The International Journal
of Not-for-Profit Law

Volume 2, Issue 3, March 2000

General

Comparative Study of NGO/Government Partnerships

Introduction

The definition of the term partnership tends to be controversial. The views on what constitutes a partnership range from any type of co-operation or initiative aiming at co-operation between at least two parties to the highest level of co-operation where two parties enter an agreement as equal partners. Partnerships can be concluded between any sectors of the society including NGOs, governments, businesses. “Partnering with civil society” has become a common theme among multilateral organizations as a vehicle for development policies. For example, it is one of the central themes discussed in the Development Forum sponsored by the World Bank.[1]

Co-operation with NGOs is also discussed at the European Union level. Although provisions specific to cooperation with NGOs are missing from the Amsterdam treaty, the declaration n° 38 annexed to the treaty states that it “recognizes the important contribution made by voluntary service activities to developing social solidarity. The Community will encourage the European dimension of voluntary organizations with particular emphasis on the exchange of information and experiences as well as on the participation of the young and the elderly in voluntary work.” This is an elaboration of the declaration 323, which was annexed to the Maastricht treaty defining “charitable associations and foundations as institutions responsible for welfare establishments and services”.

For the purpose of this paper, we have chosen to present two types of co-operation between NGOs and governments, whether at the local or national level. Government consultations with NGOs are essential, even if they do not always lead to a direct financing of NGOs are essential. They lead to the understanding that both sectors complement each other in the functioning of the society, and government feels at ease in contracting NGOs to provide services they traditionally provide. Finally, the adoption of good mechanisms to finance NGOs is essential to ensure a positive co-operation between the two sectors.

1. Consulting Between NGOs and the Government

Non governmental organizations (NGOs), and in particular grass root organizations have a comprehensive understanding of problems faced by populations because of their direct contact with the people. Government institutions are more difficult to approach by individuals first for bureaucratic reasons and second because they tend not to be located in remote areas and do not directly confront problems that can be faced in these areas. For this reason, the expertise of NGOs can be of great value for the development of government policies. Consultations between NGOs and government can takes informal or more formal forms depending on the goals the parties intends to achieve.

1.1. Informal Level

This approach tends to take the form of conferences favoring dialogue. It is often used to develop a better cooperation between the parties when they wish to develop a policy to tackle a problem confronted by the society. Such are the cases of the European Policy Forums and the Regional Environmental Center for Central and Eastern Europe.

1.1.1. European Policy Forums

These Forums have been set up to promote “social economy” in Europe. Participants in these forums include NGOs, social partners, employers, member state governments, regional and local authorities and research institutes from the E.U. countries. The Platform of European Social NGOs has been the main partner of the Directorate General for Employment and Social Affairs (DG V) of the European Commission (EC) in developing and organizing these forums.[2] The first of these forums took place in March 1996 and the second in June 1998. Padraig Flynn, member of the EC with responsibility for employment and social affairs at the time, opened the second forum stating: “We are here today because the Union is committed to supporting the capacity of NGOs to be a prime interlocutor with the systems and structures which deliver our ability to enhance the basic rights of the citizens of Europe.”[3] At the latest consultation between the DG V and the Platform of European NGOs in June 2,1999, important issues such as a European Bill of Rights, the developing relations with NGOs in Central and Eastern Europe and North America and grant management issues were discussed.[4]

1.1.2. The Regional Environmental Center for Central and Eastern Europe

The Center has promoted Environment Action Plans in Bulgaria, the Czech Republic, Hungary, Poland, and Slovakia. The actors involved in the various task forces in each country include in general: central governments, local governments, NGOs, local businesses and industries, scientific community, financial institutions and environmental funds, residents, and the media. The task forces evaluate the environmental issues and try to find a solution to them. They can take place at the local or national level.[5] Currently, in Bulgaria the purpose of Environment Action Plan is to establish partnership mechanisms between NGOs, local governments and businesses in order to solve environment al problems. Three municipalities, the Ministry of Environment, and two NGOs are involved in the program.[6]

1.2. Semi-Informal Level

Certain circumstances might encourage NGOs and governments to intensify their dialogue. In particular, the specific knowledge of an NGO, such as the expertise of a think tank, or the community dynamism NGOs can provide and which can be used by governments in times of social crisis, can incite discussion and even cooperation.

1.2.1. NGOs’ Expertise Useful for Government Decision Making

A government can decide that the knowledge and the presence of NGOs are essential in the exercise of its policies in certain domains. For example, the French government consults NGOs on a regular basis regarding its cooperation policy with developing nations and has established over the years a variety of mechanisms to promote dialogue with NGOs on these issues. Since 1990, NGOs participate and contribute to Joint Commissions where issues of bilateral cooperation between France and developing countries are addressed. These joint commissions are bilateral official reunions between high officials of the French government and of the government of the concerned country.[7] Further, NGOs are also consulted on issues regarding France’s cooperation policy towards developing countries in such bodies as the Cooperation Development Commission,[8] established in 1984, attached to both the offices of the ministers of Cooperation and of Foreign Affairs and the International Cooperation High Council[9] attached to the Prime Minister’s office created in 1999. Both are composed of representatives of NGOs and of the government.

