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The Evolution of NGO Accountability Practices and their Implications on Philippine NGOs: A Literature Review and Options Paper for the Philippine Council for NGO Certification

The Evolution of NGO Accountability Practices and their
Implications on Philippine NGOs
A literature review and options paper for the Phili ppine Council for NGO

By: Danilo A. Songco

Introduction Philippine NGOs have been at the cutting edge of NGO self-regulation. The
Caucus of Development NGO Networks (CODE-NGO), the big gest coalition of NGOs in
the Philippines, established a Code of Conduct for Development NGOs in 1991. It was
the first to establish a Code of Conduct among NGOs in Asia (Sidel, 2003) and probably
one of the first in the global NGO community. CODE- NGO’s Code of Conduct has since
been signed by over a thousand NGOs and was recently updated to provide for clearer
enforcement mechanisms. In 1998, the Philippine Co uncil for NGO Certification
(PCNC) was established by 7 of the biggest NGO coalit ions. It is one of the very few
government recognized NGO certification system in th e world and has been the subject
of discussion and possible replication by NGOs in di fferent countries. Both initiatives
are repeatedly cited as models and analyzed in many of the documents that were
reviewed for this paper.
Today, however, after 8 years of existence, PCNC has certified only 1,000 NGOs-
–nowhere near its potential market of 6,000 NGOs w hen it was established.
1 While there
are a number of factors that could have contributed to this less than expected
performance, the challenge to PCNC (as well as the e ntire NGO community in the
Philippines) is how to take NGO accountability throu gh self-regulation to the next level.
This is an overwhelming challenge at a time when Ph ilippine NGOs are facing a serious
crisis of sustainability and relevance. This crisis in the Philippines has strong parallelism
to the global NGO situation.

The global discourse on NGO accountability is creati ng a wealth of literature.
Many of them shed light on the issues at hand. Oth ers simply add more fuel to heat up
the debate. This review does not intend to cover t he entire scope of such literature
because the sheer volume makes it nearly impossible to do so. Instead, this review
attempts to build upon more current papers and summ ative documents that already
synthesize learning from a large collection of writ ings. This paper is prepared primarily
for the members and leadership of PCNC in its effort to make NGO self-regulation more
effective NGO in the Philippines. More specifically , the objectives of this review are: (1)

1 There were 6,000 NGOs with donee institution statu s in the Bureau of Internal Revenue (BIR) in 1998.
Part of PCNC’s Memorandum of Agreement with the Phi lippine government when it was established is
that henceforth all NGOs will be required to obtain certification from PCNC before they are granted do nee
institution status. All those with such status wer e given 3 years to obtain such certification or the ir status
will be considered expired.

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to appreciate the breadth of discourse on NGO accoun tability and, (2) to identify different
approaches that would be useful to PCNC’s efforts to increase accountability of
Philippine NGOs. By strengthening its accountabilit y practices, PCNC hopes to
contribute to reviving the vigor and dynamism of th e Philippine NGO community.

The Global NGO Explosion and the Rise of the “Accou ntability Industry”

The favorite introduction of many documents review ed for this paper is an
account of how the NGO sector experienced tremendous growth both locally and globally
in the last two decades.
2 Salamon (2003) describes the rise of civil societ y as a “veritable
global associational revolution” — a
phenomenon which he compares to the rise of the
nation-state in the nineteenth and twentieth centur y (ibid, p 6-7).

The power of NGOs is further exemplified not just by their increasing number but
by their ability to network and mobilize their memb ers to affect global politics
(Commonwealth Business Council, 2003) . Such power was demonstrated in various U.N.
conferences, international summits and multilateral meetings where NGOs have been
effective in influencing policy agendas, official s tatements and joint resolutions.

One of the factors that contributed to this global “explosion” of NGOs (or “civil
society boom”, as SustainAbility, 2003 calls it) is the shape and form that they have
taken. NGOs and civil society organizations have be en called different names.
the monikers civil society organizations (CSOs) and NGOs have become
interchangeable, the distinction between the two ha s become evident. Civil society is the
greater sphere that Salamon describes as the organi zations that occupy the space between
the state and the market and NGOs are only one the m any types of organizations in civil
Edwards (2000, in SustainAbility, 2003) says: “ If civil society were an iceberg,
then NGOs would be among the more noticeable of the peaks above the waterline,
leaving the great bulk of community groups, informa l associations, political parties and
social networks sitting silently (but not passively ) below.”
Interestingly, the
Commonwealth Business Council calls NGOs as the operational arm of civil society.
SustainAbility refers to activist NGOs are the shock troops of civil society. The
discussion in this paper will focus mainly on non-g overnmental organizations, or those
that primarily provide public goods or work for the public interest and receive funds
mostly from donor and philanthropic sources. It i s also important to make a distinction
between NGOs and membership-based, grassroots organi zations (that are often the
2 See for instance Salamon, L., W. Sokolowski and R. List, “Global Civ il Society, An Overview”, The Johns
Hopkins University, Baltimore, Maryland. 2003; Lloyd, R. “The Role of NGO Self-Regulation in
Increasing Stakeholder Accountability” , One World Trust. July 2005; Edwards, M. and D. Hulme, “Too
Close For Comfort? The Impact of Official Aid on No ngovernmental Organizations,” in World
Development, Volume 24. U. K. 1996.; Independent Sector, “The New Nonprofit Almanac In B rief, Facts
and Figures an the Independent Sector” , 2001.; and

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beneficiary of assistance of NGOs) referred to alter nately as grassroots organization
(GROs), community-based organizations (CBOs), or mo re popularly in the Philippines as
people’s organizations (POs). As will be discussed later in the paper, while these two
types of civil society organizations are usually in terdependent, there are also conflicts
that arise between them.

Part of the mystique of this growing prominence of NGOs is the fact that while
they continue to grow in number and their role expands, it becomes more and more
difficult to describe them and put them in boxes. McGann and Johnstone (2006) are
concerned that the confusion that attends the typology and the real number of NGOs is
contributing to their mystique if not misunderstanding.
As the power of NGOs continue to increase, both in t he domestic and
international fronts, their operations became more sophisticated and their roles more
complex. Some NGOs have become as large as medium-s ized corporations
(Commonwealth Business Council, ibid). Some (like those in Bangladesh and Sri Lanka)
employ more staff than governments. Some provide s ervices in direct competition with
private companies (ibid), government agencies and l ocal authorities. As their voice grew
louder in pointing out the economic and political i nequities created by governments,
private corporations and multilateral financial ins titutions so did the calls for their
legitimacy and accountability increase. Many of th e issues involved in the governance
debate within the private sector, for instance in r egard to conflicts of interest, are also
relevant to NGOs (Commonwealth Business Council, ibi d).

SustainAbility quotes Mike Moore, former Director General of the World Trade
Organization (WTO) as calling
for ‘new rules of engagement’ between civil society ,
international institutions and governments. Jeffre y E. Garten, Dean of the Yale School of
Management (in SustainAbility 2003, :7) agrees: “ NGOs have had too much of a free
ride in identifying themselves with the public inte rest. They have acquired the high
ground of public opinion without being subjected to the same public scrutiny given to
corporations and governments … [I]t is time that co mpanies and governments demand
more public examination of NGOs .”
NGOs became victims of their own success.

Dimensions of accountability
There are three dimensions of the accountability i ssue that have been raised
against NGOs: transparency, legitimacy and performance . The question of transparency
came at a time when massive flows of public and pri vate funds are known to be flowing
towards this sector, sometimes in competition with funds that were traditionally going
directly to government. For example, Edwards and H ulme recorded in 1998 that total aid
from Organization for Economic Cooperation and Deve lopment (OECD) member
countries channeled through NGOs rose from 0.7 perce nt in 1975 to 3.6 percent in 1985,
and at least 5 percent in 1993-94
— some US$2.3 billion in absolute terms .

At the same time, Jordan (2003) relates how journa lists have made an issue of an
NGO CEO who gets paid more than the Prime Minister o f Netherlands and about an

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alleged trading of relief supplies in exchange for sexual favors in Africa. SustainAbility
points to a series of articles published by The Washington Post which exposes alleged
mismanagement of resources in The Nature Conservancy , one of the oldest environment
groups in the U.S whose history dates back to 1915.
3 Grant (1998) and Bothwell (2004)
write about the huge 1992 scandal about Bill Aramon y, CEO of United Way America,
who was discovered to be using large amounts of don ations for his personal pleasures.
The global terrorism scare is contributing to the t ransparency question as some quarters
accuse some NGOs of being used as fronts to channel funds for terrorist organizations
(Jordan, ibid). Commonwealth Business Council (200 3) and Constantino-David (1997)
warn of unscrupulous, enterprising parties setting up their own NGOs to take advantage
of the thriving industry. SustainAbility (ibid :7) quotes Jonathon Porritt, former head of
the Friends of the Earth UK, as saying that “ NGOs are beginning to recognize that all the
things that we have been telling companies to do, i n terms of ethical standards of
behavior, also need to apply to the NGOs themselves …”. In reality, the multitude of
NGOs that have mushroomed in the last two decades is dominated by small NGOs
operating in limited areas with one or two projects that neither have the consciousness
nor the resources to institute accountability measu res.

The transformation of NGO work from service provis ion to advocacy unleashed
their real power in social discourse in the global arena. What has attracted the greatest
controversy about NGOs, and which has brought about the question of their legitimacy, is
their claim to be “the voice of the people”, or alt ernately “the voice of the poor” — an
affront to governments who NGOs claim to have betray ed public trust. In retaliation,
elected and appointed public officials (joined by c orporate CEOs who claim
accountability to their shareholders) have asked: w ho appointed NGOs to speak “for the
people” and who determines whether their views are upheld by the public which they
purport to represent? Edwards (2003) cites four wa ys by which such claim may be
validated: “through representation (if NGOs have a formal memb ership that can hold
leaders accountable for the positions they take), t hrough competence and expertise (if
NGOs are recognized as bringing valuable knowledge and skills to the table by other
legitimate bodies), through the law (if NGOs comply with non-profit legislation,
regulation, and effective oversight by their truste es), and through the moral claims of
NGOs to promote the public interest, or at least be in sympathy with large segments of
public opinion.”

Slim (2002: 6) frames the NGO legitimacy controversy by challenging NGOs to
declare whether: they speak as the poor ( as NGOs, CBOs/POs made up of poor people or
the victims of human rights violations) , with the poor (if the NGO is working very closely
with such people and speak with their consent) , for the poor (if the poor and the
oppressed are effectively unable to speak out and a re somehow ‘voiceless’) or simply
about the poor.

