The International Journal
of Not-for-Profit Law
Volume 3, Issue 3, March 2001
By Mokbul Morshed Ahmad*
Despite numerous efforts, the amount of poverty in Bangladesh has remained alarmingly high by any standard. Two salient characteristics of poverty alleviation in Bangladesh are: the poor accessibility of the efforts to the ‘target’ population (the rural poor), and the lack of coordination between government and the Non-Government Organisations (NGOs). The moment the state alone is unable to combat poverty then the NGOs come into the picture to fill the void. First Britain as a colonial power, then the East Pakistan Government and finally the Government of Bangladesh have promulgated Ordinances and Regulations for the practical regulation of NGOs. Yet loopholes and flaws within the legal framework have given the NGOs opportunities to violate the Ordinances and Regulations. A better arrangement could be achieved by modifying and strictly implementing such state rules, ensuring accountability, effective state control, and meaningful NGO-State collaboration and cooperation.
This paper will first outline the overall situation of Non-Governmental Organisationsin Bangladesh, then set out the legal issues in detail and finally make proposals for improvements. State-NGO relations in Bangladesh have moved through stages of indifference and ambivalence (White, 1999; compare Sen, 1999 on India). In other parts of the Muslim world, the state has in general been skeptical or strict towards NGOs, human rights and community groups (Huband, et al. 1999, Huband, 1999; Galpin, 1999). When the government of Bangladesh tried to control the activities of NGOs, the donors  put pressure on the state. The government then responded by imposing more paperwork on the NGOs, thus increasing their transaction costs. The state has failed to make NGOs more transparent, functionally or financially. So NGOs can easily violate laws because of the weakness of the state and their own strength that over time has been fortified by the donors.
1. NGOs in Bangladesh
Since the independence of Bangladesh in 1971, the state has largely failed to assist the poor or reduce poverty, while NGOs have grown dramatically, ostensibly to fill this gap. There are more and bigger NGOs here than in any other country of equivalent size. The Association of Development Agencies in Bangladesh (ADAB) had a total membership of 886 NGOs/PVDOs (Private Voluntary Development Organisations) in December 1997, of which 231 were central and 655 chapter (local) members (ADAB, 1998). The ADAB Directory lists 1007 NGOs, including 376 non-member NGOs. The NGO Affairs Bureau of the Government of Bangladesh (GOB), which has to approve all foreign grants to NGOs working in Bangladesh, released grants worth about $250 million US dollars in FY 1996-97 to 1,132 NGOs, of which 997 are local and 135 are foreign (NGO Affairs Bureau, 1998). NGOs have mainly functioned to service the needs of the landless, usually assisted by foreign donor funding as a counterpoint to the state’s efforts (Lewis, 1993).
Some NGOs have shown success in providing services like education, health and microfinance to their clients and promoting human rights- particularly women’s rights. This has been accompanied by backlash from the local elite, religious leaders and organisations (Rafi and Chowdhury, 2000; Shehabuddin, 1999).
NGOs in Bangladesh have not originated from Grass Roots Organisations (GROs) in civil society. Rather, it is NGO workers who set up groups, which clients then join to get microcredit and other services. Most Bangladeshi NGOs are totally dependent upon foreign funds. The volume of foreign funds to NGOs in Bangladesh has been increasing over the years and stood at just under 18 percent of all foreign “aid” to the country in FY 1995-96. Donors increased their funding from 464 NGO projects in 1990-91 to 746 in 1996-97, a 60 per cent increase in six years; the total amount disbursed showed a 143 per cent increase over the period (NGO Affairs Bureau, 1998). However, the disbursement of funds to NGOs is highly skewed. The top 15 NGOs accounted for 84 per cent of all allocation to NGOS in 1991-92, and 70 percent in 1992-93 (Hashemi, 1995). NGO dependence on donor grants has kept the whole operation highly subsidised by foreign capital. For example, the annual working costs of BRAC’s (Bangladesh Rural Advancement Committee, one of the largest NGOs in Bangladesh) branch-level units are still more than three times their locally generated income (Montgomery et al., 1996).
