Skip to main content

NGO Governance and Accountability: Challenges in a Newly Democratizing Country

NGO GOVERNANCE AND ACCOUNTABILITY IN
INDONESIA: CHALLENGES IN A NEWLY
DEMOCRATIZING COUNTRY

By:
Hans Antlöv,
Rustam Ibrahim
Peter van Tuijl

(July 2005 version)

2
2 INTRODUCTION

The collapse of President Soeharto’s authoritarian New Order regime in 1998 and the ensuing
transition towards democracy has brought about many changes in Indonesia, including a
tremendous growth in civil society. The number of civil society organizations (CSOs)
throughout Indonesia has increased substantially. It is no exaggeration to describe the recent
developments as the rising era of civil society in Indonesia. The global spread of democracy
has opened up new opportunities for Indonesian civil society groups to participate in
establishing rights, institutions and mechanism of accountability in a society where citizen
involvement not very long ago was discouraged.

With the basic freedoms of expression and association upheld, the civil society sector has
grown rapidly and intensely. Myriads of new and old organizations are trying to make their
voices heard in the public sphere. Several trends exemplify this. It is almost impossible to
capture the diversity of the nonprofit sector in Indonesia. There are tens-of-thousands of civil
society organizations in Indonesia today, including religious organizations, mass-based
membership organizations, unions, ethnic-based organizations, community organizations,
nongovernmental organizations, professional associations and politically affiliated
organizations.
1 Prior to 1998, there was only one labor organization and one farmer union
acknowledged (and controlled) by the government; now there are no less than 40 national
labor organizations, not less than 300 local labor unions and more than 10,000 labor
associations at the corporate level, and hundreds of peasant organizations. Social-religious
groups, research institutions, study groups and think tanks have also grown in numbers.

Despite the growth of the nongovernmental organizations (NGO) sector, now as a part of a
broader civil society in Indonesia, it is important to realize that the impact of a prolonged
experience of repression is still very significant. During more than three decades of
authoritarian rule, civil society in Indonesia was seen as a part of the problem, not as the
solution. Civil society was there to be controlled, not to be listened to or as a partner to work
with. The implication is that while after 1998 civil society was expected to contribute to
democracy and good governance, it actually had to rethink its strategies and reform and adjust
itself as well, quite fundamentally and dramatically, in order to come up to the challenges and
opportunities of a new situation. This process is still ongoing.

The uncertainty in the position and strategies of civil society in Indonesia is compounded by
the increasing call for accountability. Right at the moment when there is a lack of confidence
among civil actors about what they are actually able to achieve and how to achieve it, both
the internal governance of CSOs as well as their external performance in the public domain
are becoming subject of greater scrutiny. Yet, a number of initiatives to improve CSO
governance and accountability have been taken and are beginning to solidify. This chapter
will focus in particular on NGOs, as an important subsection of civil society, and their role in
developing the governance of the nonprofit sector in Indonesia.

1 It is impossible to estimate the exact number of NGOs in Indonesia, since only those NGOs that are
legal entities (normally foundations or yayasan) need to report their existence to the authorities.

3
3 THE PERMITTED GROWTH OF THE NGO SECTOR AND ITS IMPACT
There is a long history of civic associations in Indonesia. A rich texture of social groups and
movements has existed: religious societies, private schools, credit associations, mutual
assistance self-help groups, neighborhood organizations, water-user associations, and many
others. These were mainly ascriptive, and not voluntary. It was only with the rise of
liberalism and modernity that such organizations in Indonesia developed into an emergent
and self-sustaining public sphere, during the decade of political awakening, 1915-1925.
Hundreds, if not thousands, of popular mass-based organizations were established, based on
religion, ethnicity, political affiliation and other joint concerns.

NGOs
2 began to be recognized in Indonesia in the early 1970s in line with the development
activities carried out by the Soeharto government 3. Although the government was able to
maintain high economic growth of 8% per year, widespread poverty and lack of community
participation in development activities created room for NGOs to play a role in community-
based social and economic activities. These NGOs (often indicated as “Development NGOs”)
were involved in a wide variety of fields, either as a complementary provider or as an agent
of government programs that could not reach the lowest strata of society. Their programs
covered health services, nutrition, clean water and sanitation, family planning, non-formal
education, applied technology, micro credit, small enterprises, informal sector joint ventures,
cooperatives, etc.

The growth of the NGO sector in Indonesia in the 1980s was caused by both international and
domestic concerns. Internationally, more and more donors were realizing that in order to
achieve their social goals, they needed to cooperate closer with various non-governmental
organizations. And as the Cold War came to an end, the democratization agenda become
more important. Critical in this was the growth of a civil society and therefore the support of
nongovernmental organizations became important, not only for programmatic concerns, but
also in itself, as the actors to strengthen civil society.

By the early 1980s, even for Soeharto’s government it had become clear that the state
alone could not bear the full costs of development and therefore needed the participation
of communities. The state opened up to NGOs to become a player in development. But
the approach of NGOs by the Indonesian authorities was predominantly instrumental and
certainly not supported by the language of “democracy building” that the donors were
using to support NGOs. As a matter of fact, the Indonesian regime increasingly
orchestrated any other type of organization outside government, and limited their number.

Towards the end of the 1980s, “civil society” in Indonesia consisted of a series of single-
issue or single group-oriented umbrella’s or organizations, for farmers, workers, women,
sailors, officials and many other groups, all effectively controlled by the government. The
number of political parties was limited to three only. Indonesian civil society was there,

2 During Soeharto’s rule, Indonesian NGOs began to use the name of Lembaga Swadaya Masyarakat
(LSM) which means “self-reliant community development institution.” The English term NGO was
often interpreted as “anti-government institution”. This was especially related to the Soeharto regime’s
policy not to give room for any opposition. LSM is still commonly used, though some have changed to
Organisasi Non-Pemerintah or ORNOP which is the literal translation of “NGO”.
3 There are a handful of good analytic studies of the NGO sector during the 1980s and 1990s. See for
example: Eldridge (1995), Fakih (1996), Uhlin (1997) and Hadiwinata (2005).

