The International Journal
of Not-for-Profit Law

Volume 3, Issue 2, December 2000

Regional

The Role of Civil Society in Promoting Democracy in East Asia

By Barnett F. Baron
Executive Vice President, The Asia Foundation

This speech was originally published on the Asia Foundation website

October 27 – 28, 2000
Bangkok, Thailand

The Institutional Context for Civil Society Development in Asia

It is a pleasure for me to be here with you this morning and to be able to take part in this important meeting. The Asia Foundation is very pleased to have been able to assist in the preparation of the meeting with our partners — the National Endowment for Democracy, the Sejong Institute, and the King Prajdhipok’s Institute.

The Asia Foundation has supported the growth and development of civil society in many countries, over many years, in many ways. This morning I would like to discuss one of our activities, our participation in the Asia Pacific Philanthropy Consortium, because its work is particularly relevant to our topic today.

The Asia Pacific Philanthropy Consortium — APPC — is an informal network of like-minded organizations dedicated to promoting the flow and effectiveness of philanthropy in the region. We began formally at the end of 1994, after three earlier research conferences that took place in Bangkok (1989)1, Seoul (1993)2 , and Osaka (1994)3. The Consortium is not a membership organization, but an informal network of grantmaking philanthropic institutions and organizations that support the growth and development of Asian grantmaking philanthropies.

We started as a six-institution partnership: The Asia Foundation, Japan Center for International Exchange, Philippine Business for Social Progress, the Development Support Consortium (Thailand), the Institute for East-West Studies at Yonsei University in Korea, and the Myer Foundation in Australia. The Consortium is now governed by a seventeen-person Executive Committee consisting of members from Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Korea, Philippines, Taiwan, Thailand, and the United States. The Consortium has received funding for its programs entirely from private and corporate foundations in Australia, Japan, Korea, and the United States.

APPC’s mission is to increase the quality and quantity of philanthropy within and to Asia by strengthening the institutional infrastructure and improving the operating environment for philanthropy and the nonprofit sector.

The Consortium’s efforts have focused primarily at the level of policy development, human resource development, and increasing public understanding of the potential role of philanthropy in addressing significant national problems. More specifically, we have worked in four areas.

• improving the legal and regulatory framework for the nonprofit sector
• increasing public understanding and support for the role of the nonprofit sector in addressing issues of public policy concern;
• research and training aimed at mobilizing financial resources for the nonprofit sector; and
• networking and organizational capacity building.

In the next few minutes, I would like to briefly focus on three institutional challenges facing civil society in East Asia, using the Consortium’s problem framework. I will mention legal and regulatory issues, the need to increase public awareness and understanding of the legitimate role of the nonprofit sector, and the problem of sustainable funding.

Legal and Regulatory Issues

In 1997-98, the Consortium conducted a comparative nonprofit law project, covering ten East Asian countries, that resulted in the publication of a book, Philanthropy and Law in Asia, in January 19994. Let me highlight some of the main findings.