Both Edwards and Slim agree about the need for leg al mandates (government
registration, etc.) as an essential element of NGO legitimacy. Slim, however, adds that

3 See David Ottaway and Joe Stephens, ‘Nonprofit Land Bank Amasses Billions’, Washington Post, 4 May
2003 (footnote 131 in SustainAbility …).

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NGOs’ legitimacy may either be “derived” from the ma ndate of their members, if they
are membership-based organizations, or from the sup port that they get from the public,
particularly if they raise funds from private citiz ens. He cites U.K. NGOs that get large
amounts of public financial and voluntary time cont ribution as a clear manifestation of
public support. In the U.S., Independent Sector re ports that charitable giving has reached
an all time high of $248.5 billion in 2004. In the same breath, Slim also warns that
transparency in the utilization of publicly contrib uted resources as well as the consistency
of their action with their publicly declared missio n are essential in maintaining such
Edwards (2003) distinguishes between representativ e democracy and
participatory democracy in defense of the legitimac y of NGO advocacy. In effect, he is
saying that NGOs are performing their legitimate rig hts as citizens when they ask their
government (who are made up of officials who are el ected/appointed to represent their
interest) to be accountable. SustainAbility explai ns that
“NGOs act as a ‘distributed’ or
‘delegated’ conscience for society, with individual citizens ‘sub-contracting’ parts of
their ‘citizenship’ (e.g. concern for human rights) to NGOs” when they perform their
advocacy work.
Slim agrees but cautions against the hazard of clai ming such moral
authority. Apart from the danger of co-opting the voice of those who they claim to
represent (as cited above), NGOs also need to be car eful about the veracity or accuracy of
the arguments which they make.

The Commonwealth Business Council (2003) reminds that the decline in the
credibility of governments is brought about by thei r abuse of public confidence (by way
of corruption and abuse of authority) and that of p rivate companies because of their abuse
of shareholders’ and consumers’ confidence (through manipulation of financial records
and sub-standard and/or unethical products). NGOs c ould be just as guilty of betrayal of
public trust when they issue public statements that undermine the integrity of public
institutions and private companies without checking their facts or without rigorous
research and analysis. Thus, it is equally importa nt for NGOs to publicly declare the
source of their funds in order to ensure that they are not being used by private interest in
promoting the causes that they advance (Commonwealt h Business Council, ibid).

Resonating with Edwards, Miklos Marschall (2002), Executive Director of
Transparency International for East and Central Eur ope, provides a useful conclusion to
this question of NGO legitimacy and accountability: “It is important to understand that civil society is complementary, not a rival, to
representative democracy, and participatory democra cy goes hand in hand with
representative democracy. Civil society is about pa rticipation, while
parliamentary democracy is about representation. Th e civic politics of citizen
participation and the parliamentary “party politics ” of representation have a
healthy dynamic of both complementarity and tension . Citizen participation
carries its own self-originated legitimacy; it does not need to borrow legitimacy
from representation. … It is what it does, and not representation, that makes an

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NGO legitimate. NGOs and their networks are legitim ized by the validity of their
ideas, by the values they promote, and by the issue s they care about.” 4

Finally, the question of performance has to do wit h the quality versus the quantity
of NGO services (Jordan, 2003). Since they question the performance of governments
for the way they spend public funds, NGOs are also a sked to show that they have done
better with the money that they received. Avina ( 1993, quoted in Edwards, 1998) makes
a distinction between short-term functional accountability (accounting for resources,
resource use and immediate impacts) and strategic accountability (accounting for the
impacts that an NGO’s actions have on the actions o f other organizations and the wider
environment) .
While scandals (like those cited above) are few an d far between,
compared to those that occur in government and in p rivate corporations, they have
become occasion to question NGOs’ integrity since no t a few NGOs have been negligent
in measuring their performance.

In “Too Close for Comfort”, Edwards and Hulme (199 8: 9-10) reveal that there is
as much argument in favor and as there is against t he effectiveness of NGOs in service
provision. They posit that NGOs need to build inte rnal evaluation mechanisms in their
operations and use such mechanisms to improve their performance in order for them to
stay credible. Jordan (2003) argues that although performance questions against NGOs
are legitimate, they are also a product of politica l reprisals of governments and
corporations who may have been on the receiving end of NGO advocacy.

Slim links performance and legitimacy by saying th at NGOs can show their real
value by demonstrating that they do not only know w hat of they speak when they
advocate but by showing results of the change that they create in addressing these very
issues on the ground. He adds: “[P]roven good performance can transform an NGO
from being a morally good idea to being a very prac tical moral pursuit. The fact that it
works in practice makes it a more legitimate enterp rise.”
One of the most recent efforts to develop a framework of a ccountability is the
Global Accountability Project (GAP) of One World Tr ust. GAP adds a fourth element of
accountability which is complaint and grievance mechanisms which are “mechanisms
through which an organization enables stakeholders to address complaints against its
decisions and actions, and through which it ensures that these complaints are properly
reviewed and acted upon” (Blagescu, Casas and Lloyd, 2005). This is an imp ortant
means of last resort for stakeholders to hold an or ganization accountable to its goals and
objectives (ibid). This element is further discuss ed in the section on Efforts at
Enforcement in the latter part of this paper.

4 Marschall, Miklos. “Legitimacy and Effectiveness: Civil Society Organi zations Role in Good
Governance), November, 2002. git.htm

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Accountability for what, to whom and how

The new era of good governance that pervades all t ypes of institutions (from
government to business to non-profit) is a product of NGO advocacy. In “Overview of
Accountability Initiatives”, Dombrowski (2006) revi ews a vast list of accountability
mechanisms that have been instituted by NGOs, corpor ations and international
multilateral institutions. Lloyd (citing OECD 2000 ) notes that OECD recorded 246
voluntary codes of conduct for business. In “Codes of Conduct for Partnership and
Governance: Texts and Commentaries”, Kunigi and Sch weitz (1999) have compiled a
rich collection of NGO codes, national laws, busines s sector codes and principles, U.N.
resolutions and statements, codes for specialized a ctivities and global framework
documents that foster accountability for different purposes among its signatories. Sidel
(2003) reviews a host of self-regulation schemes in 17 countries in Asia in “Trends in
Nonprofit Self-regulation in the Asia Pacific Regio n: Initial data on initiatives,
experiments and models in seventeen countries”.

U.N. resolutions signed by member governments on ma intaining environmental
integrity, ensuring the rights of women, achieving inclusive social development, among
others, and most recently the Millennium Developmen t Goals, are excellent examples of
how NGOs have succeeded in pressing governments to t ie their performance against their
public commitment to achieve measurable poverty red uction targets. Unfortunately, the
advocates themselves have been slow to practice wha t they preach. A survey of 600
NGOs worldwide by a team of researchers at Universit y of Warwick revealed evidence
that many had suspected all along. Most NGO respond ents to the survey gave no thought
to the issue of their own accountability (Scholte, 2003 quoted in Jordan, 2005). Among
the reasons they cited were: it’s too expensive, th e real accountability problem is with
governments/private sector and they do not see the relationship of this to their mission
(ibid, p.12).
So, why is accountability important to NGOs? First and foremost, as has already
been previously discussed, is the matter of public trust. The Independent Sector points
out that “[P]ublic trust is the single most important asset of the nonprofit and
philanthropic community” . SustainAbility highlights how
public opinion research has
consistently shown NGOs to be enjoying high levels o f trust (some popular international
NGOs have higher trust ratings than some global comp anies), and that both governments
and companies have had no option but to take notice (p.37). However, p
ublic trust in
NGOs is neither tenured (like the fixed term of elec ted officials) nor permanent.
Marschall (2002) admits that it takes many years fo r NGOs to build up a good reputation
and only one bad move to lose it. This is echoed b y Dombrowski (2006) who warns that
the damage of one misdeed may impact across the NGO sector.
Thus, NGOs need to
exercise the responsibility of being fiduciaries of public trust. The imperative of such
responsibility is that NGOs must practice the same if not higher levels of accountability
than what they demand of governments and corporatio ns in order to continue to enjoy the
confidence that they currently hold from the public .

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Anent to the matter of public trust, civil society remains to be an important
element of democracy. Johns (2000) posits that it is civil society and not the state that
“ supplies grounding of citizenship and is hence cruc ial to sustaining an open public
space ”. As such, civil society needs to be as, if not m ore, credible than government in
order to keep the wheels of democracy turning. McG ann and Johnstone (2006) are
therefore concerned about how NGOs are becoming “coo pted” by certain institutions like
the World Bank which has given them an increasing r ole in bank decision-making in
response to their criticism. They warn of NGOs beco ming a new special interest group
rather than articulators of citizens’ concerns.

Secondly, there is already a palpable decline in g lobal funding for and signs of
decreasing trust in NGOs. Net Official Development Assistance (ODA) from major
donor countries—the major source of NGO funding— fell by 14% from 1992-95 and
continued to decline until 2000 (CODE-NGO, 2000; Thi ndwa; NGO Position Paper,
UNCSD). The global NGO boom is contrasted by a globa l funding slump.
SustainAbility quotes Chris Rose, former senior official of Friends of the Earth, World
Wildlife Fund and Greenpeace, expressing concern th at the ‘golden era’ of NGOs is
ending and suspecting that there is a real risk of a major downturn in the prospects for
advocacy NGOs. Kumi Naidoo, Secretary-General of Civ icus, warns of competitive
pressure intensifying even among the largest global NGOs because of declining funds
and more demanding beneficiaries and donors—his w ord of advice to NGOs: “perform or
perish” (ibid). There are now
warnings against the possibility of an “Enron effec t” on
NGOs which could lead to even tougher
accounting rules for NGOs, squeezing their
capacity to leverage funds (SustainAbility: 48)

In terms of who they are accountable to, the situation of NGOs is quite complex
(Lloyd and Casas, 2006)
. NGOs are said to have “downward accountability” to t heir
partners, beneficiaries, staff and supporters; and “upward accountability” to their trustees,
donors and host governments (Edwards and Hulme, 199 8; Ebrahim, 2003 quoted in
Jordan, 2003). Lloyd (2005) adds that NGOs
are inwardly accountable to themselves for
their organizational mission, values and staff and horizontally accountable to their peers.
Membership organizations (like grassroots, people’s , or community-based organizations)
are of course “laterally” accountable to their memb ers. Lloyd (ibid) prefers this
stakeholder model of accountability which promotes accountability to all those that are
affected by an organizations policies. Jordan (ibi d) echoes Edwards and Hulme on NGOs
being subject to multiple accountability and warn o f the danger of having to
“overaccount” (because of multiple demands) or “und eraccount,” as each overseeing
authority assumes that another authority is taking a close look at actions and results.
Edwards and Hulme warn of the danger that NGOs will focus accountability towards
their most powerful constituency—referring to the ir donors. Effectively balancing
among and responding to the needs of different stak eholders is the essence of NGO
accountability (Lloyd and Casas, ibid).