1.2.2. NGOs Capacity to Involve the Community

NGOs have the capacity to mobilize the dynamism of populations at the local level and therefore ensure a better involvement of the community to cope with a crisis situation. For example, during the Bulgarian economic crisis of 1996/97, some local NGOs voluntarily assisted the local governments in coping with the crisis. They started participating in the Municipal Civic Councils called by the Mayors in order to develop action in response to the crisis.[10]

1.3. Formal level

The highest level of consultancy between NGOs and government is the “participatory process”. This process takes place mainly at the local level where NGOs and local communities are involved in local decision making. It is a mechanism that allows communities to participate directly in democratization process. This approach to democratization is currently being experienced or in project in many Latin American countries. Provided below are examples from Bolivia and Brazil, but this type of experience can also be found elsewhere such as in the city of Tigu Mures in Romania where NGOs are invited to discuss the local budget and also help develop city priorities.[11]

• The Bolivian Law on popular participation[12] of April 20, 1994 targets government decentralization. Municipalities are given greater responsibilities in educational, health, sports, and local road matters. The law “acknowledges, promotes and consolidates the process of popular participation incorporating the indigenous and rural communities and urban neighborhoods in the juridical, political, and economic life of the country”. In order to achieve the above statement, a new type of legal entity is created: Grassroots Territorial Organizations (OTB) representative of the population of a given territorial unit. Only one OTB can be registered per territorial unit. These organizations are established by local populations[13] with the purpose of proposing, requesting, controlling and supervising public services rendered in the area of health, education, sports, basic sanitation, micro-irrigation, local roads, and urban and rural development. All services rendered by the municipality, the executing institutions or the regional corporations have to take into consideration the priorities identified by OTBs (or eventually by the associations of a micro-region).[14] Each OTB elects a representative to an oversight committee for the city. This committee verifies that the municipal resources are used in an equitable manner, controls the finances of municipal expenses and discloses publicly their reports. The committee reports irregularities to the regional executive power[15] which requires that the error be corrected or will refer the matter to the Senate for its sanction. Further, it is possible for OTBs to consult and coordinate their activities with other institutions of civil society.[16]
• The city of Porto Alegre in Brazil goes even further in its “participatory process” with local communities and neighborhood associations. A Council on Participation Budget is elected on an annual basis. Among the 46 members of the council:
  • 42 are elected by local communities or neighborhood associations.
  • 2 represent and are appointed respectively by the federation of neighborhood associations and the trade union of the city employees.
  • 2 represent and are appointed by the executive power. These two members do not have voting power.

This council gives its opinion and can modify decisions related to the city finances such as the proposed annual budget, the investment plans, the tax policy, and the use of extra-budgetary resources. The resolutions from the council are transmitted to the executive power, which can adopt or veto them. Two thirds at least of the votes of the council are necessary in order to override the executive veto power.

Several draft laws on cooperation between government and NGOs currently include provisions allowing consulting and participatory process between the two parties. The Polish draft law on Co-operation of Public Administration Authorities with Non-Governmental Organizations[17] provides in article 17 for the creation of a Joint Commission composed of government and local government representatives as well as representatives of public utility (public benefit) organizations. The opinion of this Joint commission would be consulted regarding issues related to NGOs such as drafts, normative acts, and state policy budget allocations for social partnerships. However, the draft stipulates that three years after the entry into force of the law, the “Joint Commission may operate without the representatives of public utility organizations” (art. 49). The draft law on Social Order[18] of the Russian Federation provides that the goals of the social program are to be discussed between the various levels of government and all interested entities and organizations. The goals of the social program are then established by the government.

“Participation process” frequently leads to contracting of NGOs for the provision of social services. Such is the case of the Bolivian example. Implementing regulation[19] to the law provides that municipalities enter into partnership contracts with NGOs and private institutions for the delivering of municipal services upon the proposition of the oversight committee.

2. Delivery of Public Services Performed by NGOs

Governments around the world tend to have resorted to NGOs for the provision of public services. This can be achieved through a grant or of a contract agreement between the State and the NGO.

It has been in practice in the United States for a very long time, but has been adopted more recently in European countries that tend to be more centralized. Claire Ulmann in her book The Welfare State’s Other Crisis, explains how the American and French societies differ in their understanding of the role of the State. The American people have always demonstrated mistrust of their government and believe that citizen activism contributes to public good. However, for the French, only the public sector has the capacity and duty to serve the public good, and therefore demonstrates suspicion towards private activities even of charitable nature.[20] However, many European countries have been confronted these past decades with rising unemployment, marginalized societies for which the existing government structures did not seem adapted to fight these new social tensions. Claire Ulmann calls it the “crisis of State capacity”, which led the French State, in this case, to use NGOs to provide new type of services, because of their flexibility and the fact that they are more adapted to solve individual problems.[21]

Governments contract NGOs for implementing both domestic social policies and also their development policies with developing countries.

2.1. NGOs and Development Policies

Governments can choose to finance the activities of an organization and also to promote voluntarism and skilled labor of these organizations. France and Luxembourg for example employ both types of support towards development NGOs.