4
4 but it was purposely trimmed into a well managed miniature. This process has been aptly
called the “bonsaification” of Indonesian civil society.
4 Some room for a more politically
oriented function in civil society was left only for a few large mass-based Islamic
organizations and for NGOs. The Islamic organizations could maintain some space as
they benefited from the clout granted by the sheer numbers of their membership, strong
community roots and skillful leadership. Room for NGOs was left by the regime because
of their contribution to delivering services to communities and because of international
support, politically and financially.

It is important to understand how the growth of Indonesian NGOs for at least two decades
took place in a context of a civil society that was deliberately dysfunctional in its political
features. It made NGOs almost synonym for “civil society”, in the eyes of donors as well
as in terms of self-perception, and it cloaked NGOs with the aspiration of a political
opposition. Donors’ support for NGOs was similarly portrayed as support for civil society
and democratization. In fact, the one-sided support of development NGOs rather than other
associations within civil society did not contribute to a broad based civil society growth and is
one of the causes for the present weaknesses of NGO elitism and a lack of effective
grassroots participation. To the excuse of donors, the Soeharto government did not give
donors much choice in supporting anything else.

Within this limited space, NGOs active in human rights and in environmental protection and
preservation began to emerge, in line with global trends. These NGOs started to carry out
advocacy activities in support of those whose rights were violated by the regime, such as
indigenous communities, women or workers. Or they became active with regard to areas of
environmental degradation, such as the pollution of air, sea and land; and the destruction of
the forests and other natural resources due to development and industrialization, rapid
population growth, and poorly planned transmigration programs.

During the 1990s, more NGOs started advocacy divisions, moving beyond the framework of
community development. The impetus for these changes was the increasingly tense relations
between the community development NGOs and the more politically oriented activists. This
friction between NGOs culminated, first with a critical attack on the established NGOs by a
group of smaller organizations in Central Java (Johnston 1990:86) and in December 1990,
with the announcement of a “no-confidence motion” of the whole NGO sector in a larger
advocacy meeting in Bali (Eldridge 1995: 39). NGOs in Indonesia, according to the advocacy
oriented activists, had merely become the extended arm and implementing agencies of the
authoritarian government and had lost its commitment towards change. They were criticized
for hierarchy, bureaucracy, co-optation and lack of internal accountability.

It is fair to say that NGOs and the leadership that grew up in the NGO sector subsequently
played a significant role in the transition to democracy. Had it not been for the voluntarism
and commitment among NGOs and some of the remaining relatively autonomous
organizations in Indonesian civil society, the transition towards democracy would have taken
longer, and the road would have been bumpier. The advocacy groups established in the 1980s
were a building block for the democracy movement. They formed an important element in the
aggressive public pressure on the Soeharto government that emerged in the mid 1990s. Many
of these groups had at the time only had limited, if any, political influence, but could

4 The term has been coined in informal discourse among Indonesian NGO activist in the late 1980s, but to the
best of our knowledge never made it into academic literature.

5
5 nevertheless contribute to the loose pro-democracy movement that eventually forced Soeharto
to resign. With the growth of a professional and more critical middle-class, with a reassured
urban working class, and with sensitized political parties, the necessary pre-conditions and
the right constellation of actors for a political transition was in place. The Asian economic
crisis that started in 1997 provided the trigger.

The fall of the Soeharto regime and the ensuing democratization process in Indonesia led to
the emergence of a discourse on good governance, accountability and transparency of public
institutions. NGOs that were active in monitoring the activities of state and other political
institutions emerged and became known as “watchdog” organizations. Starting with the heavy
involvement of NGOs in the 1999 election, nowadays almost all aspects of state institutions
are being watched by NGOs. The Indonesian public recognizes various organizations such as
Indonesian Corruption Watch (ICW), Parliament/legislative watch (DRP-Watch),
Government Watch (GOWA), Police Watch (PolWatch), and budget watch (FITRA).

To engage more effectively in promoting just public policies, Indonesian NGOs have also
grouped themselves in a number of coalitions to carry out advocacy to change, influence
and/or draft new laws. Examples of such coalitions are the NGO Coalition for the Foundation
Law, the NGO Coalition for the Public Freedom to Information Law, the NGO Coalition for a
New Constitution, and the NGO Coalition for the Participatory Law-Making Bill. However,
alliance building among Indonesian NGOs has so far never reached the level of a nation-wide
coalition, such as in many other countries. What is still missing is an organization that
monitors the NGOs themselves, or at least a professional association of NGOs.

Seven years into what is known as
reformasi, citizens in Indonesia are in a myriad of ways
making their voices heard, fill spaces opened by democratization and decentralization, and
are in the process of building a new relationship with the state. Since the fall of Soeharto, it
has been truly possible for citizens to express their voices in public and speak out about what
they feel important in life. In spite of continued state-sponsored corruption and power abuse,
civil society grows and is strong. There remains today a flowering of new ideas and social
actors, as people who had been denied participation for a long time sought to get involved.
There is a momentum for negotiating and reformulating the balance of power between the
state and its citizens. NGOs have an important role to play in this. This has been made
possible by the continued freedom of assembly and the freedom of press. Newspapers are free
to write what they want, and are often very brave in doing so. There are dozens of television
talk shows, discussing in very open and inclusive manners the problems of government and
society.
5 We will now review the present situation and perceptions of Indonesian NGOs more
in detail, starting with a brief overview of changes in the regulatory framework for NGOs.

CURRENT REGULATION OF NGOs
In Indonesia, there are two kinds of legal entities for non-profit organizations: foundations
(
yayasan) and associations (
perkumpulan).
Yayasan was first recognized as a legal entity
during the Dutch colonial era (1870) as non-membership organizations. Most
yayasan were
established under the European legal system, while some adhered to other legal systems such
as
wakaf (donations or grants under Islamic law).

5 However, we also need to recognize in the ultimate lack of political impact of many civil society
organizations. See the studies by Stanley et al (2003) and Hadiz (2003).