1.1 The State and the Law
A. Legal Status of NGOs, Past and Present
Since 1860, the state has attempted to regulate NGOs.  The most significant steps of the Ershad Government regarding NGOs were the abolition of the NGO Standing Committee, the creation of the NGO Affairs Bureau (NAB) and the appointment of an Advisor for NGO Affairs with Ministerial status (White, 1999). The NAB started functioning effectively from March 1, 1990. It was headed by a Director-General and became the contact point between the State and various foreign and local NGOs receiving foreign donations. As all NGO activities came under the purview of the “President’s Secretariat Public Division,” NGOs were supposed to be regulated by the NAB instead of the Department of Social Welfare. Within a short period of time, the Bureau had shown promise by its quick clearance of NGO applications, discussed below. However, the procedures still remain complex and need further improvement.
Specifically, the state in Bangladesh requires each NGO to register formally with NAB, and to renew this registration every five years. Each project must be approved in advance by the NAB, as must all foreign funding. Each NGO must receive all funding through a single, specific bank account, and the bank must submit full reports to the central bank, which then reports to the NAB and to the Economic Relations Division (ERD) of the Finance Ministry. The NAB also regulates the use of foreign consultants. For projects and programmes of disaster-relief, requirements are similar but the NAB must decide more rapidly. Each NGO must submit annual auditor’s reports to the NAB, having appointed its auditors from the list approved by the NAB. Penalties for false statements, failures to submit declarations or other contravention of the law include heavy fines payable by the NGO and/or imprisonment of NGO directors. The transaction costs for NGOs in securing permissions and approvals are very high, in both avoidable delays and unnecessary paperwork. Far too much unnecessary information is required, usually in multiple copies.
State regulations define the term ‘Voluntary Activity’ as an activity undertaken, with partial or complete support from external sources, by any person or organisation to render voluntary services pertaining to agricultural, relief, missionary, educational, cultural, vocational, social welfare and other developmental activities in the country. Although the definition seems to cover almost all kinds of voluntary activities, the state retains the right to include or ‘exclude any activity as “voluntary”. The state apparently intended to widen the scope of the definition in order to prevent both the donors and recipients from making or receiving grants/donations in contravention of official ordinances.
Ordinances/regulations/circulars vest the NAB with all its responsibilities regarding coordination, regulation and monitoring of foreign and foreign assisted non-governmental voluntary organisations and individuals working in Bangladesh. While considering the application for registration, the NAB is required to seek approval from the Home Ministry.
Projects may be for one or multiple years. NGOs can submit a five-year project proposal, commensurate with an identified priority area of the five-year plan of the state. The NAB arranges approval and release of the funds on a priority basis for such projects. The targets specified in the project proposal, however, must be achieved within the stipulated period. Usually, funds for the following year can be released for the project if its implementation strategy and achievement of target for the year is considered to be satisfactory by the Bureau (Circular: Section 7(h): 1993).
Existing NGO regulations make exception for projects for assistance to disaster-affected areas. For disaster rehabilitation programmes, NGOs have to submit their project proposal with requisite details on a prescribed proforma FD-6 (Circular: 7.1(a): 1993). The NAB communicates its decisions with 21 days from the day of the receipt of the project proposal and forwards it to the relevant Ministry for its opinion. The Ministry must send its decision to the NAB within 14 days (Circular:Section 7.1(b):1993).
The state and its machinery have from time to time introduced several rules and procedures, but due to their complexity and the weakness of the state, NGOs can easily evade them. The rules for receipt and use of foreign donations and the banking transactions of NGOs are interesting examples. I will elaborate below.
Submission of Annual Reports
NGOs are required to prepare annual reports on their activities within three months of the end of the financial year and send copies to the NAB, ERD, the relevant Ministry, Divisional Commissioner(s), Deputy Commissioners and the Bangladesh Bank.
Power of Inspection
The state may, at any time inspect the accounts and other documents of NGOs. The state may require the NGO to submit a declaration as notified in the official gazette (Ordinance No. XLVI- Section 4(l): 1978). Failure to produce any accounts or other documents or failure to furnish any statement or information by the NGO is a contravention of state regulations (Ordinance XLVI: Section 4(3): 1978). The NAB has the responsibility and power to audit and inspect the accounts of NGOs (Circular: Section 10(a): 1993).
The accounts of any NGO must be audited by the persons appointed by the relevant NGO or persons enlisted/approved by the NAB. Audit reports must be submitted to the NAB within two months of the end of the financial year.
From the above discussion we have a clear picture of the manner/procedure regarding the way the state of Bangladesh regulates those NGOs which finance charitable work through foreign donations. The donor agencies led by The World Bank (WB) have strongly supported the formulation of the state’s policy on NGOs, particularly in the direction of streamlining the administrative and legal framework within which NGOS operate, to increase their effectiveness (Zareen, 1996).