• The French Ministry of Foreign Affairs co-finances NGOs in order to pursue its public policies, the promotion of French Culture, to pursue France’s development policy, its image policy or for specific projects or humanitarian action. The ministry supports federation of NGOs in order to promote their participation in reunions organized by International Organizations.[22] Further, the ministry contributes to the financial expenses related to social protection of volunteers of accredited associations. This assistance is coordinated by a joint commission on volunteerism.[23]
• The Law on Cooperation to Development[24] of the Grand Duchy of Luxembourg provides that accredited NGOs are eligible for co-financing, annual global donations, subsidies for the promotion of cooperation, and cooperation agreements lasting several years. It also allows the government to promote the use of experts, skilled labor by NGOs. Cooperants, who have passed a two-year contract with an NGO for work in a developing country, can be accredited by the state. In this case, the following expenses will be at the charge of the state: a three month training prior to the mission, his (and his family eventually) moving expenses, round trip ticket to the destination country and round trip ticket home once a year. His social contributions incurred by the organization will also be reimbursed by the State. In addition, representatives and experts of NGOs who carry a professional activity outside the NGO are entitled six days per year to take leave from their professional office in order to carry out their expertise regarding programs addressed to population of developing countries with the NGO. This period is not to be imputed to the annual legal vacation time the person is entitled to and his salary expenses for the period will be reimbursed by the state.

2.2. Domestic Social Policies

Contracting of NGOs for the provision of social services by governments can be the result of:

• States who traditionally contract NGOs for the provision of social services;
• “Crisis of State capacity”, as described earlier;
• Economic crisis leading states to privatize social services. Contracting NGOs to provide such type of services is cheaper for the state than providing them through the bureaucratic apparatus of the State. It therefore enables the State to cut budget expenses.

2.2.1. Contracting of NGOs as a Traditional Means for Provision of Docial Services

As was said earlier it is common that social services be delegated to NGOs in the United States. This tradition can also be found in some European countries. For example, in Germany, the principle of subsidiarity is stated in the German constitution. Helmut Anhier defines this principle in the following terms:

“Subsidiarity means that the larger social unit (the state) should assist the smaller unit (the family) only if the smaller unit can no longer rely on its own resources. In terms of social policy, it basically translates into a system whereby private provision of services takes precedence over public efforts, and local provision over nonlocal.”[25]

Therefore if the provision of social services is governed by the rule of subsidiarity, the “third sector” is to be given preference over the public sector for the delivery of social services. The Federal Social Assistance Act states in its article 93 that government agencies are forbidden to establish their own service providers “if suitable associations… are available, or can be extended or provided”. This does not limit the independence of the NGOs in providing the service. Article 10 of the above mentioned act states that public bodies “should collaborate with the welfare associations, acknowledging in so doing their independence in the targeting and execution of their functions.”[26]

Another country where NGOs are the main providers of social services is the Netherlands.[27] For example, public media are provided by NGOs but financed by the “omroepbijdrage”, the equivalent of a tax on radio and television collected by a separate state institution and redistributed to accredited television and radio stations.

2.2.2. Crisis of State Capacity

Western European States are increasingly aware of the “crisis of State capacity”. As a result, one of the objectives of the agenda of the European Union is to combat social exclusion. Article 137 of the Treaty of the European Communities as amended by the Treaty of Amsterdam intends to promote the adoption of “measures designed to encourage cooperation between member states through initiatives aimed at improving knowledge, developing exchanges of information and best practices, promoting innovative approaches and evaluating experiences in order to combat social exclusion.” Three budget lines have been established to implement this article (B3-4101, B3-4102 and B3-4116). NGOs are mobilized under these budget lines with the purpose of:

• Improving knowledge, both of the nature and scale of social exclusion problems currently affecting the Union and of innovative approaches to the promotion of social inclusion;
• Developing the exchange of information and best practices, particularly between NGOs and voluntary organizations working in the field of social exclusion, or which represent or consist of persons facing social exclusion;
• Evaluating and benchmarking experience in promoting social inclusion.[28]

An interesting experience is conducted at the local level in Italy to combat social exclusion. Italian social cooperatives can enter into contract with local authorities. There are two types of social cooperatives: those providing social-sanitary and educative services and those carrying out activities such as agricultural or commercial activities in order to employ disadvantaged people.[29] Social cooperatives tend to group themselves in consortia of cooperatives, which seem to be increasingly the unique beneficiaries of public contracting by regional and local authorities. In this scenario the consortium subsequently distributes the contract among the different cooperatives.[30]

2.2.3. Delegating Social Services to NGOs as a Means to Cope with Economic Crisis.

Many developing countries and countries in transition have established or are in the process of establishing legal mechanisms to allow contracting of NGOs for the provision of services the State can no longer afford to provide.

Provisions on “social contracting” can be found in laws, which do not directly target social contracting of NGOs. This is the case for law on participative process such as in Bolivia or in the city of Porto Alegre in Brazil. As already mentioned, in giving the possibility to NGOs to decide on the allocation of city resources, NGOs become inevitably providers of social services the municipal government cannot provide.

Often, the possibility of NGOs to enter into contract agreements with governments is spelled out in laws on Public Benefit Organizations. The Hungarian law on Public Service Organizations of 1997 allows these organizations to enter into contract with local governments and be granted subsides. Under this type of contract, the NGO provides the service whereas the local government provides financial or infrastructure supports.[31] The Czech Law on Public Benefit Corporations of September 1995 states that a “public benefit corporation may apply for subsides granted from the governmental budget, from the budget of another territorial body of the public administration, as well as to apply for grants from a fund established by the law.”