6
6 For many years, all forms of
yayasan were based solely on societal norms and Supreme Court
jurisprudence. This form of a
yayasan is actually derived from the agreements and aspirations
of the founders only and then developed into legal practice. The purpose and agreement for
establishing a
yayasan is then authenticated by a public notary act, registered in the district
court and announced in the State Gazette.

Normally the objective of a
yayasan is social, religious, educational or humanitarian in
nature. Unfortunately however, there was no limitation to the activities that a yayasan could
implement; so many
yayasans were used as profit making entities or even money laundering
purposes for the founders. Many of the major military business groups during the Soeharto
era had a
yayasan as their legal basis, and were consequently unregulated (Robison and Hadiz
2004:57). There were also
yayasans founded by Soeharto to obtain donations from
conglomerates;
yayasans established by the military to shelter their businesses; and hospitals
and universities that raise public funds for the benefit of their founders.

In line with the demand for good governance after the fall of President Soeharto and in
response to pressure from the International Monetary Fund (IMF) to regulate military and
state-based
yayasans, the government of Indonesia submitted a draft
yayasan law to the
parliament in 2000, ratified as Law 16/2001.

The basic aim of the new Law 16/2001 is to promote transparency and accountability in
yayasan governance. The preamble states that: “Facts indicate the tendency of some members
of society to establish
yayasan to take shelter behind the legal status of
yayasan which are
used not only to develop social, religious, humanitarian activities but also to accumulate
wealth for the founders, board members and supervisors. Along with this tendency, a number
of problems have emerged in relation to
yayasan activities that are not in line with the
purpose and objectives stipulated in its Articles of Association and the suspicion that
yayasans have been used to accommodate illegally gotten wealth of founders or other
parties.”

This law can be considered as an important breakthrough for good governance of the
nonprofit sector in Indonesia, as it provided assurance and legal certainty, as well as restored
the
yayasan’s function as a non-profit institution with social, religious and humanitarian
goals. On accountability mechanisms and transparency of a
yayasan, the regulations are as
follows:

• The
yayasan is obliged to issue an annual program and financial reports, by at least
placing an announcement in the notice board of the
yayasan’s office (Article 52
Clause 1).
• A
yayasan receiving funding from the state, overseas donors or other parties in the
amount of Rp 500 million (approximately US$55,000) or more or having assets of
more than Rp 20 billion (approximately US$2.2 million) is obligated to publish its
financial report in an Indonesian language newspaper (Article 52 Clause 2).
• A
yayasan receiving funding equal to or more than Rp 500 million or having assets
amounting to Rp 20 billion must be audited by a public accountant (Article 52 Clause
3).
• Annual financial reports of a
yayasan must be prepared based on the Indonesian
Standard of Accountancy (Article 52 Clause 5).

7
7 The other form of legal entity used by NGOs is the
perkumpulan (association), which is
established by a number of people to serve the interests of its members or the public.
Different from
yayasan, which is a non-membership organization,
perkumpulan is established
on the basis of memberships or a group of people with a common social service objective and
not for profit making purposes. The legal entity of association is obtained through approval
from the Minister of Justice and is published in the appendix of the State Gazette.

With the promulgation of Law No. 16/2001, a number of NGOs – particularly organizations
active in social movements and dependent on a broad membership base –have begun to
reconsider their legal status, i.e., whether to remain a
yayasan or become a
perkumpulan. This
has been the case with NGOs involved in the women’s movement, consumer protection, the
environment, and human rights. The reason is that membership-based organizations are seen
as more accountable and less prone to authoritarian governance tendencies, different from
yayasan where the founders control everything. We will return to this issue below.

PERCEPTIONS AND WEAKNESSES OF NGOs IN THE REFORM ERA
6

Government Perceptions
In line with the ongoing democratization process in Indonesia, perceptions of the government,
the private sector and donors about the existence and role of civil society in general and
NGOs in particular have also changed. Except for some vocal NGOs working on human
rights and environmental issues, the government seldom intervenes anymore directly in NGO
activities.
7 There are indications of increasing appreciation of the role of NGOs, for example
in the post-tsunami disaster and relief operations in Aceh. The government begins to see the
need to create a new division of roles among stakeholders (government, private sector and
NGOs) by giving opportunities to independent community initiatives, as well as encouraging
them to actively participate in government programs. According to government statements, it
is hoped that a stronger, more democratic and more dynamic community will emerge through
improved community capacity to solve their own problems.
8

However, the government still has difficulties in developing effective partnerships with
NGOs. This is particularly due to the fact that the rapid growth of NGOs has not been
accompanied by the creation of an umbrella organization to represent NGO interests in
dealing with the government. For the government, therefore, it is difficult to obtain inputs or
to develop accords widely supported by the NGO community in a more formal sense.

There is also among state actors a lingering hesitation towards the limitation on state power as
advocated by some NGOs. We can see this for instance in the statement of then president

6 This section is based on opinions as expressed in a series of seminars on “Developing Strong,
Healthy, Democratic, Transparent and Accountable NGOs” held in eight provincial capitals in
Indonesia from May to July 2002. Speakers from the government, private sector and donor agencies
were invited to present their views on NGO roles. The seminars were organized by LP3ES, a national
NGO based in Jakarta.
7 The disturbing exception has been the killing of Munir, Indonesia’s foremost human rights activist,
in September 2004. There are strong suspicions but as yet no proof of structured government
involvement in ordering the assassination.
8 Freddy H. Tulung (Director of Politics, Communications and Information, National Planning Board-
BAPPENAS), paper presented at the seminar on “Developing Strong, Healthy, Democratic,
Transparent and Accountable NGOs”, Jakarta, 17 July 2002

8
8 Megawati Soekarnoputri in 2002 warning of the “ultra democracy” of NGOs, media and
political parties that only were thinking of their own advantages (Jakarta Post, 26 November
2002). This is connected to a nostalgia and romanticism of the stability and efficiencies of the
Soeharto regime, in which political stability and national unity were prime characteristics.