• Nonprofit law is incomplete and still evolving in the region. In a few countries, the absence of explicit law provides some political space for the sector, but more frequently, in the dominant civil law tradition of East Asia, the absence of explicit law creates a legal limbo that makes it difficult for nonprofits to formally organize, to raise money, or to advocate on public policy issues.
• In addition, nonprofit law is evolving out of a national security context rather than a civil liberties context. In other words, existing laws and regulations throughout the region reflect the security concerns of former colonial regimes, the social control orientation of various types of authoritarian regimes, and the historical tradition in East Asia of state dominance over the economy and society. It is generally much easier throughout the region to register and operate a “foundation,” which is a collection of assets, than it is to register an “association,” which is a collection of people. And it is also generally the case that nonprofit organizations throughout the region are more heavily regulated than commercial firms.
• Where laws and regulations do exist, they are often vague, inconsistent, and are administered within multiple overlapping jurisdictions. Often, several different ministries will have the authority to register and supervise nonprofit organizations. There may be a central ministry, such as a Home Ministry, a Ministry of the Interior, a Ministry of Civil Affairs, or a National Cultural Commission, that exercises general oversight of nonprofits. But there are usually other ministries that also have a role in the registration and supervision of nonprofits, depending on their field of activity (such as health, human welfare, education, religion, the environment, etc). And sometimes, there may be a third ministry involved — a central bank, or a Ministry of Finance. Each of these ministries may impose different rules and requirements — which often contradict each other. The net result is that throughout the region, the registration and supervision of nonprofit organizations is characterized by enormous scope for bureaucratic discretion and unpredictability. Again, sometimes this means that nonprofits have some room to maneuver. In most cases, however, it makes life for nonprofits difficult and uncertain.
• The tax treatment of nonprofits also varies within the region. In most cases, formal incorporation and registration of a nonprofit automatically provides tax exemption. That is, the nonprofit does not have to pay taxes on its assets. But in most cases, the process of obtaining tax deductibility for donors is much more complicated and restrictive. That is, while the nonprofit may not have to pay taxes itself, people who contribute money to it may not be able to deduct their contribution from their taxes, and we know that, generally speaking, tax deductibility encourages charitable donations. In Japan for example, the law was recently changed to make it much easier to incorporate and register NPOs, but the Diet refused to consider granting tax deductibility. That debate was put off for three years, and is the central policy concern of Japanese NPOs right now.
• Capital accumulation is another area of tight government control — not usually through formal laws and regulations, but more often through what the Japanese call “administrative guidance,” the close oversight and advice provided by bureaucrats in the ministries to which nonprofits are responsible. Out of a misguided sense of protecting NPO assets, foundations and other NPOs in many counties are prohibited from investing their assets in equities or commercial paper. They are required to keep their assets in “secure” local currency savings accounts or government bonds. In practice, this means that many endowments earn very low rates of return and some Japanese foundations, for example, have actually been earning negative rates of return on their endowments.
• Most Asian NPOs have very weak internal governance structures. Their Boards of Directors are often just prominent individuals who may lend their names but play a very limited role in setting policies for the organization, deciding on programs or new directions, or raising funds. That is because with close government supervision, there is little need for internal governance. Over time, however, unless Asian NPOs can develop stronger, more autonomous, and more effective internal governance structures, they will remain at the mercy of two powerful forces: the personality of their original charismatic founder, and the policy needs of intrusive governments.
• Finally, throughout the region, governments retain the right to dissolve NPOs for vague and politically-determined reasons, such as “engaging in acts that harm the public interest” (Korea); “engaging in activities detrimental to the national interest” (China); for “operating against the interests of the state” (Vietnam); “for being managed in a manner contrary to public order, good morals, or the security of the state” (Thailand); or “being used for purposes prejudicial to public peace, welfare, or good order” (Singapore).

The Need to Broaden Public Awareness and Understanding of the Nonprofit Sector

Private foundations and private wealth have traditionally played important catalytic roles in public policy debates in the United States. In most of East Asia, however, popular views of the relative roles of the “public” and “private” sectors — and their relationship — differ significantly from the United States. While many religious, ethnic, or regional organizations provide specialized educational, medical, or social welfare services to their own members, and private schools and hospitals are increasingly common in East and Southeast Asia, the concept of privately funded and privately managed public interest organizations whose scope extends beyond limited sectarian or functional mandates, is neither well-understood nor widely appreciated. The legitimate scope for “private” participation in resolving social issues or in the formulation of public policy is generally perceived to be rather limited, while the State is expected to provide all basic services. Indeed, “private” nongovernmental organizations are often greeted with suspicion as to their motives and intentions and, as we have seen, are rarely eligible for the favorable legal and tax treatment that nonprofit organizations receive as a matter of course in much of the West. Government bureaucrats, in particular, almost invariably believe that they alone have the right to define and protect the “public interest.” Bureaucrats usually reject the notion that NGOs have the social legitimacy or the political right to participate in the making of public policy or the implementation of public programs.