Such provisions can also be found in laws regulating certain activities. For example, the Croatian Law on Social Care of June 27, 1997, where “social care homes” and “centers for aid care”, which can be NGOs, are eligible to local government subsidies. Another example is the Georgian law on grants of 1996, which allows NGOs among others to receive grants “for the realization of concrete humanitarian, educational, scientific-research, health care, cultural, sports, ecological and social projects, along with programs of State or public importance” (art. 2).

Laws whose purpose is the delegation of social services to NGOs have already been developed in several developing countries or countries in transition such as the Romanian Law on Social Fund, the Brazilian Law establishing “Civil Society Organizations of Public Interest”, and the Regulation on Social Order of the City of Perm in Russia. These laws are provided as appendices and will be discussed in the third part of this paper. Such laws are currently being drafted in Poland, the Russian Federation, and certain Russian cities and regions, such as in Obninsk, Tver, Vladimir, and the Kaluga region.

• The draft Law of the Russian Federation on State Social Order defines social order as the State mission to execute measures to solve significant social problems at the regional, federal and intergovernmental levels. The executing entity can be a charitable, non-commercial or other entity of the Russian Federation and is selected through a public contest established by government resolution. The government allocates the funds to a public entity, which will then transfer them to the executing entity. It provides that once the goals of the social program are established, the legal entity which will execute the program, and the public entity responsible to organize the execution of the program have been selected by the government, a contract is signed between the public entity and the executing entity. The public entity controls that the funds are used in accordance with the social goals of the program. It is liable to the government for proper usage of the funds whereas the executing entity is liable to the public entity.
• The Polish draft Law on Cooperation of Public Administration Authorities[32] with Non-Governmental Organizations allows co-operation between the State and the NGOs based on principles of:
• Partnerships (art 11: participation of NGOs in the designation of public aims);
• Subsidiarity (art. 12: “public authorities shall pursue their social aims with the help of NGOs, particularly by entrusting them with the accomplishment of respective public aims on the terms defined in the Act”.);
• Effectiveness (art. 13: co-operation with NGOs to ensure the effectiveness of the accomplishment of the public aims);
• Transparency (art. 14: exchange of basic data between NGOs and the State on co-operation intentions, aims and effects).

An agreement between the parties has to contain the description of the task, the procedure for grant money disbursement, how the control will be carried by the State and the reporting methods, and if some tasks are to be carried by a sub-contractor. NGOs have to carry out social activities described in the draft in order to be eligible for entering partnerships with the government.

The provisions described from these two drafts are some of the elements necessary to ensure a fair co-operation between the State and NGOs.

3. State Financing of NGOs

The State can finance NGO activities through grants or contracts for the provision of services. Through a contract, the State pays the organization for the provision of the service and can also provide facilities, goods.

Funds granted to an NGO from the State can originate from national or local budgets or from a special fund established for that purpose. Such is the case in the Grand Duchy of Luxembourg where the government allocates parts of the national budget to the fund supervised by the Ministry of Cooperation and development established by the Law on Co-operation to Development.[33] The Romanian government established a fund[34] for the purpose of financing projects to fight poverty in Romania. It can provide financial assistance, labor and goods to the beneficiaries. Assets of the fund are provided by international financial organizations, private donations, local budgets, the national budget, private donations, and income from investment of the fund’s endowment, which are to be used exclusively to the financing of projects.

No matter what institution the government uses to fund NGOs, a minimum set of rules must be established and respected in order to ensure an efficient allocation of the resources and avoid fraud. Established sets of rules should apply for the selection of the beneficiaries and throughout the existence of the grant or contract agreement.

3.1. Conducting a Contest

3.1.1. Tenders Have to be Public and Open

Tenders must be publicized within a reasonable time frame before the closing of the contest in order to leave enough time to applicants to be aware of the contest and prepare their application. For example, the regulation on social order of the city of Tomsk in Russia provides that a formal tender should be announced at least 30 days before the closing of the contest.[35] Further, the government body should have the tender announcement published in publications such as the mass media as required by the regulation on social order of the city of Perm. This allows helps assure that potentially and qualified organizations to have adequate notice of the contest. Tenders should always contain a minimum of information including the following:

• Eligible organizations:
  • In most countries only public benefit organizations can benefit from State funding. For example, to enter into a partnership agreement with Brazilian government bodies, an NGO has to have acquired the status of “Civil Society Organization of Public Interest”[36] granted by the Ministry of Justice provided the organization fulfills the statutory requirements. Currently organizations that have adopted this status will keep their previous status of public benefit organization for a period of two years starting with the entry into force of the law, after which they will have to choose between their old status or the status of “Civil Society Organization of Public Interest”.
  • A license may be required in order to provide certain services and benefit from state funding. In France, associations carrying out certain types of activities such as sports or health associations need to be accredited (agrées) by their respective ministries in order to be eligible for government subsidies.
  • Only certain entities may be eligible to apply. The Romanian Law on Social Fund[37] provides that only legal representatives of poor rural communities, communities of workers from farm and handicraft production, minority groups, non-commercial organizations, and organs of local government which have entered partnerships with non-commercial organizations and minority groups may apply for grants. Another example involves applicants to grants available through European Union (EU) budget lines established to combat social exclusion mentioned earlier. Only networks of NGOs operating at the EU level or NGOs operating in partnership from four or more Member States are eligible candidates.[38]
  • Some entities might be listed as explicitely ineligible. For example, political parties and movements, trade unions, religious organizations, local communities, non-commercial organizations or businesses not registered or not carrying out activities of social utility in Perm, and non-commercial organizations represented in the contest commission of the city of Perm cannot apply for social contract agreements.[39]
• Technical aspects of the project to be financed, such as the mission, activities to be carried out, maximum amount granted.
• Deadline and location for the submission of proposal.
• Documentation to be submitted for the application. This should include at least:
  • An application form,
  • A proposal,
  • Proof that the organization is eligible to enter the contest such as the proof of its legal status.
• Approximate date of the results.