Many people within the government believe that in the present transition to democracy, the
NGO community should consolidate internally to strengthen its own capacity, because both
the government and NGOs have equal potential to be corrupt and lose focus in the absence of
a code of ethics, accountability mechanisms and transparent control. That is why the
government appreciates NGO efforts in promoting good nonprofit governance, and in
improving professionalism, transparency and accountability. The government also sees the
need for a forum of NGOs to create NGO accountability in carrying out their functions.
9

Private Sector Perceptions
The private sector primarily views NGOs as institutions with a capacity to influence corporate
missions and motivate corporations to develop and improve their performance in corporate
social responsibility. NGOs can motivate changes in corporations’ approach towards its social
function from a charity-based to a community-empowerment approach. NGOs are also
viewed as being closer to the grass-roots community and therefore as having the potential to
collaborate with corporations in developing better community development programs.

In the past, relations between the private sector and civil society were often full of conflicts,
but due to the change in political climate and NGO pressures, the private sector’s perception
towards NGOs has been undergoing some change. Companies are more willing to collaborate
with civil society organizations in community development projects. A number of
multinational corporations, directly or indirectly through their community relations
department or corporate foundations have begun to provide assistance for communities
surrounding the locations of their business, through programs in community health, clean
water and sanitation, agriculture, and the development of small scale enterprises, all in
collaboration with NGOs. These kinds of relationships were almost unheard of in the past.

There is also an emerging constituency in Indonesia for corporate social responsibility (CRS)
and philanthropy. Several networks have been established, including Indonesia Business Link
(for CSR) and the KEHATI-led Initiative on Strengthening Philanthropy (for Philanthropy).
There is an emerging convergence between the “supply” and “demand” side of civil society,
between the philanthropic sector providing funds for charitable activities, and the nonprofit
organizations that work with end-users in providing actual development programs. Recent
collaborations in the tsunami-hit province of Aceh point towards further improvements in the
relationship between these two sectors, in which trust is beginning to be built.

Donor Perceptions
Meanwhile, donor agencies mainly have continued to view NGOs as alternative institutions
with the ability to provide public services and at the same time exercise some control over
government power. In view of the changes in the political regime, many of the obstacles for
NGOs to contribute to democratization and policy change have been removed. Having said
that, while during the previous authoritarian regime NGO were often seen as the
anak mas
(“favorite child”) of donors, today there is more criticism, also among donors. Three donor
reports, funded by USAID (Holloway and Anggoro 2000), UNSFIR (Feulner 2001) and the

9 Ibid.

9
9 World Bank (McCarthy 2002)), plus a study by the international NGO Mercy Corps (2002)
10
and two MA thesis (Sudarbo 2002 and Hidayat 2003) provide a good picture of the
complexity of donor-NGO relations in Indonesia.

Donors see that there are at least four important areas for improvement among Indonesian
NGOs. First and foremost is internal governance. This includes decision-making processes,
division of roles between the board and executives, establishment of accountability
mechanisms to constituents, as well as issues related to the establishment of a clear vision,
mission and objectives. The second area to be addressed is accountability, both to the
government and to the public. So far, NGOs mainly attempt to be accountable to donor
agencies in the form of narrative and financial reports on projects. Third, NGOs need to
improve external relations with other NGOs and with the public or its beneficiaries. If an
NGO is working directly with the underprivileged then it needs to understand how it can
really empower them so that they are stronger and more critical. For advocacy NGOs,
networking and alliance building with other NGOs are important tools so that activities at the
community level can be promoted to the national level. The fourth area needing improvement
among NGOs is management, including strategic planning, program development and
financial and human resources management.

Donors will eventually evaluate NGOs based on the four factors above, i.e., technical
capability, legitimacy, accountability and transparency. Furthermore, a majority of NGOs do
not have any criteria or parameters to track program achievements. Outcomes become the
indicator for success (an indicator of success for a training session is thus often that “30
persons were trained”), without any real substantive way of measuring the medium and long
term impact of the activities.

Summary of NGO weaknesses
A recent series of academic studies of the civil society sector, NGOs and the pro-democracy-
movement in Indonesia complements the picture.
11 Below is a summary of some key
characteristics of NGOs today. They are by necessity brief and to some extent caricaturized.
But the issues and problems these groups have encountered, we believe, are real, although not
to the same extent for all NGOs individually.

• Centralistic and urban:
Most NGO are based in larges cities in Java, and in Jakarta, even
though they might be working in the outer islands. Many of the larger development NGOs
have regional branches with limited autonomy, but this is slowly changing.
• Elitist and middle-class:
The foundation (
yayasan) form of NGOs often encourages a
powerful role for the director of the institution, who usually is the founder. This may lead
to a situation in which most decisions are taken by the top layer of the organization’s
leadership without involving field-staff. The leadership is often (aspiring) middle-class
with a university degrees but has little knowledge of grassroots mobilization (Sidel 2004).
There have been cases of great distance between NGOs and the communities they were
working for, geographically, culturally, socially and economically.

10 Rolly Aruna Damayanti, Program Officer with Mercy Corps in Indonesia, in a paper presented to
represent donor perspectives in the seminar for “Developing Strong and Healthy, Democratic,
Transparent and Accountable NGOs”, Palembang, 9 July 2002.
11 See Stanley (2003), WACANA (1999), LP3ES , Pirac, UTS/Trisakti, Sidel (2004) and Hadiwinata
(2005).

10
10 • Free-floating:
Recent research by DEMOS on the pro-democracy movements has shown
the detachment of many NGOs from the everyday reality of common people. Very few
NGOs are mass-based or based in the countryside. Neither do they have political impact
upwards. They are thus floating in-between the state and the community (Stanley et. al.
2003).
• Sectoral and fragmented:
Many NGOs are focused on sectoral programs. There has been a
lack of coordination between NGOs.
• Lack of managerial and advocacy skills:
Since NGOs are micro-oriented and elitist, they
often have weak organizational skills.
• Lacking focus and ideology:
NGOs have often diffused into being involved in a variety of
activities without necessarily having any skills in that field. Environmental groups are
election monitors; research institutions manage development programs; anti-corruption
groups deliver emergency assistance, and so on. Many groups go where the problem or the
money is, the “flavor of the month”.
• Lacking accountability:
There are few mechanisms through which NGOs can be held
accountable to communities, further reinforcing the social distance and lack of impact. The
general public, the media as well as state actors, are increasingly complaining about the
lack of accountability of NGOs and other civil society organizations.