Moreover, there have been many instances of government-initiated philanthropy in East Asia or where nonprofits have been used for fraudulent or unsavory political or business purposes. The fact that the specific charges brought against former President Suharto, for example, were actually based on his alleged misuse of funds raised by so-called charitable foundations that he and his cronies had created only increases public scepticism about entities created by powerful people that claim to be charitable and oriented to the public good.

NGOs throughout the region need to devote much more effort to public education and constituency building, not just in their particular area of interest, but to create a sense of a nonprofit sector as a whole, a sector that has legitimate public rights and interests.

The Problem of Sustainable Funding and the Myth of Voluntarism in the West

Sustainable funding for the nonprofit sector is the third major challenge I want to mention, in Asia as elsewhere. Our thinking about this is hindered by what Lester Salamon calls the “dysfunctional myth of voluntarism,” the false assumption that nonprofits in the United States and Europe are primarily funded by charitable contributions and are therefore able to operate independently of government control.

Despite the promising development in several Asian countries in recent years of new sources of funding for the nonprofit sector from local foundations, corporations, and the general public, it is pretty clear that for the next few years, at least, resource mobilization for Asian nonprofit organizations will continue to depend heavily on foreign sources, including official development assistance agencies, foundations, corporations, and various international nonprofit organizations.

But the longer-term challenge to Asian nonprofit organizations will be to develop alternative sources of sustainable local income. This is not likely to come primarily from local philanthropy — just as it doesn’t in the United States or Western Europe. Despite the enormous scale of private charitable giving in the United States, estimated at more than $175 billion from individuals, foundations, and corporations in 1999, American nonprofit organizations in fields such as health, education, social welfare, poverty alleviation, housing, environmental protection, and employment-creation actually obtain a surprisingly small percentage of their total income from private philanthropic sources — as little as ten to fifteen percent. Slightly more than half their total income comes from service charges, sales, dues, fees, and other forms of earned income, while the rest — around 40 percent — comes from government grants and contracts. In addition, the United States and other Western governments indirectly contribute very substantial financial resources through the provision of tax-exemption to nonprofit organizations and tax-deductibility to their donors.

In fact, nonprofit organizations throughout the world raise revenue from only four basic sources:

• earned income, including service fees, sales, and investment income;
• philanthropic contributions from domestic individuals, foundations, and corporations;
• domestic government subsidies and payments, directly in the form of grants and contracts and indirectly through tax privileges; and
• foreign aid, both private and official.

The mix of resources varies over time and among countries, but the list is not a long one. Foreign assistance for East Asia, both public and private is declining. From the perspective of long-term resource mobilization, then, Asian and other nonprofit organizations will ultimately depend for their survival not on their foreign friends and donors, but on the quality of the relationships they are able to establish with public opinion in their own countries and with their own governments, and only secondarily and for the short-term on their relationships with international public and private donor agencies.

Ladies and gentlemen, thank you for your attention. I have used my limited time to suggest three contextual issues for discussion:

• legal and regulatory frameworks for civil society that are vague, incomplete, inconsistent, and generally restrictive
• public opinion that generally believes that the “public interest” and the right to formulate public policy lies in the domain of the State rather than civil society; and
• civil society’s current dependence on foreign funding and the need to identify new and innovative ways to generate sustained local funding in support of civil society’s objectives.

I hope that we will be able to consider these issues more carefully over the course of the next two days.

1Barnett F. Baron (ed), Philanthropy and the Dynamics of Change in East and Southeast Asia (New York: East Asian Institute, Columbia University, 1991).
2 Ku-Hyun Jung (ed), Evolving Patterns of Asia Pacific Philanthropy (Seoul: Institute of East and West Studies, Yonsei University, 1994).
3 Tadashi Yamamoto (ed), Emerging Civil Society in the Asia Pacific Region (Singapore: Institute of Southeast Asian Studies, 1995).
4 Thomas Silk (ed), Philanthropy and Law in Asia: Nonprofit Law in Ten East Asia Societies (San Francisco: Jossey Bass, 1999).