Such provisions can be found in article 25 of the Brazilian decree provided in appendix B and in article 10 of the regulation from the city of Perm provided in appendix D.

3.1.2. Selection Process Has to be Fair

Selection mechanisms that ensure a fair evaluation of the candidates have to be established in order to avoid that grants or contracts be awarded on an arbitrary basis for example for political or personal reasons.

Although selection mechanisms are not described in the Romanian Law on Social Fund,[40] the composition of the governing body should ensure that entities will not be selected on a partisan or political affiliation basis. The governing body of the fund is composed of 4 representatives of the civil society designated by the president and 5 representatives of various ministries designated by the government. Further, article 6 states that the fund is administratively independent, should remain politically neutral, and should be transparent with regards to its resources and expenses.

A commission of experts involved in the selection process should guaranty that beneficiaries be selected on technical grounds.

The Brazilian Decree implementing the Law on “Civil Society Organization of Public Interest”[41] establishes a commission composed of at least one member of the executive branch, an expert in the field of activity of the partnership, and a member of a public policy council,[42] where applicable which selects the organization. The government cannot bypass the decision taken by the commission. Further, the determining criteria for selecting an organization are stipulated in the law, such as the technical and operational capacity of the organization, the legal and institutional regularity of the organization, as well as the unacceptable criteria such as the volume of counterpart or benefits offered by the organization.

The city of Perm has also established a commission[43] whose competencies include the selection of candidates. The “contest commission” is composed of city duma deputies, city officials, representative of bodies of self-government and, if necessary, upon request from the concerned department of the city, representatives of non-commercial organizations or OTOCs, which are not candidates in the contest. The commission is in charge of evaluating, with the assistance of experts from non-commercial organizations and OTOCs, the proposals and then votes on their approval or not.

Finally, in order to ensure transparency, results of the contest should be publicized. In Brazil, the results of the contest are announced by the commission in the presence of all candidates to a partnership agreement,[44] whereas results of social contracting contests are published in the mass media in the city of Perm.[45]

3.2. Partnership Agreements

Once the beneficiary has been selected, a contract has to be signed between both parties. To ensure a real partnership between the parties it is necessary that the terms of the contract be negotiated by both parties and not imposed on the beneficiary without its prior approval. This approach encourages both parties to the contract to see each other as equal partners, to evaluate the benefits for both parties and therefore a relation of mutual trust can be established from the beginning of the agreement. This trust relationship should be maintained throughout the existence of the agreement, transparency being a key element to ensure it. The contract signed should state the right and obligations of the beneficiary on the one hand and the rights and obligations of the administrative authority part to the contract on the other hand. Sanctions in case of violation of the agreement should also be provided in the contract agreement.

3.2.1. Rights and Obligations of the Beneficiary

The contracted entity should receive the funds it is entitled by the agreement and according to the conditions set up in the agreement. Often the funds are allocated in installments. The time frame established between each installment has to be respected in order not to disrupt the finances and therefore the activities carried out by the organization. The funds received must be used exclusively for the execution of the contract agreement. An accounting system should be adopted by the organization, enabling the organization to keep track of the transactions carried out under varied funding. In certain cases the beneficiary will have to open a special bank account where will be registered all the transactions related to the contract agreement. This solution has been adopted for partnership agreements in Brazil.

The beneficiary entity has the right to manage the execution of its activities independently from the state body and enter agreements with other state bodies or private entities. For example, the Brazilian partnership mechanism allows an organization to enter several partnerships even with the same government body. It may also be necessary for the beneficiary entity to subcontract another organization in order to carry the activities funded by the agreement. Entities entering a social contract with the city of Perm have the right to subcontract a third person for the execution of activities to be carried out in accordance with the agreement. Some administrative authorities may require a prior approval to subcontracting, particularly if the subcontractor is hired to perform activities that require a license.

In order to ensure transparency of the activities performed by the beneficiary, activity and finance reports should be submitted to the administrative authority according to the terms of the contract agreement. Further, it is recommended that the beneficiary entity carry independent financial audits available to the authorities. This is required by the Brazilian authorities from organizations that have entered into a partnership agreement where the amount of resources received from the State exceeds Reais 600,000.[46]

The contract agreement should include provisions on the unused assets at closing of the program. For example, the regulation from the city of Perm[47] provides that unused money from the grant be returned to the city. Similarly, the French Minister of Economy and Finance recommended in his instruction dated September 5, 1988, that a provision in the contract agreement stipulate that such assets be returned to the treasury.[48]

3.2.2. Rights and Obligations of the Administrative Authority

The public authority part to the contract has the duty to disburse the funds within the time frame negotiated in the contract.