In addressing the reality of NGOs of having multipl e stakeholders, Slim suggests
that they need to, first and foremost, define who t heir stakeholders are for each of the
their program and how they will account to such sta keholders in the process. Like
Edwards and Hulme, he recognizes that the level of accountability may not be the same

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for all stakeholders, therefore the need to identif y primary and secondary stakeholders in
every case. Lloyd (quoting Young, 2000) believes t hat this concept of accountability
changes its nature of being a disciplinary mechanis m to that of a transformative power.
He adds: “[A]n NGO that is accountable to multiple stakehold ers not only ensures that
decisions are effective in meeting the needs of tho se interests, but also forces decision to
be made in a more equitable and fairer manner.”

Of all these, downward accountability to beneficia ries is the most important
because they are the reason why most NGOs exist (Llo yd and Casas, 2006), they lack the
power to make demands on NGOs who usually claim to s peak in their behalf (Lloyd) and
they tend to be the most vulnerable sectors in soci ety who do not have very many options
and opportunities to speak (Neligan, 2003). Thus, a ccountability to beneficiaries is
crucial to both fulfilling an organization’s missio n and maintaining its legitimacy (Lloyd
and Casas, ibid.). In similar vein, Southern NGOs c omplain of a lack of accountability
and the “new imperialism” of Northern NGOs who they claim are co-opting their agenda
in the international arena and/or of non-disclosure of funds raised in their behalf (Lloyd,
2005; Commonwealth Business Council, 2003; Fowler, et al quoted in Slim, 2002) — a
concern that has also been raised by POs against NGO s in the Philippines.
Slim (2002: 12) defines NGO accountability as : “the process by which an NGO
holds itself openly responsible for what it believe s, what it does and what it does not do in
a way which shows it involving all concerned partie s and actively responding to what it
learns.” Jordan believes that accountability is the basic p rinciple of responsible practice
for any institution, be they public, private or NGO. Edwards and Hulme (1998: 15)
define accountability as having the following featu res:
a statement of goals (whether in adherence to certa in rules or achievement of
identified performance levels),
transparency of decision making and relationships,
honest reporting of what resources have been used a nd what has been
an appraisal process for the overseeing of authorit y(ies) to judge whether
results are satisfactory, and
concrete mechanisms for holding to account (i.e. re warding or penalizing)
those responsible for performance.

(See also Annex B – The Independent Sector Checkli st for Accountability)

Thus, accountability is no longer a matter of simp le financial accountability or
reporting to donors about funds received. Lloyd (2 005) says the traditional concept of
NGO-donor relationship following the principal-agent model is no longer applicable as
the model presupposes that only entities with forma l authority have the right to exact
accountability from their agents. Slim (2002) says the practice of Western charities of
reporting on “money raised and spent, the number of poor people reached, and the
administrative cost of raising and spending the mon ey” is over. He notes the notoriety of
some charities in using fund-raising and administra tion ratios as measures of efficiency

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with little or nary any effort to accounting for th e impact of funds spent on the lives of
poor beneficiaries. Quoting Edwards and Hulme (199 5), he makes a distinction among
outputs, outcomes and impact and how these have bec ome a bane to NGOs who have
been forced by some donors to adopt corporate plann ing and management techniques in
development where determining the quality of change in people’s lives is not always as
easy as determining profits and losses.
Jordan (2003) thinks that all of these questions a re creating an “accountability
industry” . She cites the case of SGS International which ha s established an NGO 2000
Standard where it is convincing donors and governme nt to rate NGOs using these
standards as a way of determining who they will fun d. She decries the fact that many
accountability initiatives are driven by pressures from donors and governments rather
than genuine desire of NGOs to live up to the standa rds that they preach. She is
concerned that many of the accountability tools bei ng employed are not consistent with
the sensitivity of NGO development work and stifle t heir innovativeness and flexibility
(ibid,: 10-11).
Self-regulation as a strategic response
The pressure for increasing accountability is paral leled by efforts from the NGO
sector to promote accountability through self-regul ation. Shea and Sitar (2004) reviewed
the range of self-regulation efforts of NGOs in “NGO Accreditation and Certification:
The Way Forward?, An Evaluation of the Development Community’s Experience” and
found significant efforts that a variety of tools t hat have already been developed to
demonstrate NGOs’ ability to govern themselves effec tively. In addition to addressing
the questions of transparency, legitimacy and perfo rmance, as previously discussed,
Lloyd (2005) and Naidoo (2000) enumerate the reasons why self-regulation has become
necessary for NGOs. They point out that NGOs have re alized the need for promoting
greater collaboration among themselves, for pre-emp ting government regulatory
tendencies, and for the need to diversify funding s ources.

Like Naidoo, McGann and Johnstone feel that while t he strength of NGOs lies is
in their heterogeneity, their diversity is also a c ause of disorganization. Further, their
accountability to each other is among the hazy aspe cts of NGOs’ accountability to its
various stakeholders. Since the impact of single a cts of indiscretion could be damaging
to the entire sector, peer-to-peer accountability i s quite essential. Self-regulation is
becoming a way in which NGOs are establishing common norms and standards around to
whom and for what they are accountable (Lloyd and C asas) and, in the process,
the various issues related to their accountability among themselves. With the Philippines
leading the way with CODE-NGO’s Code of Conduct in 1 991 (Lloyd quoting Sidel,
2003), it is estimated that there are now NGO self-r egulatory schemes in over 40
countries (Naidoo, 2004 quoted in Lloyd, 2005).

While many of the authors quoted here recognize th e value of government

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regulation, there are at least two arguments about why this is inadequate and (potentially)
dangerous. Naidoo (2000) and Lloyd (2005) doubt whe ther the state has the capacity to
exercise it regulatory function over a vast and com plex range of private, voluntary
organizations. They are joined by Irish and Simon (2004) in the belief that the culture of
ethics and multistakeholder accountability cannot b e legislated. They all point out that in
some cases of self-regulatory practice, NGOs are dem onstrating that they are able to go
beyond the legal requirements and standards of inte rnal governance. Since governments
are usually the target of NGO advocacy, it is not de sirable that they exercise stringent
regulatory power over them since such power can be abused to stifle NGOs.

In terms of funds diversification, Naidoo thinks NG Os, particularly those in
developing countries, have started to explore local sources of funds. In some instances,
the patriotic sense of the diaspora has become a po tent source because of the wealth that
they have accumulated. NGOs have also started to se cure tax incentives from
governments to encourage charitable giving by the l ocal population. All these will
necessitate a system by which NGOs can demonstrate t heir integrity in order to capture
local philanthropy.

Performance standards and principles of operation encased in codes of conduct
became a popular manifestation of NGO self-regulatio n. Lloyd (2005) notes that before
codes of conduct became popular, NGOs have used sel f-assessment and peer evaluation
as ways to measure performance and determine accoun tability to their mission. He
makes an example of the Organizational Self Analysi s for NGOs (OSANGO), a product
of the Centre for Youth Social Development in India , which has recently developed
software that enables NGOs to internally analyze how efficiently and effectively they are
utilizing resources in the pursuit of their mission . Lately, Keystone has developed a set
of simple tools that help NGOs measure their perform ance and report them using a
reporting standards framework (see ).

Some studies that have established a typology/cate gorization of self-regulation
approaches are: Sidel (2003, Asia-Pacific only), Ll oyd and Casas, Lee (2005) and Shea
and Sitar. Following is a summary of the different modes of self-regulation that are
currently being practiced by different organization s based on the three studies:

Standards Setting and Performance Measurement

Sectoral codes and other means to govern conduct (Sidel and Lee) involves a
group of organizations coming together in agreement over standards
governing their conduct, with each promising to abi de by the established
norms (Shea and Sitar); (see Annex A for a collection of Codes of Conduct)
Self-certification is low cost, easy to administer for both the rated and the
rating organization, and is accessible to a wide ra nge of rated organizations;
effectiveness depends on the seriousness of individ ual organizations to apply
the program (Shea and Sitar); an example of this is OSANGO and t he
Keystone method;
Peer Review is one of the more rigorous evaluation methods; ch aracterized
by independence of the raters, technical assistance in identifying and

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correcting organizational weaknesses, and substanti al responsibility on the
part of rated organizations to produce evidence of compliance with each
standard; because of its rigor, it is likely to be meaningful to donors, the
public, and others relying on the certification, bu t its high cost and high
standards may place it out of reach for many small or new organizations
(Shea and Sitar); an example of this method is the practice of Philippine
Business for Social Progress (PBSP) described in th e next section;
Ratings organization evaluation functions much like a traditional “charity
watchdog” organization – it solicits information fr om the organization and
rates it according to the standards, and publishes its conclusion as to whether
an organization has met the standards, as well as a report detailing its
findings, for public consumption; depends heavily o n the credibility of the
rating agency; examples in the U.S. include BBB Wis e Giving Alliance,
Charity Navigator and the American Institute of Phi lanthropy’s ratings guide
(Shea and Sitar, Sidel, Lee).
Accreditation by an accreditation agency (accreditation, certification,
validation and licensing mechanisms ; [Sidel]) provides the most significant
assurance that an organization meets certain standa rds of quality in its
delivery of services; most expensive type of mechan ism to implement, both for
the rating and the rated organization (Shea and Sitar; Lee); the PCNC,
Pakistan Centre for Philanthropy NPO Certification P rogram, and the
Australian AID initiative are some examples of this method (ibid).