Australia

Charities Inquiry

By Dr. Myles McGregor-Lowndes, Queensland University of Technology

On the 18 September 2000 the Australian Prime Minister finally announced the terms of reference of the Inquiry into Definitional Issues relating to Charitable, Religious and Community Service Not-for-Profit Organisations. It was a long time coming as on 8 December 1999 the Treasurer wrote to Senator John Woodley confirming agreement on Charities Consultative Committee Report Recommendations and noting that:

“Finally, and on a more general note, I note that there are various kinds of charities according to various definitions which lead to the various kinds of different treatment under income tax, WST and financial taxes. The definitions have raised huge legal disputes over past decades.

Given that the common law definition of charity is based on a legal concept originating in the sixteenth century, I consider there may be some merit in examining the definitional issues. You have raised the possibility of looking at this through the Law Reform Commission or some other mechanism. While I do not wish to be definite at this stage, I would like to further discuss the possibility of some type of inquiry to examine definitional issues outside the context of the current issue and I propose therefore that we return to this discussion next year.”

The Australian Democrats are a minor political party in the Australian Upper House that control the balance of power. The introduction of the new Goods and Services Tax (a general value added tax) had shown to them that the definitions of nonprofit organisations used for GST rating were less than ideal. As part of the deal to pass the legislation through the Upper House of Parliament they negotiated an inquiry into the definition of “charity”. On the 13 April 2000 the Treasurer wrote to Senator Meg Lees leader of the Australian Democrats and noted that:

“In my letter to Senator Woodley of 8 December1999, I raised the prospect o some type of inquiry into definitional issues relating to charities, churches and not-for-profit organisations. I now propose we proceed with an independent inquiry with the objective that it be completed by the end of this year. I would like to further discuss with you and Senator Woodley who should conduct the inquiry along with its terms of reference.”

The Prime Minister, The Hon John Howard address to the Prime Minister’s Community Business Partnerships Awards at Parliament House Canberra on 26 June, 2000 included the following remarks:

“Charities churches and not-for-profit organisations are of course pivotal members of the social coalition. They are playing a major and running role under the Government’s business and community partnerships policy. And we always need to ensure that the legislative and administrative framework in which they operate are appropriate to the economic and social environment of modern times. Yet as many of you involved in those organisations will know, the common law definition of charity is based on a legal concept which originated in 1601. As a result, there are currently a number of definitions of a charity and this often gives rise to legal disputes. And therefore the Government has announced an independent inquiry into definitional issues relating to charities, churches and not-for-profit organisations to be completed by the end of the year. The terms of reference of the inquiry, let me assure you – it has no goal other than a simpler, clearer legal definition are being developed in consultation with the Australian Democrats and the Community Business Partnership.”

There have been many inquiries into the definition of charity in other jurisdictions. The last serious consideration in an Australian context was the Industry Commission Inquiry into Charitable Organisations in Australia in 1995 that made some recommendations in respect of charities that delivered social welfare services. None of its recommendations in relation to the definition of charity were accepted by the Government of the day.

The Charity Inquiry established by the Prime Minister has an issues paper and web site. The site is https://www.cdi.gov.au A retired judge and two other lawyers form the Committee to prepare the Report. Submissions were due by the 31 December, 2000 but extended to 19 January, 2001 after requests from the sector. Submissions are being posted to the web site and many comment about the length of time for submissions, the narrow terms of reference, the administration of the taxation officials of taxation definitions and calls for the consideration of an English style Charity Commission. The Report is due to be handed to Government in March 2001.

The Inquiry, if it keeps to its timeline, will be amongst the shortest charity inquiry in the English speaking world. The Brougham Charity Commission had its beginnings in 1816 and continued until 1835 costing 208,000 pounds and producing a forty volume report on 30,000 English charities. The Charity Commission of England and Wales owes its existence to this inquiry. The Nathan Report on the law and practice of charitable trusts ran from January 1950 to December 1952 and the watershed American Inquiry, the Filer Commission took a full two years.