NGOs in Bangladesh have increasingly become subject to question and criticism from the government, political parties, intellectuals and the public in general. Recently there have been allegations of misuse of funds, gender discrimination, and nepotism lodged against GSS (Gano Shahajyo Sangstha), a large NGO. State and private donor investigations found that the rural level female workers of GSS were compelled to go on maternity leave without pay. They also found that GSS bought lands worth millions of Taka to build its headquarters in Dhaka. The donors stopped funding the GSS (Kabir, 1999; News from Bangladesh, 1999c).
During the long process of NGO development in Bangladesh, many NGOs have certainly empowered themselves with structures and buildings, while empowerment of the poor, beyond better services, has been rather limited. Recently, NGO activities and expenditures came under fire in the National Parliament and other fora (The Daily Star, 1999b; NFB, 1999d). One Member of Parliament (MP) alleged that some NGOs raised money on false promises of jobs and credit, only to misappropriated it. Another MP claimed that some NGOs make loans at the high rate of 14% and resort to “inhuman torture” on debtors who fail to repay on time (News from Bangladesh, 1999a). The relevant minister gave a face-saving answer to all these allegations but in reality there is poor control by the state on NGOs in Bangladesh. This was reiterated by the head of NAB on another occasion (News from Bangladesh, 1999b).
It is possible for any powerful NGO to deliberately manipulate the Home Ministry or the relevant Ministry when it has not delivered an opinion within the stipulated time (as mentioned in Circular 1993) so that the application may be passed without any objection. If this happens, the illegal issue would not be eliminated.
According to law, no person or organisation may receive or spend foreign loans/grants without prior state approval. The NAB Report submitted to the Prime Minister’s Secretariat in 1992 stated that various NGOs had disbursed 1.5 billion Taka without prior State permission in the financial year 1990 to 1991. Quite often, large amounts of money come into the country illegally. The Salvation Army received 12.5 million Taka without the state approval (Government Report, 1992). Similarly, Sheba Shongho spent 13.5 million Taka without state approval, and the Finnish Free Mission also violated state instructions (Report:1, 18th August, 1992; Bhorer Kagoj, 1992).
According to a Government Inspection Report (1992), senior officials of some NGOs quite often travel abroad and, without state approval obtain foreign donations. According to the report the accounts provided by the NGOs may fail to match those provided by the Bangladesh Bank, although according to law, if any organisation wants to carry out a charitable programme, then it should receive any foreign currency through an approved bank in Bangladesh. This restriction was imposed to give the state a true picture of the total amount of foreign currency in the hands of NGOs. Yet, according to another Act,any organisation or person can bring any amount of foreign currency into Bangladesh. Therefore, as a result of this dual system, no one can know the total amount of foreign currency actually received by any NGO.
According to a nineteenth century Act,  Voluntary societies cannot undertake business oriented projects. The same Act also provides that upon the dissolution of the society and payment of all its debts and liabilities, no property whatsoever shall be paid to or distributed among the members of the society but should be vested in the managing committee. In a 1961 Ordinance there is a provision for gaining profit in order to create job opportunities. Both the Act and Ordinance apply to the same cases. As a consequence, some NGOs are flourishing simultaneously as service-oriented organisations and as profit-oniented business organisations. The state is also being deprived of taxes by NGOs taking advantage of loopholes ‘in the regulations. Some senior officials of certain NGOs have used loopholes to become affluent. 
BRAC is currently alleged to be running successful businesses like a commercial organisation, contrary to its charitable status. BRAC’s cold storage, press, a marketing organisation named “Aarong”, a real estate company, and a restaurant are highly profitable. Recently BRAC has received state approval to open a commercial bank for microlending (The Financial Times, 1998). BRAC provides no accounts of their commercial organisation’s income or expenditures to any state department. White (1999) points out that BRAC generates 31 per cent of its income from its business sources. As BRAC is not registered under the Ordinance of 1961, if BRAC dissolves then all its property will be vested in the managing committee. BRAC possesses more than 50 modern automobiles (Zarren, 1996).