Enforcement and incentives

Award – their high public visibility draws substantial a ttention to the program
and to the standards it sets; like accreditation, o ne of the most costly to
implement (Shea and Sitar); an example of this is the Malcolm Baldrige
Award in the U.S. (ibid);
“Intranet” self-regulatory measures or precursors to self-regulation in which
domestic funding nonprofits encourage and require c ompliance with
standards by their domestic partners and/or grantee s (Sidel); examples of this
approach are the Children and Youth Foundation effo rts in the Philippines and
Child Relief and You (CRY) and Action Aid initiativ es in India (ibid);
Grievance mechanism is a system to accept public complaints against er ring
NGOs, a process of investigating allegations and in stituting sanctions if the
accusations are proven. An example of this system is the one provided for b y
Code of Conduct of Ethiopia.
Public information

Information Agencies – organizations provide information to users witho ut
any rating or interpretation, consumers use the inf ormation as they see fit.
Examples, in the US, include the Guidestar website
which provides
information about charitable organizations, includi ng copies of their
income tax return (Shea and Sitar);

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Charity commissions or self-regulatory charity regi sters – the registration
of charitable organizations, ongoing monitoring and regulation of their
activities, responsibility for official interpretat ion and development of the
common law definition of charity, and provision of advice and guidance as
required to the sector and administrators…. (Sidel on the formation of a
charity commission in Australia: 5)”; existing mode l of this approach is the
Charity Commission for England and Wales (ibid);
Because the methods of self-regulation being used by NGOs have evolved, Sidel
observed that it is difficult to establish a strict categorization of the various efforts. Some
of them have actually combined one or more methods in one approach (ibid). He stresses
the autonomous character of the methods that he obs erved in the Asia Pacific region
although there are also a few models where there is government recognition or mandate
(like the PCNC, Pakistan and Australian initiatives) . He also observes that many of the
initiatives are meant to pre-empt heavier regulatio n of NGOs by the state.

Caveats regarding self-regulation methods

Although widely viewed as a positive development, a number of concerns have
emerged in their regard. Codes of Conduct are prim arily voluntary and performance
standards are usually vague in terms of how they ar e to be measured and enforced. Once
an organization signs on, they are usually left to themselves to observe the principles and
measure up to the standards (Lloyd and Casas; Leade r, 1999). Unfortunately, not all
organizations pay attention to these after they hav e signed up. Although some codes like
that of People Aid require that an officer is appoi nted to ensure compliance of the
organization’s commitments, this is still largely d ependent on voluntary compliance
(Lloyd and Casas). In many cases, there is no indi cation of disciplinary measures that
will be imposed by violators (ibid).
They make an example of a desirable system with th e Maryland certification
scheme which states that an NGO should identify a pe rson in the organization from
which interested parties may obtain information abo ut the organization. In terms of
financial accountability the Maryland scheme states that financial statements should be
prepared at least quarterly, should be provided to the board of directors and should
identify and explain discrepancies between actual a nd planned revenues and
expenditures. Lloyd and Casas think that this is a good way of establishing standards
that are expected of NGOs as well as specific accoun tability measures that its
stakeholders can expect of them.
Furthermore, there is concern that (as Edwards and Hulme warn), many codes are
more focused towards powerful stakeholders. Llyod and Casas reviewed 35 codes of
conduct and certification schemes and opine that mo st of them are geared towards
addressing the requirements of donors, governments and the general public more than
their beneficiaries (See Annex A – Collection of Codes of Conduct). They note that in a
number of codes, accountability to beneficiaries is not even mentioned. They make an

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exception with the NGO Code of Conduct for Ethiopia, Sphere, and the NGO Code of
Conduct for Afghanistan which all clearly establish that beneficiary accountability means
beneficiary involvement in all stages of decision-m aking, from design to implementation
to evaluation of programs and projects. They also point to other codes such as the
Nigerian Code of Conduct and HAP-I that state the ne ed for a complaints mechanisms
through which concerns against the NGO can be raise d and addressed by anyone. The
Pakistan NGO Forum Code of Conduct even goes so far as to require NGOs to ensure
that financial information is made accessible and i ntelligible to beneficiaries.

Another exemplary model of downward accountability is the Accountability,
Learning and Planning System (ALPS) of ActionAid In ternational. ALPS consists of a
set of core requirements for planning and accountab ility of its affiliate organizations that
involve the communities and partner organizations i n the planning, budgeting, monitoring
and reviewing of its projects. (Dombrowski, 2005)

Efforts in enforcement
Concerns about the weakness of self-regulation met hods, increasing media
attention to NGO scandals (Grant, 1998), and threats of stronger regulation from
government have prompted NGOs to develop enforcement schemes (Bothwell, 2000).
For instance, the Canadian Council for Internationa l Cooperation (CCIC) requires CEOs
of signatories to its Code of Ethics to certify tha t they have complied with their
commitments or, in the case of InterAction, to subm it work plans for how they will
achieve such commitments (Lloyd and Casas, 2005). The most advanced initiative that
has been referred to by many studies in this regard is the PCNC (Lloyd and Casas, ibid;
Sidel, 2003; Dombrowski, 2005, among others). Side l (2003) refers to the CODE-NGO
Whitelist Project in 1997 as another effort in enfo rcement of codes of conduct (see more
on this initiative in next section) but little else seems to have evolved along these lines.

Bothwell (ibid) discusses three very prominent cod es that were instituted in the
early to mid-90s in the U.S. which faded into obliv ion because the initiators did not
undertake an education program to popularize the co de, there were no provisions to
enforce them and there were no tangible rewards for compliance. On the other hand,
Lloyd and Casas (ibid) feel that one of the compell ing reasons behind enforcement
initiatives is the fact that some donors are beginn ing to require grantees to subscribe to
self-regulation methods as a condition for funding. They cite the case of Australia where
only signatories to the Australian Council for Inte rnational Development’s (ACFID)
Code of Conduct are eligible to apply for governmen t funding.

Without meaning to argue for greater government re gulation, Freedman (2000)
and Bothwell (ibid) suggest why such is still impor tant. Bothwell says that under
voluntary disclosure methods, insufficient or inadv ertently wrong information may be
disclosed; or information may be deliberately and e rroneously disclosed by an
organization which could argue in favor of having c omplied with their commitment but
which defeats the purpose of disclosure. As such, he thinks that legally required public

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reporting could decrease the incidence of erroneous disclosure because of the threat of
legal sanctions. In the end, Freedman feels that o perational integrity is still a matter of
responsibility of the organizations leadership. Bot hwell adds that high profile NGO
scandals happened despite the existence of strong r egulation in the U.S.

As such, increasing attention has focused on the r esponsibility of boards of
trustees for ascertaining the integrity of an NGO, a responsibility that has come to be
imposed on for-profit boards as a result of corpora te scandals. In the past several years, a
spate of efforts has evolved on strengthening non-p rofit boards as the fulcrum of NGO
good governance. The National Center for Non-profit Boards (NCNB, now
Boardsource) reported that the “hits” on its websit e increased from 15,000 in 1997 to
60,000 in 2000 (Bothwell, ibid). Nancy Axelrod, fou nding head of NCNB, notes the
following trend in board governance: (1) greater incidence of self-assessments by
boards, (2) boards constructively evaluating the pe rformance of the chief executive
officer (and reviewing compensation). (3) increase in establishment of “governance” or
“board development” committees, and (4) special ses sions or board retreats to focus on
strategic planning, governance reform or evaluation of programs and services (Bothwell,
ibid) .
Gregoire (2000) speaks of NGO good governance as a c ombination of
accountability and stewardshi:He defines stewardshi p as the “active oversight of
organizational governance, and policy-making by the board of directors” which entails
eight tasks: Steering toward the mission and guiding strategic p lanning
Being transparent, including communicating to membe rs, stakeholders and
the public and making information available upon re quest
Developing appropriate structures
Ensuring the board understands its role and avoids conflicts of interest
Maintaining fiscal responsibility
Ensuring that an effective management team is in pl ace, and overseeing its
Implementing assessment and control systems
Planning for succession and diversity of the board, as well as assessing its

The latest frontier in self-regulation is complain ts and grievance mechanisms.
Since it is a fairly new concept, Burall and Neliga n (2005) note that it is the least
researched and understood feature of self-regulator y mechanisms and is most often
missing from discussion on accountability. They co ntend that having a complaints and
grievance mechanism that works is the ultimate test of how serious organizations are in
making themselves accountable as they open themselv es to complaints from their
stakeholders and the public and commit themselves t o addressing such complaints. They
posit that the absence of an effective complaints a nd grievance mechanism renders the
other mechanisms inutile. Lloyd and Casas, (2005) c ite the NGO Code of Conduct for
Ethiopia as one of the few codes that provide for s uch a mechanism. The code entrusts a
committee of seven (five NGO and two civil society r epresentatives) to be its guardians.
The committee is empowered to accept complains from the public against non-

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observance of the code by its signatories as well a s to mete out disciplinary action against
those found guilty with either admonition, suspensi on or cancellation of membership.

The same is true with the ACFID Code of Conduct wh ich constituted an
independent Code of Conduct Committee. The committ ee is made up of a chair, six
representatives elected from aid and development ag encies, and a representative of
donors nominated by the Australian Consumers’ Assoc iation. The Code of Conduct
Committee monitors compliance to the Code by accept ing complains from the public
against a signatory organization, investigating the complaint through a prescribed process
and imposing needed sanctions. The committee also monitors compliance of the Code’s
requirement for all signatories to submit their ann ual report and vets these reports vis-à-
vis minimum standards of annual and financial repor ting. Organizations that are
determined to have violated the Code are removed fr om the roster of signatories. Since
only signatories of this code are eligible for gove rnment funding, that is a very heavy
price to pay. (Dombrowski, 2006)
Burall and Neligan (ibid) refer to the effort of i nternational financial institutions
like the World Bank that established its Inspection Panel that receives complains from the
public for any violation of bank policies by any of its units. The Asian Development
Bank, the Inter-American Development Bank, and the European Bank for Reconstruction
and Development all followed suit with similar unit s within their respective institutions.
Clearly, the multilateral financial institutions, w hich have been the target of NGO
criticisms of lack of transparency and accountabili ty, are ahead as far as instituting their
accountability in this regard.
Self-regulation combined with a minimum level of l egal regulation is emerging as
the more suitable form for exacting accountability given the complex nature of NGOs.
NGO efforts at increasing their accountability have evolved only the last decade and a
half. As can be gleaned from the foregoing discuss ion of literature reviewed, the
consciousness about the need for accountability onl y arose among NGOs in the 80s while
self-regulation only developed in the 90s. There i s a long way to go as far as establishing
self-regulation methods as a means of accountabilit y concerned.

Naidoo (2000) reminds us that whatever self-regulat ion system an NGO
community adopts, it should not be a “gate-keeping instrument” which becomes
exclusionary. On the contrary, he suggests that su ch should be open to reflection,
evaluation and change over time and that it should be an educational and capacity
building process for all concerned.