The Inquiry in its Issues Paper stresses that it is focussing on “definitions”, noting that “the Inquiry is not seeking submissions, and will not be providing comment, on issues related to the taxation or other legislative and administrative treatment of charitable, religious or community service not-for-profit organisations.” However, definitions are not ends in themselves and only serve to draw boundary lines for the purpose of the taxation, legislation and administrative treatment of organisations or their activities. A consideration of such issues will be difficult to avoid in any sensible review.

The last major inquiry in Canada was the Ontario Law Reform Commission’s Report on the Law of Charities in 1996. Days after that Report was released, the Commission reached the end of its term. The Report was published on the Internet and a only a few hard copies were published and filed in Canadian Law Faculty Libraries. About a year later, the Commission’s web site was discontinued and the Internet published report disappeared as well. The Program on Nonprofit at Queensland University of Technology has been able to secure the agreement of the Ontario Minister of Consumer and Commercial Relations to publish the material at no charge provided the source of the material was acknowledged. The Report is now available from the PONC website for viewing ( https://www.qut.edu.au/bus/ponc ) apart from some graphics that could not be found in electronic format, but will eventually be reproduced and inserted.

The QUT Program on Nonprofit Corporations has some materials on the inquiry including links to other charity sites at https://www.qut.edu.au/bus/ponc and a special mailing list for charity inquiry material. You can subscribe yourself to the list by sending an e mail message to mailserv@qut.edu.au , turn off your automatic signature, leave the title, subject or Re: blank and in the message type <subscribe charity> and on the next line type <exit>. If you have difficulties send an email requesting subscription to ponc@qut.edu.au

The Program has also collated a select bibliography of writings of the definition, law and regulation of charities. The bibliography contains about 250 references to books, government reports and inquiries and journal articles from a wide variety of sources and jurisdictions. The references may assist organisations that wish to respond through a submission to the Inquiry into Definitional Issues relating to Charitable, Religious and Community Service Not-for-Profit Organisations.

The address of the Inquiry is:

Secretariat to the inquiry into the Definition of Charities and Related Organisations, C/- The Treasury, Parkes Place Parkes ACT 2600 telephone (02) 6263 4346 Fascimile (02) 6263 4471 Email: submissions@cdi.gov.au

Web site: https://www.cdi.gov.au

the Philippines

The Philippines Council for NGO Certification

By Fely I. Soledad

Civil Society and NGOs in the Philippines

As early as the Spanish colonization,“proto-NGOs” already existed in the form of cooperatives, local reactions to colonialism, and the trade union movement. Then the Americans came and introduced some welfare agencies. A number of individuals and families contributed to the relief, welfare, and reconstruction efforts. Religious and civic organizations then began to be recognized.

The Martial law period (1972-1986) gave birth to more new issues and concerns, and therefore new arenas of struggle. By this time, the generic label NGO was already being used in international circles. New NGOs were set up by the mid-1970s, dealing with social development issues on a largely community-based level. The NGO community was relatively small then, and although there were politically independent NGOs, much of the action during this period was in conjunction with ideological forces. As such, NGOs were largely labeled as belonging to one force or another, further dividing the already factious groups. Hence, the felt need for networking.

The welfare organizations already had a network from the 1950s. The Council of Welfare Foundations of the Philippines, Inc. (CWAFPI) was the forerunner for the National Council for Social Development Foundations (NCSD). But it was in the ‘70s that the Philippine Business for Social Progress (PBSP), the Association of Foundations (AF), the National Secretariat for Social Action (NASSA), the National Council of Churches in the Philippines (NCCP), the Ecumenical Center for Development (ECD), the National Association of Training Centers of Cooperatives (NATCCO), and the Philippine Partnership for the Development of Human Resources in Rural Areas (PHILDHRRA) were formed.

As the Marcos dictatorship earned a notorious reputation even abroad and civil society began to awaken, more international support flowed into the country. The regime responded by becoming more repressive and violent, but it only led to the growth of the NGO community and the downfall of the dictator.