The Government Report (1992) levels a complaint against PROSHIKA, another large NGO. Although PROSHIKA, is registered under the 1961 Ordinance, it nonetheless has developed a transport company of 28 buses at a cost of 30 million Taka. At a cost of 15 million Taka, PROSHEKA has also established a press and a garment industry and is investing 5 million Taka in a video library. Recently it has started an Internet and software business. In some cases, service-oriented NGO projects are basically marketoriented, with the objective of earning profits through long-term capital investment. BRAC’s cold storage project (costing 70 million Taka) and Savar Ganosastha Kendro’s (GK, another large NGO) highly profitable clinic, university and medicine businesses are striking examples. Allegations have also been made against GSS, another large NGO which used donors’ funds to open a printing press and media business without being audited and taxed as per rules of the state. The Report also pointed out that profits from these commercial ventures of NGOs are not taxed and not always used for their clients since NGOs depend on donors for their ‘development’ projects (Kabir, 1999).
The Government Report (1992) states that ADAB’s dishonesty is evident as it has several bank accounts. The holding of several bank accounts is a violation of a state rule, which requires that NGOs receive foreign donations through a single bank account (Regulation Rules: Section 4(4): 1978). The power to appoint any state-registered firm as an auditor is currently vested in the NGOS themselves, which is alleged to have resulted in auditors giving favourable reports on their clients. The NAB is further reported to have 2 audit supervisors but not a single auditor, so that the state is unable to obtain a clear picture of the actual status of NGOs in the country. Due to poor capacity of NAB, only a random sample of audit reports are examined, so most NGOs are not reviewed.
After audit and inspection, if a complaint is lodged against an NGO, virtually no appropriate action is taken. Usually a note is passed to the NGO to correct the error, which is a trivial remedial measure. Due to the strong support of donors for NGOs, in the recent past the state has had to scrap its own desire to withdraw the registration of a number of NGOs and even had to change the head of the NAB when that individual appeared tough with NGOs that had indulged in irregularities (Hashemi, 1995). When the NAB cancelled the registration of three NGOs for financial irregularities, the head of a diplomatic mission in Dhaka personally intervened, brought the issue to the attention of the Prime Minister’s office and got the cancellation order withdrawn. This action created great dissatisfaction among the officials of the Bureau (Hashemi, 1995).
As NGOs are heavily dependent on foreign resources, the flow of money from the outside, in the absence of accountability, can make the NGOs corrupt, controversial and autocratic (Zarren, 1996). Despite the negative effects , ironically real in most cases, NGOs are accountable to the donor countries rather than the state of Bangladesh (The Independent, June 14, 1995).
In reality, the state is unable to control NGOs. The NGOs often work against the directions and decisions of the state. Weak administration on the one hand and strong national and international backing on the other encourage some NGOs to defy the state and to work according to their own whims. In the recent past, the registration of ADAB was cancelled by the NAB but reinstated within a few hours. A powerful international lobby naturally achieved this. There is a tug of war between the NAB and the Social Welfare Directorate which gives the NGOs opportunities to break the rules (The Daily Inquilab, September 23, 1992; The Daily Sangbad January 6, 1993).
The following recommendations would improve the existing legal status of NGOs in Bangladesh, by reducing bureaucracy, removing legal contradictions and making NGOs more accountable.
State Rules, Acts and Ordinances should be replaced or modified to reflect the current critical atmosphere. The state should remove all administrative and procedural bottlenecks created through promulgation of various Ordinances and streamline the existing working procedures, enabling NGOs to complete all formalities within the shortest time possible. The state should evaluate the strength and weakness of current measures for regulating NGOs and ensure promulgation of flexible and effective rules and regulations.
Improving NGO Efficiency
It takes more than two months to prepare renewal papers for an NGO registration, which, in any event are not thoroughly scrutinized. Because the state has the authority to cancel the registration of any NGO or stop its activities and inform the donor, in any case of serious allegations, once a NGO is registered, renewal procedures should be simplified.
Some of the Foreign Donation (FD) forms and procedures followed by the NAB are complex and cumbersome. The application forms and procedures should be simplified through discussion between the GOB and NGOs. With regard to registration, the Home Ministry should grant approval or disapproval within sixty days of receiving the application from the NAB. An application for the appointment of expatriates or extension of tenure should be decided within twenty-five days. The NAB should send reminders to the National Security Intelligence (NSI).
Appropriate action should be taken by the administrative Ministries, Divisions and Departments to give their advice to the NAB within twenty-one days with regard to approval of NGO projects.
To enable NGOs to prepare budgets and implement projects within the time limit of financial year, if the report about a particular NGO is satisfactory, then the NGO could be given clearance for other projects in the same year without further investigation by the NAB.