The public authority should evaluate that the activities described in the contract agreement are implemented effectively, and therefore should require periodical activity reports. Partnerships with the Brazilian government in order to provide social services are monitored and evaluated by an evaluation commission set up by both parties to the partnership.[49] This commission is composed of two members from the executive branch, one member from the organization, and sometimes of a member of a public policy council, which is a government agency competent in a certain field of activity.[50]

The public authority should of course control that the beneficiary entity uses the funds according to the contract agreement. Accordingly, the public authority has the right to require periodical financial reports.

Controls over the finances and activities of a beneficiary entity by the government should respect the autonomy of the beneficiary entity. Article 17 of the Regulation of the city of Perm[51] is in accordance with this principle, providing that municipal controls should not interfere with the usual activities of the beneficiary.

3.2.3. Sanctions in Case of Violation of the Terms of the Agreement

Violation of the agreement by either of the parties has to be sanctioned. In that respect the Georgian Law on Grants of June 1996 states that “parties are liable for violating the regulations articulated in the agreement”.

The misuse of funds allocated for the execution of the contract has to be sanctioned. In the Brazilian law on “Civil Society Organization of Public Interest”[52] in case of misuse of the assets, the judge can then make the assets of the entity unavailable and can have assets of officers, public agents or third sector agents that “have illegaly enriched themselves or caused damage to public assets” sequestrated. In the case of the Romanian Social Fund,[53] the later can cancel a grant agreement if the beneficiary violates the agreement or provisions from the law on social fund. It should be possible for the beneficiary to appeal such decisions in court.

Violation of an agreement by the state body should also be sanctioned. The city of Perm for example provides in article 19 of its Regulation on Social Order[54] that any party violating the agreement “carries responsibility in accordance with the Russian legislation and the contract agreement”.

Conclusion

Often, NGOs fear that entering into partnership with governments will infringe upon their independence. This should not be the case if the NGO chooses to adopt self-sustainable measures such as engaging in economic activities and other alternative sources of funding. The French Prime Minister recommended in 1988 that local authorities contracting NGOs encourage these associations to “develop their own resources”, whether by engaging in economic activities, collecting fees and donations. He further recommended self-financing of NGOs be taken into consideration for the renewal of contracts.[55]

Finally, partnerships at the local level should be considered more effective in transition countries. Their flexibility and intimate proximity with local conditions provides the means to answer efficiently the specific needs of a community, and trust relationships can be more easily established at the local level. However, in a report prepared by CAF consultants, it is stressed that in the CEE and NIS, “local NGOs are too small or not sufficiently developed … to be able to participate in partnerships.”[56] On the other hand, contracting at the local level with NGOs operating at the national level can, according to CAF consultants, “alienate local communities and preclude their effective involvement in partnerships. There can, in these circumstances, be a conflict between what the NGO sees as the ‘public good’ and what the community wants.”[57] Accordingly, great care must be taken in choosing NGOs with whom a useful partnership can be undertaken.