The above list of weaknesses and problems is framed in a remaining reliance on assistance
from foreign donors. This does not help either to generate public trust towards NGOs in
developing legitimacy, accountability and transparency. These challenges are probably best
illustrated through the case related to the Indonesian Legal Aid Foundation (YLBHI). YLBHI
has been one of the outstanding NGO in the fields of law, democracy and human rights for
the past thirty years. However, this organization is now in the middle of a severe financial
crisis, after two major donors stopped their assistance. The decision has had a huge impact on
YLBHI and they have decided to reduce their activities and to rationalize the number of staff.
The reasons for the cessation of aid to YLBHI are related to management quality and internal
governance issues, particularly the conflicts between the board of trustees and the executive
office during the last couple of years.

The above illustration provides an example of the financial reality of Indonesian NGOs.
When donor support is stopped it affects programs and even the NGO’s own existence. This
suggests the need for Indonesian NGOs to raise their funds from domestic sources, from the
public, the government or the private sector. In order to gain public trust, however,
Indonesian NGOs need to improve their governance first, especially in relation to the issues
of legitimacy and accountability. It is important for NGOs to prove their capacity to deliver
intended services to the community so that their existence can be socially recognized and
supported.

RESPONSES AND INNOVATIONS FROM NGOS
The rapid growth of civil society and the increasing discourse on good governance have
caused anxiety among the NGO community in Indonesia and critiquing NGOs has
increasingly entered the media and public discourse. Although it has had positive impacts on
the democratization process, it is now more generally understood that the explosive growth of
new NGOs during the last five years has also created problems of quantity versus quality.
Some even question the growth as “too much, too fast” (McCarthy 2002).

11
11 Many organizations that were established after the fall of Soeharto and call themselves NGOs
have questionable objectives, and some of them have been involved in malpractice, and have
thus affected the reputation of NGOs in general (Ganie-Rochman 2000).These include NGOs
that sold subsidized rice destined for the poor; NGOs established just for the purpose of
gaining access to development projects; NGOs established by political party activists to
mobilize funds and support to gain political power; as well as NGOs acting as debt collectors
or specializing in mobilizing mobs for hire. There have been newspaper articles about the
“Billion rupiah business of NGO” (Bisnin Milyaran LSM) and allegations of corruption and
misuse.

Some activists in Indonesia have started to reconsider the basic principles of NGO existence.
People are asking questions such as, “What is an NGO? Why does it exist and what are the
bases for its legitimacy? How can NGOs be accountable to their constituents and stakeholders
and how can this accountability mechanism be established?” Discussions surrounding these
questions were first attempted to be answered through a number of workshops and seminars
conducted in 2002-2003
12. These workshops, which also included foreign resource persons,
covered issues of NGO legitimacy and accountability in a comprehensive way. The
workshops covered mapping of all sources of NGO legitimacy and existence, NGO
constituents and stakeholders, various accountability mechanisms, applications of principles
of NGO internal governance; and developed an action plan to improve NGO integrity and
credibility.

As already mentioned, there is no umbrella organization for NGOs in Indonesia yet. In other
countries, such umbrellas can function as a representative in promoting the existence and the
interests of NGOs to outside parties and serve internal capacity building purposes for its
members. The absence of such an organization may be related to the traumatic history of
Indonesian NGOs, who always tried to avoid unity to avoid being co-opted by the Soeharto
authoritarian regime or used as a political vehicle by opportunistic NGO leaders. During the
last few years, however, a number of influential NGOs have begun to take new and
sometimes quite innovative steps to address the issue of NGO governance. We will briefly
present some of these efforts.

Preparation of an NGO Code of Ethics
Since 2002, LP3ES (the Agency for Research, Education, Economic and Social
Development) a national NGO, has taken the initiative to prepare and implement a code of
ethics and to establish an NGO association or umbrella organization, particularly for NGOs
that are working in community-based social and economic development. The preparation of
the code of ethics and the establishment of the NGO association has been carried out through
a number of meetings, seminars and workshops with the NGO community and involving
stakeholders such as the government and private sector. The program has been organized in
provincial capitals, involving at least 500 local NGOs.

The program eventually managed to formulate a written code of ethics. The code, signed by
252 NGOs from eight provinces, contains matters related to integrity, accountability and
transparency, independence, anti-violence, gender equality, and financial management,
including accountability to external parties such as beneficiaries, government, donors, other
NGOs and the public at large. There are a number of points in the code of ethics that may be

12 Donor agencies interested in the issues of rights and obligations, transparency and accountability of
NGOs include the Ford Foundation, the Partnership for Governance Reform and Tifa Foundation.

12
12 considered important to improve NGOs’ accountability and transparency as nonprofit
organizations, including: a) an NGO is not established for the purpose of profit making for its
founders; b) an NGO is not established in the interests of its founders but is intended to serve
the people and humanity; c) all information related to its mission, membership, activities and
financing are basically of public nature and is therefore available to the public; d) an NGO
utilizes bookkeeping and financial systems that are in accordance with acceptable accounting
standards.

The NGOs participating in formulating the code of ethics also agreed to establish regional
associations of NGOs, which are responsible for the implementation of the code, and to help
NGOs in their capacity building. Future challenges for the NGOs that have accepted the code
of ethics is how to apply it consistently in each organization and sanction those in violation,
so it will not become merely an on-paper agreement.

NGO Certification Program
Satunama, a Yogyakarta-based NGO that is active in education, training and management
consultancy, has launched a program called “Certification of Indonesian NGOs”. The
program is intended to improve NGO public accountability and management performance in
order to strengthen partners’ trust in NGOs and to make NGOs capable of serving their
advocated groups well.

The program began with a national seminar and workshop in Yogyakarta in November 2002,
attended by 50 NGOs, all with five or more years of experience and from various provinces in
Indonesia. The workshop produced a task force consisting of 12 NGO leaders to formulate
future work programs and preparation of instruments required for a certification program.
During preparation of the instruments, the program received valuable inputs from the
Philippine Council for NGO Certification (PCNC-see chapter in this volume).