The existing procedure that requires projects and clearance of funds be annually approved by the state should be changed. NGOs that have approval for a project should be able to use foreign funds until the project is completed, without annual renewal. Since the funds must be received through specific NGO bank accounts, the state will be able to monitor the flow of foreign funds to the NGO sector and to each NGO. It will be the business of NAB officials to check whether an NGO has several bank accounts.
The National Security Intelligence (NSI) should be aware of each NGO’s activities so that it is ready to comment on an application without further inquiry. If the NGO has done anything highly objectionable during the last 30 years, it should be closed and the relevant donor informed.
For NAB approval of projects, NGOs should be required to submit the names of its Board Members and/or Executive Committee and the number of staff positions in each category. Staff names, however, should not be required.
Improving the Law
According to a Circular  “‘No such project would be approved if it offends the feelings of the people of any religion, has adverse effects on the culture and values of the country or if the project is based on a political programme.” Nearly 90% of the laws in Bangladesh are secular. Approximately 87% of the population is Muslim (BBS, 1998) and Islam is the state religion in Bangladesh. Therefore, there are legal problems in Bangladesh arising from unresolved conflicts in the law. While women’s independence and empowerment programmes are against the beliefs of many strict Muslims, “gender development” is now a leading concern of western donors. So, a specific political party could firmly resist women’s development and NGOs would have to end women’s development programmes (Chazan, 1998). This would be an unethical as well as undesirable result.
Recently unrest started when Islamic teachers and students organised a general strike in a northeastern town of Bangladesh and demonstrators attacked a rally of NGO women clients and set fire to the offices of several NGOS. Several individuals were injured. The rally had been organised by NGOs that had lent money to millions of poor Bangladeshi women to start small shops or businesses such as poultry breeding and weaving. Several thousand women who benefited from such loans took part in the rally. Islamic groups said they objected to women taking part in celebrations to commemorate the 1971 victory over Pakistan that led to the independence of Bangladesh. But NGOs said that the fundamentalists had objected to Muslim women going out to work. Human rights groups urged the state to take action against Islamic fundamentalists who attacked women taking part in a rally to commemorate the country’s independence struggle (Chazan, 1998). Another similar conflict erupted in Fandpur, a district town in central Bangladesh (The Daily Star, 1999a), Given the unrest, the state must clearly define what kinds of programmes would affect native culture or strike the sentiment of the people of any religion.
There is supposed to be an investigation as to whether any NGO is involved in any political or anti-cultural activity under the guise of a development programme. Currently, CARITAS is involved in consciousness-raising by making people aware of their rights, teaching them to be independent and morally strong, thereby empowering people at the grass-roots level. This is not a crime; few people see empowering individuals as an anti-state activity. This section of the circular should therefore be modified.
Indeed, it is very difficult to draw the line between freedom of NGOs to raise important class/race/gender issues that may be unpopular with some governments and NGOs that are not responsive to local needs. The success of NGOs lies within their capability to make changes in the lives of their clients; so making structural changes may be risky but should be an important agenda for the NGOs. At the same time the role of Northern NGOs should be to help their Southern partners and make their voices heard by the Northern people and policymakers. This may change the attitudes and policies of the donors. This is an important role for Northern NGOs, which should be taken seriously.
Holding NGOs Accountable
The state audit system is ineffective. A mechanism must be developed under which the state officials involved in the development process make regular field visits to NGO programmes. Such officials should also conduct impact evaluations upon the completion of a project to enhance the state’s understanding of the programme dynamics and the operation of NGOs.
Commercial activities of NGOs should be duly taxed and profits from them should be used for development work. The law should be changed accordingly and NAB should make sure that it is implemented properly. In conformity with law, immediate legal action ought to be taken against the officials of several NGOs who are involved in misappropriation, embezzlement or accused of misconduct, irregularity or lawbreaking.
Theoretically, the state is accountable to Parliament and ultimately to the public for its activities and programmes, but NGOs remain unaccountable. This is unacceptable. NGOs must be regulated by Parliament. If the government can remain above narrow party interests and if the opposition party can remain strong and responsible, then an effective parliamentary committee could be created to scrutinize and evaluate the activities and programmes of the NGOs.