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The Philippine NGO Accountability Narrative 5

The evolution of NGO accountability practice in the Philippines follows
practically the same pattern as the global trend di scussed previously but with some
interesting nuances. The dynamism and creativity o f Philippine NGOs are both their
strength and their weakness. The narrative behind this reality speaks to some of the most
compelling arguments about the importance of accoun tability in the NGO community.

Understanding the nomenclature and typology of Phi lippine civil society could
create more confusion than enlightenment to those w ho are uninitiated in this sector of
Philippine society. Cari ño (2002) devotes a whole chapter of her study to an alyzing the
different categorization of civil society organizat ions by applying the Johns Hopkins
University classification. Constantino-David (1997 ) maps the terrain of Philippine civil
society by separating the NGOs, POs and ideological groups who mostly deal with poor
and marginalized groups and are more politically in clined from the academe, church,
media and business who are more concerned with eith er sectoral or broad public interest.
She further segregates the former into their sub-ca tegories as individuals, membership-
based organizations, institutions/agencies and ideo logical groups. This section will focus
its discussion on “NGOs” using Constantino-David’s g rouping because these are the
organizations that have made an effort to organize themselves towards accountability
practices following the global models in the forego ing section.

The “mushrooming” of NGOs after the Marcos dictator ship came about as a result
of two factors. The first obvious factor is the op ening up of the democratic space. The
pent up energy of all the NGOs, POs and other social movements that continued to
operate under the repressive regime, burst into act ive expressions of citizenry as the
government of Pres. Corazon Aquino enshrined people power in the new constitution. In
addition, tens of thousands of NGOs got organized ov ernight to take advantage of this
space and to exploit the new democratic President’s commitment to make NGOs and POs
an active part of her government. Constantino-Davi d (1997), Gonzalez (1998), the ADB
study on Philippine NGOs (1999), Cari ño (2002), and Abella and Dimalanta (2003)
provide an exhaustive discussion of the constitutio nal provisions, laws and government
policies that establish the positive environment fo r the growth and increasing role of
NGOs in development.

The second major factor is the donor funds that fl ooded the country from donors
that wanted to ensure the success of the newly re-e stablished democracy. Gonzalez
(1998) states that ODA flows to the Philippines con tinued to rise every year from US$
908 million in 1986, reaching a peak of US$ 2,725 m illion in 1991. Because of their
newfound legitimacy, NGOs became a choice channel o f donor funds as well (Abella and
Dimalanta, ibid). Donors also wanted to avoid a r epeat of their experience in the Marcos
administration where massive amounts of aid money c ould not be accounted even while

5 While sources are cited to provide evidence in man y parts of this section, some information/observations
are provided as a personal contribution based on th is author’s own experience as an active NGO
practitioner and network person from 1986 – 2004; p articularly as CODE-NGO National Coordinator from
1993 – 2002 and PCNC board member from 1998 – 2001 and Chair from 2001 – 2002.

The Evolution of NGO Accountability Practices and their Implications on Philippine NGOs

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Marcos was still in power. Gonzalez (ibid) estimat es that in the early 90s NGOs received
US$ 56 million annually directly from NGO co-financ ing schemes alone (not counting
funds available to them through contracting arrange ments from ODA funds).

Unfortunately, it is also these two factors and th e environment that they created
that encouraged unscrupulous individuals and organi zations to establish fly-by-night
NGOs or pseudo NGOs. ADB cites that by 1995, the Phi lippines Securities and
Exchange Commission (SEC) had registered 60,000 non -stock, non-profit organizations.
In an ambitious survey of the size of the non-profi t sector, Cariño (2002, :83) estimates
that there were between 249,000 – 497,000 of these organizations in the country in 1997.

NGO Accountability: Philippine edition
The confluence of an expanding democratic space an d inundation of donor
funding had a damaging impact on NGO existence and o perations. Donors were loose
with accountability requirements because their mand ate was to “push” funds towards
NGOs (or government, as the case may be). There was so much money to disburse that
many donors were more concerned about moving the fu nds to meet disbursement targets
than accounting for funds disbursed. On the other hand, NGOs did not bother about
accountability because they were more predisposed t o chasing after funds. To begin
with, some donors were already quite loose with acc ounting of funds during the martial
law regime, preferring not to know if their funds w ere being used to resist the dictator
(Abella and Dimalanta, 2003).
Government did not bother with NGO accountability b ecause they were busy
spending grants or trying to close grant contracts that were already committed by donors.
Accountability was simply not in the agenda because absorptive capacity was the name
of the game. Worse of all, NGOs competed vigorously to corner donor funds.
Competition became so intense that, at some point, some NGOs/networks were already
putting down others in order to shore up their own credibility with donors. This is
exacerbated in part by the ideological rivalry of g roups with competing political
backgrounds since the martial law period (Constanti no-David, 1997).

In addition to being favored with funds by donors, NGOs also took a high profile
role in advocacy. Buoyed by their starring role in People Power I (or EDSA
6 I) in 1986,
NGOs wasted no time in forming coalitions and allian ces to engage government in
various policy-making arenas. Living up to the com mitment of the President,
government, on the other hand, organized summits, e stablished dialogue and other
consultative fora and tripartite and multisectoral councils to give NGOs and other civil
society organizations space to participate in gover nment policy-making. Eventually, the
passage of the Local Government Code of 1991 opened a wider avenue for people’s
participation all the way down to the grassroots le vel. All these were done on the pretext

6 EDSA is the acronym for Epifanio delos Santos Ave. which was the historic location of the series of
people revolts. It is the main thoroughfare in Met ro Manila that cuts through the national military a nd
police headquarters that stand in front of each oth er.

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that NGOs spoke for the poor. Indeed, NGOs made str ong points in invoking the
perspective of the poor in the policy arena—somet hing that was ignored by the dictator
but which became an irrefutable rhetoric under a de mocratic environment precipitated by
people power.
This period, which Abella and Dimalanta (ibid) cal l the period of legitimacy (late
80s – early 90s), also ushered in a host of innovat ions that would put Philippine NGOs in
the global development map. Donors would point to t hese exemplars in their reports.
International NGOs came to research and write about them. Developing country NGOs
came to see how they could be replicated. Among ma ny others, those that became
models of effective development strategies were: sustainable integrated area
development (SIAD) where NGOs attempted to cover larger depress ed areas employing a
synergy of development strategies (i.e. organizing, enterprise development, gender
programs, health and education, etc.), NGO coalition building where CODE-NGO was
the most prominent achievement as a coalition of co alitions, NGO-managed fund
mechanisms where NGOs/networks took a crack at donor funds man agement, and NGO
engagement with government where they were sitting in official high level pol icy fora
with high level officials. These strategies and ap proaches were not made overnight.
They are the result of years of dedicated work and experimentation in community
development and community organizing which spanned several decades. They are a
product of networking and coalition building effort s and a clear manifestation of the fact
that NGOs are not just convenient channels of donor funds but also add value to them
because they experiment and innovate (Garde and Nava rro, 1996 quoted in Gonzalez,
1998). They were also made possible by the abundanc e of funds from donors that were
genuinely supportive of NGOs as key actors of democr acy and were willing to invest in
their experimentation.
Not long after, there was a shift in donor attitude towards the Philippines.
Somewhere during the Ramos administration which sta rted in 1992, the international
community had a sense that the country had “stabili zed” and that the fledgling democracy
was taking root. From Gonzalez (1998) it could be n oted that ODA flows declined to
US$ 1,576 billion in 1992. Although it picked up a nd continued to fluctuate until 1999
(CODE-NGO, 2000), they never returned to the US$ 2.7 billion level of 1991. Pres.
Ramos, encouraged by the initial success of his eco nomic program, told donors the
Philippines wanted trade and not aid (Abella and Dimalanta, ibid). Thus, donors started
to decrease their funding allocations to Philippine s. At the same time, geopolitical
priorities in development assistance were also chan ging around this time and were
flowing towards more needy countries. The result w as slow but sure drying up of the aid
well on NGOs. By the mid-90s, the U.S. and Canada, the two big donors supporting
NGOs, started to wind down their programs which prov ide some US$ 10 million
annually to NGOs—representing around 50% of donor funds that went directly to NGOs
(CODE-NGO, ibid).
One of the biggest consequences of the weak enviro nment for accountability
during the era of abundance is the lack of transpar ency and financial accountability
among Philippine NGOs. Aldaba (2001) notes that whi le there is a large number of

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NGOs registered with the SEC, their records show tha t less than half of those registered
submitted the required annual information in the ye ars 1997 and 1998. In a state audit
conducted in 1992 – 93 of 42 NGOs that availed of fu nding from government, it was
discovered that there were lapses ranging from non- submission of reports, to lax
accounting procedures, to the failure to return unu sed funds in 56% of the grantees
(Cari ño, 2002). The oft-repeated complain of NGOs about t he lack of staff and financial
resources in meeting SEC requirements (Aldaba, ibid ) and, later, PCNC certification
procedure (Abella and Dimalanta, ibid) is a clear i ndication of the low priority that they
give to transparency and financial integrity.

More to the point, when CODE-NGO tried to obtain th e profile of its member
NGOs for its database, it was only able to get 50% o f them to provide the information
requested. The CODE-NGO leadership was disappointed with the resistance of many of
its members to provide basic information about thei r organization. Some members later
explained that they did not want their information to get into the “wrong hands”. This
was also the experience of the Cari ño (2002) in conducting her survey which led her to
the observation that NGOs guard their financial inf ormation like they were “state
secrets”. This is without a doubt a hangover from the practice of controlling
organizational information to evade repression duri ng the martial law era.