The task force has formulated a program vision (“the establishment of democratic,
responsible, transparent, sustainable, trustworthy NGOs supported by the society”) and a
mission statement (“to help NGOs to be more ethical and responsible, to achieve good
performance levels, gain better access to resources and be widely accepted by the society”).
The task force is presently (2005) conducting a series of activities, that include the
establishment of solid instruments, procedures and certification standards; a public campaign
for NGO certification; the establishment of an NGO Certification Agency; advocacy
campaigns for tax law reform and laws for the nonprofit sector; and a program designed for
NGO capacity building and implementation of various types of necessary technical
assistance. It is recognized that the future central issue of the program will be NGO
accountability and transparency, with certification being one of the instruments that will be
developed.

Civil Society Index
YAPPIKA, a national NGO alliance for civil society and democracy, implemented a program
starting in 2000 to assess the health of Indonesian civil society using the CIVICUS Index on
Civil Society. The objectives of the assessment included increasing the knowledge and
understanding of the status of civil society in Indonesia, empowering civil society
stakeholders through dialog and networking, and providing civil society with tools to analyze
sector-wide strengths and weaknesses, as well as to develop strategies to foster positive social
change.

13
13 YAPPIKA organized participatory dialogues involving a wide spectrum of civil society
organizations, as well as a number of key stakeholders, such as government officials, local
parliament members, and representatives from the private sector. The dialogue was conducted
through a number of workshops in several provinces and involved more than 400 CSOs from
all over Indonesia. The definition of civil society was debated, the CIVICUS analytical tools
were reviewed, and a number of indicators were formulated and analyzed by participants to
assess the level of CSO health. There were five dimensions analyzed: 1) the political, social-
economic context as the external environment in which civil society operates; 2) the scope of
CSOs, including the breadth and depth of citizen participation within civil society, its inter-
relations and resources; 3) values, norms and behaviors being promoted by CSOs; 4) the
relations of CSOs with the state and the market; and 5) CSO contributions to the solutions of
social, political and economic issues confronted by the nation. The result of the provincial
Civil Society Index exercises were then discussed in a national seminar, resulting in a report
on the status of Indonesian civil society and common strategies to increase CSO performance
over the next five to ten years (Abidin 2004).

HAPSARI Women’s Association: From Foundation to Association
In 1990, four women from Sukasari Village, Kabupaten Deli Serdang, 60 kilometers from
Medan (North Sumatra) established a working group called “Village Women Working
Group”. Each individual in the group began to interact with individuals and groups of women
in their village and with groups from other villages to jointly develop a women’s organization
to strive for gender justice and equality. The method of work was through “critical education”
in the form of discussions to break the silence and to build awareness. Ideas about gender
justice were disseminated to village communities through agriculture programs managed by
women or through the community radio station.

In 1997, in order to obtain legal-formal legitimacy, especially in relation to the government
and to enable them to gain access to donor assistance, this working group transformed itself
into a
yayasan, a foundation. They invited a number of outsiders (men and women) who were
concerned about gender equality to sit on the Board of Trustees.

In 1998 the HAPSARI Foundation carried out strategic planning to formulate the vision,
mission and goals of the organization. 15 persons attended from the Board of Trustees,
Executive Board, representatives from its beneficiaries, and a number of NGOs that had
working relations with HAPSARI. With its status as a foundation, HAPSARI obtained its
formal-legal legitimacy to move more freely within village communities and began to receive
assistance from donor agencies.

But the leadership was nevertheless concerned about the top-driven character of the
yayasan
and the lack of a membership based constituency. As many other foundations in Indonesia
after 1998, HAPSARI began to explore the possibility of establishing a mass-based
organization. In due course, the women’s groups nurtured by HAPSARI established an
independent women’s organization. In 1999 a Free Women’s Association (
Serikan
Perumpuan Independen or SPI) was founded in North Sumatra with 721 individual women
members from the lower strata of the community, such as farm workers, plantation workers,
fisherwomen and small vendors. SPI was then divided into five districts/
Kabupaten based
working areas in North Sumatra (Deli Serdang, Labuhan Batu, Simalungun and Langkat).
The function of the HAPSARI Foundation changed into providing funds, technical and moral
support to these local SPIs, to function effectively.

14
14 In September 2001, SPI organized its first congress. The congress is the highest institution
that formulates vision and mission for the organization, as well as acts as an accountability
and reflection mechanism for its members. It was agreed in this congress that each
Kabupaten
level organization was allowed to have its own structure and management, relatively
independent of one another.

In November 2002, the HAPSARI Foundation produced a new organizational design and
structure in response to the continuing changes in its working relationships with SPI. All the
local SPI organizations came together and decided that HAPSARI should dissolve itself and
become the secretariat for a Federation of Independent Women of North Sumatra. This
federation functions as an umbrella organization of the local women’s organizations
mentioned before. The HAPSARI experience may become an example of how a non-
membership NGO in the form of a
yayasan can dissolve itself to become a broad-based
membership organization and obtain better social legitimacy.

The Consortium for the Development of Civil Society (KPMM)
When Indonesian’s first democratic elections were held in 1999, the country was literally
flooded by funds and organizations supporting voters’ education and election monitoring.
With lots of energy and enthusiasm, thousands of NGOs entered into this field. While the
majority did a good job making sure that the elections were free and fair, there were
unfortunately also organizations that misused funds or were created only for the purpose of
accessing donor funding.

Things were no different in the province of West Sumatra, where an estimated fifty
nongovernmental organizations were created simply to be able to get a share of the funds. A
year after the elections, a dozen of established regional NGOs came together in the provincial
capital of Padang to try to address the lack of accountability among civil society
organizations in the province. They created the “Consortium for the Development of Civil
Society” (
Konsorsium Pengembangan Masyarakat Madani or
KPMM). During the past years,
KPMM has developed a code of ethics and standard operational procedures for its
membership organizations. But the struggle of KPMM is also a good measure of how difficult
it is to promote issues of internal good governance among NGOs. Of the 12 organizations
who founded KPMM in the year 2000, 3 have left the consortium since they felt that the code
of ethics was too strict (such as a proposed ban on polygamy for NGO activists). And few
new organizations have joined.