In Bangladesh, NGOs play a pivotal and pragmatic role when the state does not reach the poor and meet their needs. Despite their numbers, NGOs have brought little change in levels of poverty. Even the largest NGOs in Bangladesh when taken together cover only a fraction of the population- perhaps only 10-20 percent of landless households (Hasherm, 1995). This highlights the NGO need for reaching more poor and provision of services given the limitations of the state and the laws. So, alleviation of poverty of the masses should be at the top of the agenda of the NGOs, state and donors in Bangladesh.
However, the NGOs’ umbrella body (which is required to elect its executive committee) is not broad-based. Elections to the executive committee are often not properly held and its membership is often confined to friends and relatives. This surely frustrates the potential of NGOs as democratic voluntary organisations. Nevertheless, NGOs cannot function in isolation from the mainstream of political, economic and social life in this Country. They must conform to certain standards, adhere to state regulations and have their work coordinated at the state level. NGOs can only complement the state’s activity. Under the current system, the state cannot ask NGOs to become more transparent and accountable or to cooperate more with the state due to donor pressure. The state is very weak in Bangladesh (Wood, 1997). Instead, the state creates undue hindrances which only increase transaction costs of NGOs without encouraging or forcing the NGOs to respond more to the needs of the poor. But still NGOs need to be transparent to their clients, donors and the state both functionally and financially if they really want to represent the interests of the poor or at least provide services to them.
Note: 1 US$ was @5 6 Taka in April 2001
ADAB. (1998). Directory of PVD0s1NGD0s in Bangladesh (Ready Reference). Dhaka: ADAB.
BBS. (1998). Statistical Pocketbook of Bangladesh. Dhaka: BBS.
Bhorer Kagoj. (1992). October 29, 1992 (Daily Newspaper in Bangla).
Chazan, D. (1998). “Aid Offices Set on Fire in Bangladesh”. The Financial Times. December 9, 1998.
The Daily Star. (1999a). “Tension Prevails at Faridpur Over ADAB Conference”‘. The Daily Star. (Daily Newspaper). March 6,1999. (From World Wide Web).
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Galpin, R. (1999). “Pakistan Tightens Screw on Opposition”. The Guardian. May 15, 1999.
Huband, et al. (1999). “Middle Eastern NGOs Strain at The Bonds of Authoritarian Government”. Financial Times. June 10, 1999.
Huband, M. (1999). “Top Egypt Academics Repudiate Draft Law”. Financial Times. May 25, 1999.
Hashemi, S. M. 1995. “NGO Accountability in Bangladesh: Beneficianies, Donors and State” in Edwards, M. and Hulme, D. (eds.) Non-governmental Organisations : Performance and Accountability Beyond the Magic Bullet. London: Earthscan Publications.
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Islam, M. A. (1995). Editorial. The Independent. (Daily Newspaper).
Kabir, N. (1999). “In a Mess: One of The Better-Known NGOs Faces Charges of Irregularities”. The Daily Star, May, 25. (from World Wide Web).
Lewis, D. J. 1993. “NGO-Government Interaction in Bangladesh” in Farrington, J. and Lewis, D. J. (eds.) Non-Governmental Organisations and The State in Asia : Rethinking Roles in Sustainable Agricultural Development. London: Routledge.
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List of Government Ordinances/RuIes/Working Procedures:
- The Foreign Donations (Voluntary Activities) Regulation Ordinance 1978: Ordinance No. XLVI of 1978.
- The Foreign Donations (Voluntary Activities) Regulation Rules, 1978: No. S.R.O. 329-1/78.
- The Foreign Contributions (Regulation) Ordinance, 1982. Ordinance No. XXXI of 1982.
Working Procedure of Foreign assisted Bangladeshi Non-Govermnent Voluntary Organization (NGOs) A Circular: 184.108.40.206.0.46.93-478, dated. 27-07-1993. NGOs are the non-profit development organisations or NGDOs for this paper. Most NGOs in Bangladesh are foreign aided development organisations. Although NGO activities are described as ‘voluntary’ activity in this paper this has been due to the official documents and laws which includes all voluntary or non-profit work. Salamon and Anheier (1997) tried to define nonprofit organisation as
- Organised, i.e., institutionalised to some extent.
- Private, ie., institutionally separate from state.
- Non-protit-distributing, i.e., not returning any profits generated to their owners or directors.
- Self- governing, ie., equipped to control their own activities.
- Voluntary, i.e., involving some meaningful degree of voluntary participation, either in the actual conduct of the agency’s activities or in the management of its affairs (Salamon and Anheier, 1997).