The two biggest blows to NGOs’ inviolate image were the Erap Muslim Youth
Foundation and the PEACe bonds scandals. Pres. Est rada (fondly called Erap by his
supporters) was exposed to have deposited some P 50 0 million in a “dummy” foundation,
allegedly from jueteng (local numbers game) sources. This accusation woul d become
one of the reasons why he was booted out of the pre sidency in the second people power
revolution in 2001 and is being used as evidence in the on-going plunder case against
him. The PEACe bonds project was a fund-raising ef fort of CODE-NGO which netted P
1.8 billion through the trading of government bonds . It used the proceeds to endow the
Peace and Equity Foundation which is now a grant-ma king institution for NGOs and
POs. CODE-NGO leaders (including this author) were accused of having engaged in
illegal transactions to earn this huge profit and f aced Congressional investigation and
media scrutiny. The investigation failed to establ ish the accusations but the supporters of
Pres. Estrada took the opportunity to demolish the reputation of CODE-NGO, which was
one of the leading organizations in People Power 2 (EDSA II). They publicly implied
that these “holier than thou” civil society organiz ations are no better than those whom
they accuse of being corrupt. Undoubtedly, these t wo incidents did create doubts about
the integrity of NGOs in the minds of the public.
The question of legitimacy is one issue that has h ounded Philippine NGOs of late.
After a brief honeymoon period NGOs started to trade barbs with politicians in the
Aquino administration when the contentious policy i ssues of asset reform (the
Comprehensive Agrarian Reform Program) and sovereig nty (the presence of the U.S.
military bases in the country) were tackled. NGOs s tarted to call politicians blocking the
passage of their version of the CARP law as trapos (short for traditional politicians but
also literally meaning rag in Pilipino) for being anti-poor and representing only their
selfish interest. Politicians retorted by asking wh o NGOs represented since they were not

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elected and whether they indeed had the mandate of the poor to speak in their behalf—
something that mirrors the accusations against NGOs in the global arena. Politicians shot
back by calling NGOs ngongo (a person with a congenital speech defect), a malic ious
and politically incorrect swipe at the, apparently, dissonant voice of NGOs.

The animosity progressed until People Power 2/EDSA II where the term civil
society became a buzzword in Philippine media. NGO s, POs and social movements that
pushed for Pres. Estrada’s ouster repeatedly referr ed to themselves as “civil society” – the
voice of the people who wanted Estrada out. While the strategy of using people’s power
was successfully repeated in ousting Estrada, this did not sit well with the western press
which considered this impatient, extra-parliamentar y exercise as “mob rule”. Eventually,
an intellectual debate ensued as regards the wisdom of this mode of changing a duly
elected president.
When it was time for Estrada’s supporters to prote st his arrest, they claimed the
same right to express their disagreement with gover nment in people power fashion in
exactly the same site where EDSA I and II took plac e and called their revolt EDSA III.
They also maintained that they acted in behalf of t he poor whose interest Estrada vowed
to uphold and to whom he was very popular even afte r his ouster – an attack on the
largely middle-class character of EDSA I and II. A lthough it is widely known that it was
Estrada’s allies who started the uprising, eventual ly urban poor groups independently
trooped to the protest site and made true Estrada’s supporters claim that theirs was the
“real” voice of the poor. The uprising ended in vi olence when politicians agitated the
masses to invade the Presidential palace to try and oust Pres. Macapagal-Arroyo –
Estrada’s successor. The attempted ouster miserabl y failed but the fracas would long be
embedded in the public’s mind as a confusing politi cal battle between groups who
claimed to represent their interest. The fact that the unorganized poor joined EDSA III
was like a jolt of lightning to NGOs, especially tho se who were part of EDSA I and II,
who had always claimed that they know of and/or spe ak for the poor (Cariño, 2002).

The question of legitimacy is further complicated by the fact that politicians have
begun to organize their own “NGOs”. In the advent o f the Local Government Code
which gave affirmative rights and representation to NGOs and POs in every development
council in each barangay (village, town, city and p rovince), local government officials
have taken on the practice of putting up their own NGOs to either control representation
in the local government councils, corner local gove rnment contracts or simply have a
convenient vehicle with which to extract loyalty fr om people in the community. The
latter is especially true for the spouses of politi cians and for those who have lost elections
and plan to make a comeback. This phenomenon has f urther raised disturbing questions
about what NGOs are really all about, how they are r elated to or different from
government and who they really represent. This con fusion has added to questions about
their legitimacy and their credibility with the pub lic.

7 This uprising was never referred to as People Powe r 3 because it failed to achieve the ultimate conclusion
of the two previous people power revolts – regime c hange.

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Another sticking point under the legitimacy issue is the dynamics between NGOs
and POs. Constantino-David (1997) describes this te nsion as a case bordering on a
paternalistic attitude of NGOs towards POs and of di strust of POs towards NGOs.
Cari ño (2002) highlights the matter of misrepresentation of POs by NGOs, while Aldaba
(quoted in Cari ño) focuses on the class conflict between the mostly middle-class NGOs
and the poor POs. This discourse is closely relate d to the question of downward
accountability of NGOs to the people who they purpor t to represent. In the case of the
Philippines, the silver lining could be that POs co uld be considered to have somehow
been empowered because they are able to articulate their displeasure with NGOs
(contrary to Lloyd’s claim that the poor do not hav e the capacity to demand for
accountability). Nevertheless, it contributes to di minishing the credibility of NGOs.
Philippine NGOs are not spared from the issue of accountability for performance.
In CODE-NGO’s survey of donors (2000), their most po pular complains about NGOs
were their lack of institutional systems and mechan isms, resource constraints in terms of
staffing and counterpart contributions which preven t them from being fully accountable
for their projects, their inability to make their p rojects sustainable because of their
dependence on external funding, narrow-mindedness o r parochialism and lack of capacity
to scale up their projects. Abella and Dimalanta ( 2003) write that NGOs are more
focused on process than on outputs and outcomes whi ch have become donors’ favorite
measures of exacting accountability. On the other hand, they claim that NGOs make
themselves vulnerable to accusations of poor perfor mance because they use such
objectives as people empowerment, consciousness-rai sing, or capability building which
are difficult to measure; they also have poor monit oring and evaluation systems. While
this can be explained by the value-oriented nature of NGOs (Fowler, 1997 quoted in
Carino, 2002), it still opens them up to some donor s’ impression of being weak in
delivering on their commitments. Constantino-David (1997), echoing Jordan, contends
that the kinds of performance measurement systems t hat are being imposed by donors
upon NGOs are rather corporate or bureaucratic in na ture and contradictory to the
voluntary and socially-oriented nature of NGOs. The challenge, she opines, is for NGOs
to devise accountability systems that are more cons istent with their nature and resist those
that impinge on their flexibility and autonomy.

One of the other weaknesses identified by Abella an d Dimalanta about Philippine
NGOs is weak board governance. They point out that most NGO are nominal, inactive,
and/or disinterested in their governance functions. Board members are usually selected
among friends and acquaintances so that there is an in-breeding rather than a broadening
of perspectives among NGOs. They also note that mos t boards do not want to get
involved in the financial and fiduciary responsibil ities of the organization leaving the
Executive Director to worry about raising funds as well as spending them. This is borne
by the experience of PCNC in its first few years wh ere many evaluators validated the
above findings in the course of certifying applican t NGOs.

When the accountability regime hit Philippine NGOs , many were hard pressed to
comply with the standards that were being expected of them. Although large in number,
a great majority of them are small organizations wi th an average of 5 – 10 staff (Abella
and Dimalanta, ibid; ADB, 1999; Cari ño, 2002). Many of them had not established the

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kind of human resources and organizational systems required to institute the
accountability mechanisms. Having been dependent o n donor grants, many were caught
unprepared when these started to disappear. Analyz ing a survey conducted by the
Association of Foundations (AF) of CODE-NGO members, Aldaba (2001) says less than
half (47.8%) considered themselves financially sust ainable. In an attempt to update the
size of its members towards the late 90s, CODE-NGO d iscovered that they had lost
around 500 of their 3,000 members.
Cari ño and Fernan (2002) talk of the multiplicity of pur pose of civil society
organizations in the country as well as the Filipin os’ penchant for association that have
contributed to the growth spurt and complex nature of non-government organizations in
the Philippines. Some of these efforts to organize are more fleeting than others, oblivious
of the need for institutionalization and more conce rned about meeting short-term
objectives. Many eventually disappear when their p urpose have been met or are not
easily achieved so the effort at institutionalizati on are rare compared to the over-all
enthusiasm to organize.
Self-regulation: Philippine style
The NGO organizing frenzy and the cacophony of voi ces competing for a larger
sphere of the democratic space were the impetus for the creation of CODE-NGO in 1991.
The ten biggest coalitions of NGOs in the country de cided to form themselves into a
coalition of coalitions to uphold the integrity of the “genuine” NGOs by setting the
standards of development work while also serving as the voice of the sector in policy
issues. These networks, some of which were bitter rivals during the martial law period,
were forced to work together to form the Philippine s-Canada Human Resource
Development Program (PCHRD). The Canadian governme nt challenged NGOs to work
together to manage a capacity building grant so tha t they could demonstrate their
competency in financial administration and program management. It was a precedent
setting initiative of the Canadian government which would eventually be replicated in
other parts of the world and which eventually paved the way for other NGO-managed
funds in the Philippines.
The initial task of CODE-NGO members was to encapsu late their standards into
two documents: the Covenant on Philippine Developme nt which articulates their vision
of development and the Code of Ethics of Developmen t NGOs (later Code of Conduct)
that would establish the ethos of their work to set them apart from the fly-by-nights that
were already proliferating. Formulating these docu ments was a painstaking exercise that
took nearly a year of debate, consensus building an d wordsmithing to conjure the right
language that would marry the sometimes opposing vi ew of this very wide range of
development actors (Songco, 1999). It was a necess ary exercise to prove that NGOs
could subsume their self-interests to the interest of the sector. This proved to be a
strategic step.

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Abella and Dimalanta (2003) say government had a g enerally positive attitude
towards NGOs, especially during the Aquino administr ation. The National Economic
and Development Authority (NEDA) Resolution No. 2 ser ies of 1989 provided the
framework of the Aquino government’s policy towards NGOs (Gonzalez, 1998). Among
others, the resolution provided that government wil l not control, but rather, would
enhance direct funding support to NGOs, GO (governm ent) – NGO coordinating
mechanisms at various levels of government are give n authority to collaborate and
negotiate with NGOs, and NGOs should be informed of a nd consulted on major policy
and program decisions, accreditation policies, and proposed legislative agenda that
concern them (Gonzalez, ibid).
Government provided a very liberal and enabling en vironment for NGOs. The
ADB study on Philippine NGOs (1999) distinguishes be tween registration and
accreditation of NGOs by government. Registration i s defined as an “official or legal
recognition issued to a person, entity or organizat ion, after having met certain
requirements in Philippine laws.” It refers to the SEC as the primary registration agency
for non-stock, non-profits and the Cooperatives Dev elopment Authority for cooperatives.
It then refers to Bureau of Internal Revenue (BIR), Department of Finance (DOF) and the
Department of Social Welfare (DSWD) as secondary re gistration bodies if non-stock,
non-profits would like to avail of tax exemption, e xemption from duties and tariffs for
imported goods and for relief donations, respective ly. Apart from these simple rules,
there was no intention to strictly regulate NGOs be cause government also realized that it
had no capacity to exercise strict supervision over these rapidly growing organizations
(Cari ño, 2002).