The assassination of Benigno Aquino, Jr. in 1983 and the assumption of power by his widow Corazon in 1986 were to herald the increase in number of NGOs in the Philippines. Buoyed by their role in the success of the EDSA People Power, encouraged by the available democratic space, enhanced by support from international donors which preferred to work with NGOs rather than with government agencies, and now formally recognized by the government via the 1987 Constitution and the Local Government Code of 1992 which requires the inclusion of NGOs in the decision-making process at the local level, NGOs have proliferated beyond anyone’s accurate reckoning. The Securities and Exchange Commission (SEC) estimates that there are about 60,000 NGOs (the term also covers the so-called non-stock, non-profit corporations under the category under which NGOs register with the SEC), but other estimates cite more than a hundred thousand, including those which are not registered. The Philippines is now said to have the most active civil society in Asia. (From David, Karina C., “Intra-Civil Society Relations: A Synoptic Paper.”)

The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) – Comprehensive Tax Reform Program (CTRP)

The rapid expansion in the number of NGOs has given rise to concerns about the ability of the government to regulate all these organizations and to ensure that resources channeled to them are actually being used for their declared goals and objectives. These concerns are made significant by the fact that Philippine NGOs enjoy tax incentives under the law, such as tax exemption and donee institution status, which allows local donations to be deducted from the donors’ taxable income and exempted from donors’ tax.

In 1995, the DOF came under increasing pressure to increase revenues to the central government. The DOF and the BIR, therefore, set up a joint task force to reform the tax system. The task force proposed a sweeping plan to change the system to address the problem of revenue collection. The proposal, known as the CTRP, would have eliminated the deductibility of donations to NGOs as one means of increasing revenues for the state. If passed, it would have only allowed the deductibility of donations to government relief and rehabilitation projects from the donors’ taxable income. Some leaders of top corporate foundations and NGO networks immediately realized that this would have an enormous detrimental effect on NGOs dependent on local donations. They then expressed their concern to DOF, which, in turn, challenged the NGO representatives to create a self-regulatory body to certify non-stock, non-profit organizations for donee institution status, allowing them to receive tax-deductible and tax-exempt contributions under the new tax law.

The Philippine Council for NGO Certification (PCNC)

Rising to the challenge, six of the country’s largest national NGO networks—the Association of Foundations (AF), the League of Corporate Foundations (LCF), The Philippine Business for Social Progress (PBSP), the Bishops-Businessmen’s Conference for Human Development (BBC), the Caucus of Development NGO Networks (CODE-NGO) and the National Council for Social Development Foundations (NCSD)—organized the Philippine Council for NGO Certification, or PCNC.

PCNC signed a Memorandum of Agreement with DOF under which it was given the authority to certify NGOs applying for donee institution status based on specific standards. The certification would then serve as a basis for the BIR to grant donee institution status. PCNC was registered in 1997 with the Securities and Exchange Commission as a private, non-stock, non-profit corporation and was publicly launched on February 5, 1999.

It was envisioned that this certification process would encourage local donations to NGOs so significant at this time when resources channeled to social development projects, particularly from foreign donors, are diminishing. However, PCNC not only exist to pursue tax incentives for donors to NGOs. More importantly, it has committed itself to promoting professionalism, accountability and transparency within the NGO and non-profit sector in the Philippines. In effect, a PCNC certification would mean a “seal of good housekeeping,” which hopefully shall also help identify NGOs “of good standing” that funding agencies and partners, both local and foreign, may consider in their choice of which organizations to support. The evaluation process itself is deemed to be beneficial as it provides the applicant NGO the opportunity to assess and improve its own status as an organization and address organizational concerns.

PCNC, the Organization

PCNC is governed by an eleven-member Board of Directors composed of representatives of the various NGO networks, members elected from among the certified organizations, and a BIR representative. The primary function of the Board, which meets once a month, is to examine the evaluators’ findings and make the final decision on the certification of applicant NGOs.

