and other stakeholders.

Donors must develop an independent test for determining that an organization is credible, transparent, and honest before disbursing funds, in order to avoid the much-taunted misallocation of resources that can result in financial misappropriation. In order to avoid misallocation, donors must look before they leap. Donors must also realize that NGOs need help if they are to be successful in waging war against the miscreants in their midst by sharing information about the reputation of other NGOs.

Donors must also offer political support to NGO partners-in-development facing threats from the government of Zimbabwe and other hostile regimes. In particular, donors must apply all pressure necessary to make the government change its course of action on development issues in Zimbabwe. They must call on the government to respect its international obligations with respect to the freedoms of assembly, association, and free speech, and they should threaten punitive sanctions for non-compliance. Donors can show their clear support for NGOs by sending an unambiguous signal to the Zimbabwean government regarding its actions toward NGOs and people with opposing views.

3. From the Government's Perspective

The government creates a policy framework for NGOs to operate. Therefore, the government of Zimbabwe has no grounds to complain about inadequate transparency and honesty on the part of NGOs—it has the unfettered power to make and enforce the laws that guide NGO actions. If it wants a booming NGO sector, it must promulgate just laws and enforce them without political motivation.

A government serious about NGO transparency and honest management of resources needs to set the necessary machinery in motion. That means that the government of Zimbabwe should be encouraged to do the following:

a.      Abrogate all the so-called “strangulatory” legislation that gave extra-legal justification to violence against NGOs and people with opposing views.
b.      Promulgate just and acceptable laws and initiate policies that promote collaboration with NGOs. When acceptable laws are made and truly enforced, the atmosphere of fear, distrust, misgiving, and suspicion will be eradicated.
c.      Strengthen law-enforcement procedures so that laws on NGOs can be truly and honestly enforced.
d.      Instead of confronting NGOs, welcome them and work together so that NGOs can fully contribute.
e.      Work closely with NGOs in order to make joint coordination of NGO activities a reality.
f.       Reverse its position on media campaigns to smear NGOs in the public eye.
g.      Harmonize its local laws with its responsibilities under international laws and instruments.

Conclusion

If these recommendations are adopted, NGOs in Zimbabwe can attain increased transparency and honesty in the management of resources. But if such measures are not seriously considered, NGOs could find themselves part of the problem they are fighting against—which could constitute the worst nightmare for stakeholders, particularly beneficiaries, and raise needless questions about the legitimacy of NGOs. 

Transparent and honest management of NGO resources pleases donors and other stakeholders, and is necessary to ensure continuous support and thus sustainability. More broadly, transparency is critical to development and a thriving democracy. It enables civil society to understand, analyze, and participate in discussions relating to community development and other social issues. Zimbabwean NGOs must understand that transparency is indispensable if they are to realize their overall goal of social transformation.

Notes

* Ignatius Adeh, LL.B (BL), M.A., is a development policy consultant based in Germany. Copyright 2004 by Ignatius Adeh.

Bibliography

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Global Accountability Report (2003): Power without Accountability. http://www.wto.org/english/news_e/news03_e/gar2003_e.pdf, accessed August 17, 2003.

Group of 22 (1998): The Report of the Working Group on Transparency and Accountability. Washington, D.C.: International Monetary Fund.

Independent newspaper of Zimbabwe (2002): Clamp down on dissent. February 8.

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