The hostility started when NGOs began to take a con descending attitude towards
government, treating government workers with suspic ion—a hangover from their
relationship during martial law. What partly trigg ered this reaction and marked the end
of the honeymoon was the agrarian reform debate in Congress discussed in the previous
section. Politicians shot back by trying to revers e the liberal environment for NGOs.
During the Ramos administration, there were a numbe r of attempts by Congress to pass
legislation for greater regulation of NGOs. After t he state audit revealed misdeed of
NGOs who obtained funds from government, COA called for greater government
monitoring over public funds that NGOs received (Abe lla and Dimalanta, 2003).

CODE-NGO resisted these initiatives and insisted th at the sector had the capacity
to regulate itself. To prove this point, CODE-NGO t ook on a project which it dubbed as
the Whitelist project in 1997. The project went af ter all NGO and PO grantees of the
PCHRD that failed to comply with their grant agreem ent after the program closed. While
only 89 of the total 975 grantees of PCHRD were rem iss in their obligation, only 28
managed to comply after they were taken to task by CODE-NGO (CODE-NGO, 1997).
A list of these 28 organizations was eventually dis seminated by CODE-NGO to
government agencies, donors, and international NGOs . The list made no judgment on the
NGOs and POs enumerated. Instead, it merely made pu blic the information that these
organizations failed to comply with their contractu al obligation to PCHRD even after
they were warned that they would be included in a l ist that would be publicly

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disseminated. This was sufficient notice that shou ld have given fair warning about the
sense of responsibility of these organizations.
In the course of handling this process, some NGOs c omplained that PCHRD was
stricter in its accountability requirements than fo reign donors who were giving bigger
funds. The networks managing PCHRD responded by sa ying that they need to be harsh
on NGOs because they have to prove that NGOs can liv e up to the responsibility that is
expected of them (Constantino-David, 1997).
Moving self-regulation forward, CODE-NGO has since removed one member
network when it failed to account for funds that it received from the network. This is a
painful act which is consistent with the standards that CODE-NGO has established in the
Whitelist project when it dismissed two member netw orks and ten NGOs that are among
the 28 organizations that eventually landed in the whitelist. CODE-NGO has not stopped
this practice. As this paper is being written, it is undergoing due process in disciplining
(possibly dismissing) another member organization f or financial anomalies in the
management of funds received from a World Bank – Ja pan Social Development Fund.
When CODE-NGO celebrated its 10 th anniversary in 2001, it asked its members to sign
an updated version of the Code of Conduct for Devel opment NGOs which now carries
explicit guidelines for enforcement. It has also e stablished a permanent Commission on
Internal Reform Initiative to work out the sanction s for members who violate the Code
and a Commission on Capacity Building to assist its members in living up to the
standards of the Code as well as prepare them to ad apt to the changing environment.
Further, after years of deliberation, it finally de cided that one of the requirements for
membership in CODE-NGO is PCNC certification. By 20 14 all members who are have
not been certified by PCNC will be removed from its roster.

The creation of PCNC is an independent effort of so me CODE-NGO member
networks (notably the Association of Foundations an d the Philippine Business for Social
Progress) to take self-regulation to the next level . The history and purpose of PCNC will
no longer be discussed in this paper since it is as sumed that its members (the primary
audience of this paper) are already aware of this.
9 Suffice it to say that PCNC is referred
to, discussed and/or analyzed as a path breaking ac hievement in NGO self-regulation by
many of the documents that were reviewed for this p aper. It is without a doubt a global
phenomenon. What is important to state here is tha t the confidence to establish PCNC is
built upon the experience of CODE-NGO in self-regula tion.

The formation of PCNC was not without controversy. A few NGOs questioned
the authority of its founders to pass judgment on w ho is worthy of certification in a
collegial community. Interestingly, some of the NG Os that resisted PCNC’s creation are
also the same organizations who did not want to be part of CODE-NGO because they did
not want to subscribe to the Code of Conduct. One NGO threatened to sue CODE-NGO
if its name lands in the whitelist, claiming that i ts accountability is to PCHRD and not to
CODE-NGO—a threat that it did not make good after CODE-NGO included it in the

8 From a conversation with Sixdon Macasaet, current Executive Director of CODE-NGO. 9 For more information on PCNC see .

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whitelist. These NGOs’ assertion of their autonomy is noteworthy. Unfortunately, their
resistance to the NGO sector’s effort at instituting discipline while also resisting
government regulation is what makes NGOs vulnerable to public suspicion.

Abella and Dimalanta (2003) note that NGOs give two reasons why they do not
obtain PCNC certification. One is they cannot affo rd the P 10,000 cost of certification,
the other is their difficulty in preparing the requ irements of certification. It must be noted
here that PCNC obtained a grant of P 500,000 from Fo rd Foundation when it was newly
established to subsidize small NGOs that will be abl e to afford the application fee. It
took several years for this grant to be consumed be cause the availment was quite low.
The PCNC board also made some adjustments after rece iving feedback on its stringent
requirements from relatively small NGOs. When the a pplication for certification was
still rather slow despite these two efforts, the bo ard concluded that the problem was the
desire/attitude of NGOs to meet accountability stand ards and/or the lack of incentives for
them to obtain certification. At present, PCNC cert ification enables an NGO to obtain a
donee institution status which means a corporate do nor can obtain a tax deduction for a
donation given to them. Since neither donors not g overnment require PCNC certification
before giving a grant and few NGOs access funds from the business sector, PCNC
certification has become valuable only to those who really care about good governance
and accountability. Since a very small population of the NGO sector has been certified,
PCNC certification is becoming an elitist symbol rat her than an expression of the
Philippine NGO sector’s efforts at self-regulation.
Abella and Dimalanta (ibid) point to other NGO/net work-level self-regulation
practices in the Philippines. They mention the eff ort of the Philippine Partnership of
Support Service Agencies (PhilSSA) and AF (both COD E-NGO member networks) in
preparing an annual scorecard of their members as a system of peer-review based on pre-
agreed criteria. Some members have apparently bee n dropped from the roster of these
networks because of consistently poor performance w hich includes failure to submit
annual and audited financial reports. Abella and D imalanta also make mention of the
practice of PBSP in conducting regular independent audit of its grantee NGOs as well as
its own operations to determine whether they are li ving up to their commitment of
performance. They cite the effort of the Children and Youth Foundation of the
Philippines (CYFP) to provide its grantees with a s elf-assessment tool which it
recommends them to use before they avail of their a ssistance. CYFP staff then validate
the self-assessment before approving a grant applic ation and, when necessary, provide
assistance to enable the proponent to addresses wea knesses identified from using the
diagnostic tool.

Philippine NGO Accountability: the unfinished story
Although seemingly a large segment of Philippine s ociety, the NGO community
is an esoteric sector that addresses itself to a na rrow public. While actively engaging in
public discourse, its work is known only among prac titioners, beneficiary communities,
marginalized sectors, donors, some government agenc ies and some business segments of

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the business sector. It is only fairly recently th at media had gotten wind of them, picking
up mostly negative news about them. Government offi cials are fond of quoting a little
known study that says NGOs reach only 1% of the poor in the country—a point that
NGOs are unable to dispute for lack of contrary evid ence. The reality is Philippine
NGOs have not developed the habit of engaging the pu blic in their work. Unlike their
counterparts in developed countries, they has a ver y narrow base of volunteers and have
not exerted effort at raising funds from the public because they have found it more
convenient to obtain funds from generous donors.

For their sins, Philippine NGOs are now suffering f rom a crisis of relevance that
they have never before experienced. The innovation s have ceased, grants continue to
disappear and NGOs are closing down one by one. On the political front, the Philippines
is once again under a cloud of political turmoil th at threatens to retard its democracy back
to the martial law era. Despite the fact that the current President holds the record of
being the most unpopular president in the country ( Chua, 2006) the general public have
dismissed the calls for her ouster shying away from opposition efforts at mass action and
choosing instead to attend to “more important matte rs” (Pulse Asia, 2006). NGOs who
are in the thick of this protest are practically th e same NGOs who were part of People
Power 1 and 2. Forced to form tactical alliances w ith politicians and groups who were on
the opposite side of the fence in EDSA I, II and II I, they are now being rejected by the
very people who they claim to represent, confused a bout the unholy alliance that they
have entered into and preferring to sit out a presi dent they dislike rather than gamble on
the options that are being presented by the same gr oups that had promoted people power
as the ultimate recourse to attaining reform. The combination of the question of integrity
and the question of relevance is a deadly combinati on that currently plagues NGOs and
threatens to send the Philippine NGO community into oblivion. The golden era of
Philippine NGOs is approaching the dark ages.
Some Points of Reflection
The foregoing discussion provides some rich insigh ts on the importance of NGO
accountability. The following are offered as a sum mary of the important points that can
be gleaned from that discussion and how they may be used to improve the current
situation of NGOs in the country.
1. As a sector grows (particularly those that affect p ublic interest), some level of
regulation is necessary and desirable (either by government, by NGOs themselves or
both) to ensure that the members of the sector are able to uphold responsibility in
their work in the course of addressing public inter est. Philippine NGOs have
demonstrated the capacity to regulate themselves an d keep government regulation to
a minimum. However, (as Slim pointed out) the scop e of such regulatory
environment needs to encompass the sector as a whol e. Locally and globally, the
high profile role that NGOs play in their advocacy efforts is not matched by their
ability to communicate their capacity to discipline themselves. As several authors
have warned, a few scandals are sufficient to damag e NGOs’ credibility. This is

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particularly true in the Philippines where NGOs have instituted pathbreaking efforts
at self-regulation that are globally recognized. I f NGOs do not want more
government regulation, they need to demonstrate in a bigger way—in ways by which
the public can fully understand—that they can dis cipline themselves. Marschall and
Edwards highlight the right of NGOs to assert their right to expression in a
democratic setting. However, the Commonwealth Busi ness Council emphasizes the
responsibilities entailed by such right.

2. Accountability cannot be imposed . First and foremost, those that are still unawar e
must be made to understand that NGOs’ noble intentio ns to serve public interest
comes with great responsibility and that such respo nsibility needs to be exercised
towards a variety of stakeholders. The bar of pub lic expectation of NGO behavior
has been set so that it is no longer possible for N GOs, no matter how small, to work
in isolation from the purview of public scrutiny. At the same time, the diversity of
mission and operation of NGOs makes it difficult to establish uniform measures of
performance and accountability. There are already a lot of tools that have been
developed thus far for these purposes (a few exampl es have been given here). Codes
of conduct are noteworthy but they need to be popul arized and there need to be
enforcement mechanism to give them “teeth” so that NGOs that subscribe to them
will take them seriously. Bothwell shares an examp le of how the codes of conduct of
two U.S. coalitions of NGOs were not enforced becau se they did not promote them
properly among their members. The challenge is ho w to make these tools available
to NGOs so that they can choose the more appropriate ones or they can develop their
own to demonstrate their accountability.