Notes

[1] World Bank, Development Forum, [www.worldbank.org/devforum/current.html], December 8, 1999.
[2] European Union, “Meeting between the Commission and the Platform of European Social NGOs, [europa.eu.int/comm/dg05/soc-prot/civilsoc/news/platformm_en.htm], October 28, 1999.
[3] European Union, European Social Policy Forum, Brussels, 24-26 June 1998, Summary report, Edited by Mark Carley.[ europa.eu.int/comm/dg05/jobs/forum98/en/texts/finalreport_en.pdf], October 28, 1999.
[4] European Union, “Meeting between the Commission and the Platform of European Social NGOs, op. cit.
[5] REC, Developing Local and Regional Environmental Action Plans, Budapest, 1996, pp. 7-9.
[6] CAF, Building Cross-Sectoral Partnerships, Country Reports, September 1998, p. 5.
[7] Mission de Liaison avec les Organisations Non Gouvernementales, French Ministry of Foreign affairs, “Les rendez-vous de la politique internationale…” in Les formes du dialogue entre les pouvoirs publics et les ONG, [www.france.diplomatie.fr/ong/dialogue/commissions/commissions01.html], April 2 nd, 1999.
[8] See: Arrêté du 6 août 1996 portant modification de la commission coopération dévelopment.
[9] See: Décret n° 99-90 du 10 février 1999 portant création du Haut Conseil de la Coopération Internationale.
[10] CAF, op. cit., p. 6.
[11] CAF, op. cit., p. 39.
[12] See appendix A, Bolivia, Law on Popular participation.
[13] OTBs can be associations of indigenous populations, farmers, or neighbors. They are representative of such groups of territorial subdivisions.
[14] See: Bolivian Supreme decree n°23858 regulating Basic Territorial Organizations, September 9, 1994, article 7
[15] See Bolivian Supreme decree n° 24447, complementary regulation to the law on Popular Participation. article 63.
[16] See, Bolivian Supreme decree n°23858, op. cit., article 21.
[17] Version drafted in January 1999.
[18] Version drafted in February 1998.
[19] See, Bolivian Supreme decree n° 24447, op. cit., article 48.
[20] Claire Ulmann, The Welfare State’s Other Crisis, Explaining the New Partnership between Nonprofit Organizations and the State in France, Indiana University Press, Indianapolis, 1998, pp. 1-4.
[21] Ibid., pp. 18-31.
[22] Mission de Liaison avec les Organisations Non Gouvernementales, French Ministry of Foreign affairs, “L’appui financier du ministère des Affaires étrangères aux ONG” in L’appui des pouvoirs publics français aux ONG, [www.france.diplomatie.fr/ong/appui/mae.html], April 2 nd, 1999.
[23] Ibid.
[24] See appendix C: Luxembourg, Law on Cooperation to Development.
[25] Helmut Anhier, “An Elaborate Network: Profiling the Third Sector in Germany”, in Government and the Third Sector, Emerging Relationships in Welfare States, Jossey-Bass Publishers, San Francisco, 1992, pp. 32-33.
[26] Helmut Anhier, op. cit., pp. 31-56.
[27] Hermann J. Aquina, “A Partnership between Government and Voluntary Organizations: Changing Relationships in Dutch Society” in Government and the Third Sector, Emerging Relationships in Welfare States, Jossey-Bass Publishers, San Francisco, 1992, pp. 57-74.
[28] European Union, Guidelines on preparatory measures to combat social exclusion 1998, [europa.eu.int/comm/dg05/soc-prot/soc-incl/callprop/guideen.pdf], October 29, 1999, p. 2.
[29] Guide to social cooperatives [ip21.mir.it/ics/accoglienza/guida_in.html], April 4, 1999.
[30] Rural Europe, “Training and Integration, in Rural areas, The Italian Social Cooperatives: an Avenue to be Explored?”, Leader Magazine, n° 10, winter 95-96, [www.rural-europe.aeidl.be/rural-en/biblio/training/art06.htm], April 4, 1999.
[31] ICNL, Comparative Assessment of NGO/Government Partnership in Romania, Budapest, 1999, p. 13.
[32] Version of January 1999.
[33] See appendix C.
[34] See appendix E: Romania: Law n° 129 on Social Development Fund of June 29, 1998.
[35] See Regulation of the city of Tomsk n° 176 on Municipal Social Order for Non-Commercial Organizations, October 20, 1999, article 13.
[36] See appendix B: Brazil: Law n° 9.790 of March 23 rd, 1999. Currently organizations that have adopted this status will keep their previous status of public benefit organizations for a period of two years starting with the entry into force of the law, after which they will have to choose between their old status or the status of Civil Society Organization of Public Interest.
[37] See appendix D.
[38] European Union, Guidelines on preparatory measures to combat social exclusion 1998, op. cit., pp. 5-6.
[39] See appendix D, Perm: Regulation n° 103 on Social Order, September 21, 1999.
[40] See appendix E.
[41] See appendix B: Brazil: Decree n° 3.100 of June 30, 1999.
[42] A public policy council is an agency of the government which is competent in a certain field of activity. Activities carried out by NGOs can fall within the competence of a public policy council. These councils are consulted during the process of contracting with an OSCIP. If no public policy council exists for the activity in question, only the body of the government wishing to establish the partnership is consulted.
[43] See appendix D.
[44] See appendix B: Brazil: Decree n° 3.100 of June 30, 1999.
[45] See appendix D.
[46] See appendix B: Brazil: Decree n° 3.100 of June 30, 1999.
[47] See appendix D.
[48] Brigitte Clavagnier, Subventions et Associations, Editions Juris-Services, Paris, 1993, pp55-56.
[49] See appendix B: Brazil: Decree n° 3.100 of June 30, 1999.
[50] See footnote n° 40.
[51] See appendix D.
[52] See appendix B: Brazil: Law n° 9.790 of March 23 rd, 1999.
[53] See appendix E.
[54] See appendix D.
[55] See: Circulaire N° 3.300/S.G. from the French Prime Minister on relations between the State and associations receiving public finances.
[56] CAF, Building Cross-Sectoral Partnerships”, A Study for the Charles Stewart Mott Foundation, September 1998, p. 59.
[57] CAF, Building Cross-Sectoral Partnerships”, A Study for the Charles Stewart Mott Foundation, September 1998, p. 58.

Brazil

Please see discussion on OSCIPs in the Brazil Country Report.

Kenya

On March 30-31 a conference on “Wealth Creation, Corporate Citizenship, and Social Responsibility” was held in Nairobi, Kenya, under the sponsorship of the African Philanthropy Initiative, the Private Sector Corporate Governance Trust, and the Kenya Community Development Foundation. Many aspects of this topic were discussed by a group of regional and international representatives. One part of the discussion was the need to create a better legal enabling environment for NGO, business, and government sector partnerships. The following describes the conference and its proposed outcomes:

Conference on Wealth Creation, Corporate Citizenship, and Social Responsibility
March 30th – 31st 2000, Nairobi

Organized By Africa Philanthropy Initiative; Private Sector Corporate Governance Trust; The Kenya Community Development Foundation

Theme: Partnerships for Wealth Creation and Social Responsibility

Key Issues

• Changing Roles of Business, Civil Society and Government in development.
• Challenges of sustainable Wealth Creation in an era of the globalized market
• Policy and laws that affect social responsibility and corporate citizenship

Topics

• Making the case for corporate citizenship and corporate social responsibility
• Corporate governance in an era of the globalized market
•   Governance and self- regulation of the Private Sector Opportunities for Business and Civil Society collaboration to create wealth
•   Promoting philanthropy and self-reliance
•   Need for partnerships – and the role of government in promoting partnerships
•   Impact of Public Governance
•   Governance for efficiency and effectiveness in the not-for-profit social sector

Design and Components

• Programme to be highly interactive and offer as much ground for participant’s learning and sharing.
• A series of plenary sessions with key speakers
• Breakout groups to discuss questions and topics determined to be significant
•   Panel discussions

Output

Conference’s main output will be to develop a draft:

1. Commitment to social responsibility and enhanced partnerships between business, not-for-profit sector and Government.
2. Structure and mechanisms to facilitate partnerships for Wealth Creation.