CHALLENGES FOR INDONESIAN NGOs
Indonesian NGOs are coming from a politically marginalized position, burdened with
overblown expectations. While the number of NGOs has grown significantly since 1998, as
part of a broader development in which Indonesian civil society is so to say ‘coming out of
the closet’, most NGOs have little experience in positively engaging with government, the
corporate sector or other stakeholders. The
reformasi period has established a new strategic
environment for NGOs, considerably more complex and difficult to navigate than the simple
pro- or contra Soeharto dichotomy that set the framework during the previous decades.
Moreover, even though the new environment for civil society and NGOs is certainly more
open in terms of access to information and possibilities to organize civil life, such is no
guarantee for a welcome reception of NGO contributions to public and political discourse.

15
15 Several challenges remain that must be confronted by Indonesian NGOs for them to be an
effective part of civil society. On top of the list is a reformulation of NGO positions vis-à-vis
the state (government) and various other sectors in the society. With the emergence of
democracy, power is no longer centralized but distributed among new power centers such as
parliament, political parties, and judicial institutions. The critical stance taken by some
NGOs, who consider themselves watchdog organizations, towards all state institutions has a
tendency to disregard the real progress in decentralization of power and democratization that
has taken place. New local governments and local parliaments also need time to learn how to
do their job. By the same token, NGOs are in a process of learning how their “watchdog”
function is part of an equation in a process of creating checks and balances, and no longer
suggests a self-standing political agenda. In addition, the role of public watchdog is no longer
monopolized by NGOs, but is shared – and has to be shared – with other actors, foremost the
media but also academia and other civil society organizations.

Accusations against the political aspect in the NGOs role remain, but are now made by
political parties instead of the government. NGOs are still branded as agents of foreign
interests and traders of poverty, especially due to the fact that there have been corrupt
practices among NGOs themselves. Politicians have started to ask questions regarding NGO
legitimacy and how much they really represent the interest of their constituents.

The situation seems to be unfavorable for the immediate future of the NGOs without a
breakthrough on relations and interactions with government and other sectors in the society.
There is a need for a genuine two-way dialogue with the government and private sector to
develop trust, as well as a common cause. This change from protest politics to developing
strategies of engagement means bringing changes towards a better Indonesia through the
process of lobbying and negotiations.

It is still early in the day, but there are indications that the positive role of NGOs in delivering
emergency assistance in Aceh after the tsunami of December 2004, is opening some of these
avenues for a more productive relationship between Indonesian NGOs and other actors. The
necessary focus on quality of management and speed of delivery, yet in a difficult political
context calling for close consultation and participation of local communities, is shared by
NGOs and government in post tsunami Aceh.

However, even if advocacy and watchdog functions are better balanced with effective service
delivery, building a healthy NGO sector is not an easy task in a country with a strong
predatory state and a weak and unaccountable civil society. Some of the lessons from the
Indonesia case are the dangers of project- and donor-driven NGO development. Since donors
have a tendency to work with articulate, efficient, groups in the center, rural mass-based
movements are often out of the picture. There are very few alternative sources of income for
the civil society sector today.

In order for the accountability and responsibility of NGOs to take root in Indonesia, there are
a couple of pre-conditions. One is that funding agencies begin to realize that accountability is
not only accounting: donors need to hold grantees to high standards of public accountability.
It is also important that the philanthropic sector expands in Indonesia, so that civil society
organizations in Indonesia become less dependent on foreign funds, and in that process start
to relate increasingly directly to Indonesian stakeholders, being more responsive to local
developments.

16
16 REFERENCES

Abidin, Hamid; and Rukmini, Mimin, “Kritik dan Otokritik LSM. Membongkar Kejujuran
dan Keterbukaan Lembaga Swadaya Masyarakat Indonesia” (“Critique and Self-
Critique of NGOs, unpacking the integrity and openness of Indonesian NGOs”).
Jakarta, 2004.
Damayanti, Rolly Aruna. “Membangun NGO yang Sehat dan Kuat, Transparan dan
Akuntabel: Perspektif Donor” (“To Develop Strong and Healthy NGOs, Democratic,
Transparent and Accountable: a Donor Perspective”). Paper presented during the
“Seminar on the Development of Strong and Healthy NGOs, Democratic, Transparent
and Accountable.” Palembang (South Sumatera): 9 July 2002.
Eldrigde, Philip J., “Non-Government Organizations and Democratic Participation in
Indonesia”, Kuala Lumpur, 1995.
Fakih, Mansour, “Non Governmental Organizations in Indonesia”. Center for International
Education. University of Massachusetts, 1991
Feulner, Frank, “Consolidating Democracy in Indonesia: Contributions of Civil Society and
State. Part One: Civil Society”, United Nations Support Facility for Indonesian
Recovery (UNSFIR), Jakarta 2001.
Ganie-Rochman, Meutiah, “Needs Assessment of Advocacy NGOs in a New Indonesia”.
Unbpublished Report to the Ford Foundation, Jakarta 2000.
Ganie-Rochman, Meuthia, “An Uphill Struggle. Advocacy NGOs under Soeharto’s New
Order.” FISIP-UI, Jakarta, 2002
Hadiz, Vedi R. ‘Power and Politics in North Sumatra: The Uncompleted Reformasi’, in
Aspinall, Edward and Greg Fealy (eds),
Local Power and Politics in Indonesia,
Singapore: Institute of Southeast Asian Studies, 2003.
Hidayat, Helmi “The Roles of NGOs in Decentralized Indonesian Development”, MA thesis,
University of Hull, September 2003
Holloway, Richard and Kusnanto Anggoro, “Civil Society, Citizens Organizations and the
Transition to Democratic Governance in Indonesia”, Civil Society Support and
Strenghtening Program, Jakarta: USAID, 2000.
Ibrahim, Rustam, “Strategi Mewujudkan Civil Society”. LP3ES, Jakarta, 1999
Ibrahim, Rustam. “Mengapa NGO Membutuhkan Kode Etik” (“Why NGOs Need Code of
Ethics”). Position Paper prepared for the Program for the Formulation and
Implementation of an NGO Code of Ethics and the Formation of NGOs Umbrella
Organization
(Program Penyusunan dan Pemberlakuan Kode Etik dan Pembentukan
Asosiasi LSM). Jakarta: 2002.
Ibrahim, Rustam. “Membangun Hubungan yang Sehat, Produktif dan Setara antara
Pemerintah, Swasta dan NGO” (“To Develop Healthy, Productive and Equal
Relationship between the Government, Private Sector and NGOs.”). Paper presented
for the
Series of the Seminar on the Development of Strong and Healthy NGOs,
Democratic, Transparent and Accountable. Jakarta, LP3ES, 2002
Johnson, Mary, “Non-Governmental Organisations at the Crossroads in Indonesia”, in Rice,
Robert C. (ed.): “Indonesian Economic Development: Approaches, Technology,
Small-Scale Textiles, Urban Infrastructure and NGOs”. Melbourne: Center for
Southeast Asian Studies, Monash University, 1990
Hadiwinata, Bob S. The Politics of NGOs in Indonesia. Developing Democracy and
Managing a Movement. London: RoutledgeCurzon, 2003.
Malik. Tom. “Pola Kemitraan dalam Program Pengembangan Masyarakat Rio Tinto
(“Partnership Patterns in the Rio Tinto Community Development Programme”). Paper