3. There is broad social consensus, locally and global ly, about the important role of civil
society in building social capital and strengthenin g democracy. In the Philippines,
however, public disenchantment with civil society could also foment apathy and
indifference among people . NGOs need not blame themselves entirely for this
situation. Certainly unscrupulous groups that have exploited the political value of
“civil society” are more to blame. However, the ir ony about a society that hosts one
of the most advance NGO communities in terms of sel f-regulation that has also lost
confidence in this community is quite disconcerting . There is urgent need to take
great effort for the NGO community to remedy this si tuation and to prove that they
are capable of regaining their important role in so ciety.

4. Philippine NGOs need to realize that they will inevi tably need to engage the public
in their work . The next big source of funding to sustain develo pment work is the
public. However, tapping public funding at this ti me will be extremely difficult for
NGOs because of their low level of credibility. Thu s, apart from establishing sector-
wide as well and institutional level measures of ac countability, NGOs will have to
face the challenge of soliciting public participati on in reporting on errant NGOs
through complaints and grievance mechanisms to show that NGOs are confident to
face public scrutiny and are willing to face the co nsequence of reprisals. On the other
hand, the warning of Blagescu, Casas and Lloyd abou t complaints and grievance

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being a very new approach and being very dangerous and complex must be heeded.
There is need to study and plan for this carefully lest if backfires.

5. As a final note, it would be good to be reminded ab out Naidoo’s advice to ensure that
the self-regulatory system of NGOs must be inclusive and conceived as one that is
open to reflection, evaluation and change over time and that it should be an
educational and capacity building process for all c oncerned.

Some Options for Increasing NGO Accountability in t he Philippines
The challenge of bringing about the renaissance era of Philippine NGOs is a
daunting challenge — resources are scarce, spirit s are low and bad habits are deeply
ingrained. It is not suggested here that increasin g the accountability of NGOs is the
panacea to remedy this serious crisis. Rather, the premise is that promoting good
governance among NGOs could be an important step in regaining and enhancing their
public credibility. PCNC could play an important ro le in this process since it is already
internationally recognized as a pioneer in NGO self- regulation. At the same time, it has
built the necessary infrastructure to carry out a s ector-wide campaign to shore up
accountability practices as a measure of regaining public trust and recapturing the NGO
community’s essential role in development.
With the foregoing discussion in mind, it is propo sed that the approach to
increasing NGO accountability among Philippine NGOs i s to create an incentive-
disincentive structure for this purpose. Such a structure must provide r ewards for NGOs
to institute accountability practices and increase the risks and sanctions of not doing so.
This approach is proposed because experience has sh own that accountability cannot be
imposed. NGOs need to first understand why accounta bility is important, become aware
of different dimensions and methods of demonstratin g accountability then choose the
method/s that is/are applicable to their organizati on depending on their mission and
operation. At the most basic level for instance, e fforts must be made to make small
NGOs with very limited focus and operation aware of the minimum standards of
accountability that they need to uphold to enable t hem to perform their work effectively
and sustainably. They should not be “forced” to in stitute complex accountability systems
which would jeopardize the viability of their opera tions. At the same time, NGOs cannot
also be left to freely decide whether they want to institute accountability measures or not.

It may be necessary for PCNC to work with other ins titutions to bring about such
a structure in order to create the environment to m ake NGOs work for greater
accountability on their own while also proactively providing assistance to NGOs who
need help to institute their own accountability eff orts. The full range of self-regulation
methods that were discussed in previous sections ne eds to be reviewed and the extent to
which those that are applicable to the Philippine s etting carefully studied. Some
beginning discussions are offered below to aid the PCNC in reflecting on the
applicability of these approaches.

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Standards Setting and Performance Measurement

Sectoral codes and other means to govern conduct. How can the Code of Conduct
of CODE-NGO be more widely disseminated, especially beyond its membership?
Are there other NGO codes that can be popularized s o that different NGOs may
choose the code of conduct that is applicable to th em? The enforcement system of
the CODE-NGO Code of Conduct should also be widely d isseminated so that it can
serve as a possible template for enforcement for ot her groups who may want to
establish their own codes of conduct.

Self-certification. Can the system of CYFP be popularized? Are there o ther such
self-certification methods being used locally and c an they also be publicly shared?

Peer Review . Can the PBSP system be popularized? Are there othe r such peer
review systems being used by other NGOs/institution s which can be shared with other
Ratings organization evaluation . There are two ratings/grading system that were
presented here are examples (AF and PhilSSA). Thes e are useful in a controlled
environment with a relatively small membership base . What needs to be studied is
how such a system can be applied in a larger settin g. Of course, the fundamental
question that needs to be asked is whether there is value to such an undertaking. If
so, perhaps the assistance of professional ratings group (such as PhilRatings which
does rates local companies) can be obtained so that their technology can be

Accreditation by an accreditation agency. While it is certainly desirable to expand
the reach of PCNC, the necessity to encourage other specialized certification bodies
should also be studied. For example, there has bee n talk within PCNC to encourage
microfinance institutions to establish their own ce rtification body since the
parameters being used to certify NGOs cannot apply t o MFIs. Perhaps PCNC can
make its services available to assist other certifi cation bodies to be established the
way it obtained the assistance of PAASCU (the certi fication body for Philippine
colleges and university) when it was being formed.
On the part of PCNC, it may want to consider workin g with the SEC to increase
awareness in good governance and accountability amo ng non-profits the way it (SEC)
did for financial institutions. SEC required all b oard members of financial
institutions to undergo a seminar on their duties a nd responsibilities as part of their
compliance requirements. Can PCNC work with SEC to require all non-profit boards
to undergo good governance seminar?

Enforcement and incentives

Award s. A survey of award giving bodies should be done to f ind out if anyone of
those is willing to give special awards of recognit ion for excellence in governance to

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NGOs. Such awards should be encouraged not only for their competitive nature but
also for the public awareness that they create. If a prestigious award-giving body can
be established, over the years this award will crea te a lot of consciousness about
exemplary models of good governance among NGOs.

“Intranet” self-regulatory measures. Donors need to be convinced to encourage
NGO grantees to obtain PCNC certification. So that P CNC certification is not
regarded as an impediment to access donor funds, do nors may want to ask first time
grantees to seek certification before they can acce ss another grant from them in the
future. In addition, donors may also consider prov iding an additional grant to help
small NGOs to obtain assistance to improve their gov ernance system. Such
assistance can be used to prepare them to obtain PC NC certification.

Public information

Information Agencies. The role of an organization such as Guidestar
( ) in the U.S. is very important because of the high
incidence of public giving there. Since there is n o such environment of public giving
in the Philippines, there may not be a need for thi s kind of organization at present.
However, since engaging the public will be a necess ity for NGOs, the effort to
establish a service that provides a wide range of i nformation about NGOs will be
strategic at this time.
Furthermore, one of the most important steps that n eed to be taken to increase NGO
accountability is to increase awareness of the impo rtance of accountability. One way
to do this is to ask SEC to provide information mat erials on accountability measures
to all registered/registering non-profits. PCNC can produce the materials in
cooperation with SEC to cut the bureaucratic time t hat it will take to produce such
materials. It can ask SEC to give a copy to all ap plicants as well as all currently
registered non-profit organizations.
Charity commissions or self-regulatory charity regi sters. Like ratings and public
information agencies, the utility of charity commis sions or registries need to be
further examined at this time. However, the future will have great use for a large
database of information on different types of NGOs in the country to make it easier
for the public to support them.
Complaints and grievance mechanism . As previously noted, care needs to be taken
in setting up such a mechanism at this time given t he fragile state of NGOs in the
country and public reception towards them. Such a system can be initially started by
PCNC for its members as a way of testing its viabili ty. If the system succeeds, it can
be expanded to cover a wider range of NGOs.
Other possible initiatives.

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– Can PCNC create a research unit or encourage an inst itution to establish one
that will continuously identify cutting edge practi ces in NGO accountability,
package these into information materials and dissem inate them broadly to
NGOs and other civil society organizations? It is i mportant to constantly
generate new information that NGOs and CSOs can use in developing
accountability mechanisms to maintain their interes t in this subject and to fuel
– Can PCNC encourage other donors to publish a list of their negligent grantees
like the Whitelist project of CODE-NGO? Such a proj ect would initially be
controversial but could eventually change the behav ior of NGO and CSOs if
they realize that donors do not tolerate such behav ior.

Part of the effort of creating a more proactive e nvironment for NGO
accountability is to dissect the different levels a t which accountability needs to be
promoted, the methods that can be used by NGOs opera ting in these different levels and
incentives and disincentives that can be instituted in this regard. The foregoing
discussion provides a general idea of how this stru cture of incentives and disincentives
may be organized. PCNC needs to decide what role it wants to take in either establishing
such an environment and/or in the way that such an environment will be established.

Whichever option is selected by PCNC, there is a ne ed to conduct an information
campaign to launch this initiative and plan for a s ustaining mechanism to broaden and
deepen awareness on accountability measures among N GOs and CSOs. PCNC needs to a
take a leadership role in this undertaking by worki ng with NGO networks which have
already established systems of promoting discipline among their members as well as
other institutions that have the competence to deve lop the schemes that are necessary to
promote greater accountability among NGOs and to sus tain development work in the

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Annex A –Collection of NGO Codes of Conduct

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Source: Robert Lloyd and Lucy de las Casas, One Wor ld Trust. 2006

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Annex B – The Independent Sector Checklist for Acco

Develop a Culture of Accountability and Transparenc y
Adopt a Statement of Values and Code of Ethics
Adopt a Conflict of Interest Policy
Ensure that the Board of Directors Understands and Can Fulfill Its Financial
Conduct Independent Financial Reviews, Particularly Audits
Ensure the Accuracy of and Make Public Your Organiz ation’s Form 990
Be Transparent
Establish and Support a Policy on Reporting Suspect ed Misconduct or
Malfeasance (“Whistleblower Protection Policy”)
Remain Current with the Law
The complete accountability Checklist can be downlo aded at