PCNC’s operation is handled by a Secretariat headed by an Executive Director who is presently assisted by seven (7) staff members. The PCNC Secretariat serves as the operational hub and coordinates the activities involved in the whole evaluation/certification process.

PCNC has received start-up funds from the Ford Foundation, support for its public awareness campaign and evaluators’ training from the US Agency for International Development (USAID) and a grant from the Sasakawa Peace Foundation for its research/documentation project. Its operating expenses will eventually be funded by application fees and membership dues.

Criteria for Evaluation

The initial procedures of PCNC were largely based on those of the Philippine Accrediting Association of Schools, Colleges, and Universities (PAASCU), especially in the crafting of the certification process as well as in the drafting of the evaluation criteria.

PCNC has formulated three rating sheets — one is for organizations operating for two or more years; another is for newly established organizations; and the third is for networks.

The evaluation covers six areas, namely: Vision, Mission, and Goals; Governance; Administration; Program Operations; Financial Management; and Networking. Each area is composed of a number of indicators which are rated on a scale of 5 to 1 with 5 as the highest and 1 as the lowest. Extra parameters may be added or deleted when necessary, depending on the organization being evaluated.

Of the six areas, Financial Management carries the most weight as it is the best source of assurance for donors that the recipient organization is accountable and transparent and that donations are utilized according to the organization’s declared goals and objectives. Among the important standards in financial management are the presence of a financial plan, check and balance mechanisms, and compliance with BIR requirements.

The next two areas that are given more significance are Administration and Program Operations. Administration includes policies and procedures that pertain to lines of authority and accountability between and among various units of the organization while Program Operations includes program/project development, implementation, monitoring, and evaluation.

Since its public launching in February 1999, PCNC has trained 750 top NGO officers as volunteer evaluators who are deployed in teams of three to visit and evaluate applicant NGOs. As of December this year, eighty-five organizations have been evaluated; thirty-five certified for three years; twenty certified for five years; twenty certified for one year; three with deferred certification; and seven not granted certification.

Reflections on PCNC’s Experience

After almost two years of actual operation, the PCNC Board recently held a reflection session to ponder the role of PCNC within the wider context of development efforts in the Philippines. Following are some of their thoughts on PCNC’s role:

PCNC has, in fact, already begun to play a critical role in defining the NGO sector, and in defining the very nature of development endeavors in the country. Not only has PCNC begun to influence the shape of NGOs to come—it has also begun to play a critical role in determining government and indeed social policy on what kind of NGO services ultimately redound to the “public good” (and should, therefore, be supported with tax incentives). As such, PCNC’s work will necessarily break ground, and —for better or for worse—will necessarily create a new culture and a new climate for development work. This is an inescapable dimension of the formidable challenge faced by those at PCNC’s helm.

Another dimension of the challenge that confronts PCNC is balancing the demands of its various “publics” and stakeholders. There is, on the one hand, the responsibility to the donor community—the responsibility of helping to ensure that donor resources are utilized responsibly, and that NGOs meet certain standards of professionalism, accountability and transparency.

There is also the responsibility to government, which deliberately opts to forfeit revenues that it might otherwise earn from taxes, in exchange for the services that donee institutions are able to provide the citizenry. There is the responsibility to ensure that fraudulent activities are rooted out and that the benefits of tax incentives accrue to institutions that perform genuine public services. (This was, in fact, the context in which PCNC was first conceptualized.)

There is also the responsibility to the development community, particularly to the so-called “smaller” NGOs. Such NGOs may lack the resources and expertise to cope with certification standards but may possess a commitment to development work that makes them as deserving of support as their larger, more established counterparts. In the process of certification, therefore, PCNC must learn the difficult art of “judging with compassion,” of supporting and assisting NGOs even as it evaluates them.

Then there is also the responsibility to the beneficiaries of NGOs, who demand and deserve a certain level of competence from those who have taken it upon themselves to provide various forms of assistance. There is, finally, the responsibility to continually cultivate— within the wider community of the general public–support for development efforts in the country.