17
17 presented for the
“Seminar on the Development of Strong and Healthy NGOs,
Democratic, Transparent and Accountable.” Pekanbaru: 16 May 2002.
McCarthy, Paul. “A Thousand Flowers Blooming: Indonesian Civil Society in the Post-New
Order Era.” Paper prepared by a Civil Society Consultant of the World Bank Office in
Indonesia, Ottawa/Jakarta: March 2002.
PIRAC, “Investing in Ourselves. Giving and Fund Raising in Indonesia”, Jakarta 2002
Report of the Civil Society Assessment Program: Implementing the Index on Civil Society.
Jakarta: YAPPIKA (Civil Society Alliance for Democracy), 2002.
Report of the National Workshop on Advocacy, People Empowerment and Accountability:
Between Rights and Responsibilities of NGOs. (Laporan Lokakarya Advokasi,
Pemberdayaan Rakyat dan Akuntabilitas: Antara Hak dan Tanggungjawab NGO
).
Jakarta, 9-11 January 2003.
Report of the Workshop on the Development of Indonesian NGO Accountability and
Transparency: Developing Synergy (Laporan Lokakarya Peningkatan Akuntabilitas
dan Transparansi NGO Indonesia: Membangun Sinergi. Held by PIRAC (Public
Interest Research and Advocacy Center), Jakarta, 4-5 September 2002.
Report of the Workshop on Increasing Quality of NGOs with Accreditation and Certification
(
Laporan Lokakarya Peningkatan Kualitas NGO melalui Akreditasi dan Sertifikasi.
Held by Satunama Foundation. Yogyakarta: 4-6 November 2002.
Robison, Richard and Vedi Hadiz,
Reorganizing Power in Indonesia. The Politics of
Oligarchy in an Age of Markets. London: RoutledgeCurzon, 2004
Rooney. Greg. “Membangun NGO yang Sehat dan Kuat, Demokratis, Transparan dan
Akuntabel: Perspektif Donor.” (To Develop Strong and Healthy NGOs, Democratic,
Transparent and Accountable: Donor Perspective). Paper presented on the
“Seminar
on the Development of Strong and Healthy NGOs, Democratic, Transparent and
Accountable.” Banjarmasin: (South Kalimantan), 14 May 2002.
Sidel, John, “Watering the Flowers, Killing the Weeds: The Promotion of Local
Democratization and Good Governance in Indonesia”. Unpublished Report to the
Ford Foundation, Jakarta, September 2004.
Stanley Adi Prasetyo, A.E. Priyono and Olle Törnquist (eds.)
Indonesia’s Post-Soeharto
Democracy Movement. Jakarta: DEMOS, 2003.
Sudarbo, Yoke Octarina “Performance Management of Non-Governmental Organizations:
Case Study of NGOs in Indonesia”, MBA, School of Public Policy, University of
Birmingham, 2002.
Suryaningati, Abdi, “Tingkat “Kesehatan” Masyarakat Sipil. Petunjuk Penggunaan Indeks
Masyarakat Sipil Civicus” (“The level of “health” of civil society, guidelines for the
use of the Civicus Civil Society Index”). Yappika, Jakarta, 2003
Sociology Laboratory, Faculty of Social Sciences University of Indonesia in cooperation with
National Democratic Institute (NDI).
Dinamika Koalisi Ornop (The Dynamic of NGO
Coalitions). A Research Report. Jakarta: August 2002.
Tulung. Freddy H. “Membangun NGO yang Kuat, Demokratis dan Transparan: Perspektif
Pemerintah” (To Develop Strong, Democratic, and Transparent NGOs: a Government
Perspective). Paper presented for the
“Seminar on the Development of Strong and
Healthy NGOs, Democratic, Transparent and Accountable:” Jakarta, 17 July 2002.

Uhlin, Anders, “Indonesia and the “Third Wave of Democratization”. The Indonesian Pro-
Democracy Movement in a Changing World”, Surrey: Curzon Press, 1997.
Wacana, “Masyarakat Sipil” (“Civil Society”). Institute for Social Transformation (INSIST).
Yogyakarta, Edisi 1, volume 1, 1999.
Zailani. Lely. “Membangun Perjuangan Terorganisir, Keadilan untuk Semua. Pengalaman

18
18 Membangun Proses Kolektif Perempuan Pedesaan (“The Development of Organized
Efforts: Justice for All: The Experience of Developing Collective Process of Rural
Women”). Paper presented in the National Workshop on Advocacy, People
Empowerment and Accountability: Between Rights and Responsibilities of NGOs.
Jakarta, 9-11 January 2003.

-->