For further information, please contact Elkanah Odembo, Africa Philanthropy Initiative (and member of the ICNL Supervisory Council) e.odembo@fordfound.org.

Russia

Consolidated Budget Competitions for NGO Projects as a Tool for Intersectoral Interaction

By Kira Grebennik

A “consolidated budget” is a budget that brings together funds from all sectors to finance socially significant projects conducted by non-profit organizations through an open competition. Government officials, representatives from the non-profit and commercial sectors work together to find a common language and common approaches while providing the financing by cooperating on expert committees to evaluate projects and monitoring their realization.

The consolidated budget can also be considered as a first step toward developing public foundations that can be created at the regional or municipal level. Like a foundation, the financial means for consolidated budget competitions are collected from various, but mainly local, sources. The grants are distributed on the basis of competition and the expert committees consist of local representatives. Such a method of uniting resources stimulates the civic responsibility of authorities, businesses and non-profit organizations for the development of local community. Finally, it is easily duplicated while the mandate for a foundation (and for the competition) is being developed locally by those who contribute to the foundation.

The idea of collecting financial support from different sources and conducting a competition among NGO projects occurred to the organizing committee for the NGO Fair in Novosibirsk in 1998. The committee consisted of representatives of the Siberian Center, non-profit organizations, businesses, and municipal and regional authorities. The technique for developing the consolidated budget competition evolved during the preparation for the Fair. The complete package of documents necessary for conducting the competition was also created. This package included the following:

• the forms of application letters to authorities and businesses;
• the invitation to the competition;
• requirements to the form of the application;
• the form of the registration of projects presented for the competition;
• the regulation of the expert committee;
• the form for project evaluation by the project evaluators;
• the form for expert committee decision;
• the grant agreement;
• reporting forms (program forms and report forms).

Within a one-month period thirty-one applications from non-profit organizations in the region were collected, and eight projects were chosen for support. However, this was not the main result of our work. The level of communication between the Siberian Center and municipal and regional authorities and businessmen, who participated in the distribution of the grants, has completely changed. We understood that our technique has great potential that allows us to develop the non-profit sector and to establish partnerships with other sectors simultaneously. This technique can be reproduced in all regions.

Subsequently, the Novosibirsk office developed a network project called “Fairs for Non-Profit Organizations in eleven Regions of Siberia: a step towards solving the problems and develop mutual understanding between different sectors in society,” which was awarded a grant from the Open Society Institute. A competition mandate was developed and financing for consolidated budget competitions was collected from municipal and regional executive authorities. The Open Society Institute provided matching funds. The amount of local matching funds could not be less than 10,000 rubles in order for a region to qualify. Nine regions in our network, specifically, Kemerovo, Novosibirsk, Omsk, Tomsk, Tyumen, Altai and Krasnoyarsk Regions and Altai and Buryatia Republics, qualified to take part in conducting competitions.

Our current approach can best be characterized as a unity of procedures with a variety of approaches. The Novosibirsk office administered the competition and local representations of the Siberian Center conducted it in their respective regions. Organizing committees defined the criteria for the competition and the maximum grant size in each region in accordance with its particular needs – from 2000 to 10,000 rubles. In each region local expert committees that included representatives from non-profit organizations, authorities, commercial organizations, mass media and representatives of the Open Society Institute evaluated the projects. On the whole, sixty-seven people took part in the expert committees. 5846 thousand rubles were donated to eighty-three projects of non-profit organizations in nine regions as the result of the competition (180 thousand rubles from regional and municipal authorities and commercial organizations, 4046 thousand rubles – from the Open Society Institute).

In all regions the majority of projects were aimed at children, teenagers, youth, ecology, human rights, social protection, culture, education and the development of civil initiatives. By the middle of December 1999 reports from all the projects receiving financial support will be collected at the Siberian Center. The Center will give the reports to organizations and government officials who participated in financing the competition. The results will be published in regional mass media and in “The Effect of Being.” However, it is already possible to mention some successful results of the project:

• The 1999 budget for the Novosibirsk region contained an item for financing the project competition. This amounted to ninety thousand rubles, out of which fifty thousand were given by the Open Society Institute and forty thousand by businesses and the regional and municipal authorities.
• In Tyumen, the region municipal authorities contributed to the project competition a sum equal to that provided by the Open Society Institute – forty thousand rubles. As a result, nine projects received support.
• In the Republic of Buryatia, the municipal administration of Ulan-Ude and the State Youth Committee of the Republic of Buryatia gave the ten thousand rubles for the consolidated budget.
• In Kemerovo region, ten thousand rubles were given by the commercial enterprise “Siberian Bread” in addition to financial support from authorities. Representatives of the company participated in the work of the expert committee.
• The regional authorities in Tomsk, in addition to the financial input, provided a space free of charge.

In addition to supporting NGO projects on the local level and strengthening the partnership between sectors, conducting such competitions in the regions has several other goals- to support the passage of laws regulating interaction between non-profit organizations and authorities (social order, municipal grant, contract system); and to provide incentives to businesses carrying out social policies.