NGOs (Non-Governmental Organisations): The World Bank usually refers to nongovernmental organisations as any group or institution that is independent from government, and that has humanitarian or co-operative, rather than commercial, objectives. Specifically, the Bank focuses on NGOs that work in the areas of development, relief or environmental protection, or that represent poor or vulnerable people (The World Bank, 1996). This definition of NGO has been used in this paper. The official donors are DFID (Department for International Development), NORAD (Norwegian Agency for International Development), CIDA (Canadian Agency for
International Development), SIDA (Swedish Agency for International Development) other donors include Oxfam, CUSO (Canadian University Services Organisation), and ActionAid. In 1860, the then Provincial Government of Bengal promulgated the Societies Registration Act No. XXI to improve the legal position of societies for the promotion of literature, science or the fine arts, for diffusion of knowledge or for charitable purposes. The First Ordinance No. XLVI of 1961 was promulgated on the 2nd of December, 1961, by the Martial Law Administration of President Ayub Khan. It made registration mandatory for all NGOs working in what was then East Pakistan and made the Director of Social Welfare responsible for ensuring registration. The Foreign Donations (Voluntary Activities) Regulation Ordinance 1978 was promulgated .’on the 15th of November 1978 by President Ziaur Rahman to regulate the receipts and expenditure of foreign donations for voluntary activities. The Foreign Donations (Voluntary Activities) Regulation Rules were promulgated on December 12th, 1978, requiring all NGOs intending to receive foreign funds to be registered under specified prescribed rules. The Ershad Government promulgated the Foreign Contributions (Regulations) Ordinance 1982 on September 6th, which reiterated that no individual representing NGOs or the organisations themselves would be allowed to give or receive ‘any foreign contribution without prior permission from the state. The government amended the Foreign Donations (Voluntary Activities) Regulation Rules 1978 on May l4th, 1990.  The Foreign Donations (Voluntary Activities) Regulation Ordinance, 1978 (hereafter FDRO, 1978), for example, defined ‘foreign donations’ as donations, contributions or grants of any kind made for any voluntary activity in Bangladesh by any foreign government or organization or a citizen of a foreign state, or by any Bangladeshi citizen living or working abroad (Ordinance XLVI:. 1978). The foreign contributions Regulation/Ordinance, 1982, hereafter FCO, 1982 replaced the term itself by foreign contribution’, defined as any donation, grant or assistance made by any government, organisation or citizen of a foreign state (Ordinance XXXI: Section 3: 1982). According to FCO, 1982, any foreign payment, in cash or kind, even a ticket for a journey abroad, has to be considered as a foreign contribution.  The ordinances and regulations are a) The Foreign Donations (Voluntary Activities) Regulation Ordinances, 1978.
- The Foreign Donations (Voluntary Activities) Regulation Rules, 1979.
- The Foreign Contributions (Regulation) Ordinance, 1982.
- Working procedure for Foreign and Foreign assisted Bangladeshi Non-Government Voluntary Organizations, 1993.
- Arranging ‘one-stop service’ for NGO registration and processing of project proposals, NGOs are not required to go to any other office or authority for these purposes. (Circular: Section 1 1993).
- Approving project proposals submitted by NGOs, releasing project funds and approving appointments of expatriate officials/consultants and their tenure of services (Circular: Section 2: 1993).
- Scrutinizing and evaluating reports and statements submitted by NGOS.
- Coordinating, monitoring, inspecting and evaluating NGO programmes and auditing their income and expenditure of accounts.
- Collecting fees/charges fixed by the government.
- Examining and taking necessary action on the basis of reports on NGO programmes.
- Enlisting Chartered Accounts for auditing NGO accounts.
- Approving receipts of ‘one-time contribution’ by NGOs. Such contribution is made for buying equipment or for construction of a house/building (Circular- Section 2: 1993).
NAB is also responsible for maintaining communication with concerned Ministries/Agencies on subjects related to operations of NGOs in the country and for obtaining views/opinions from these agencies when required. Government ordinance/regulations requires necessary assistance and co-operation from concerned Mimistries/Divisions, other Subordinate Departments/Directories, Divisional Commissioners and Deputy Commissioners for smooth discharge of the stipulated responsibilities of NAB. The Ordinances/ Regulations also require that different Ministries/Divisions of the government and their subordinate offices will consult NAB prior to entering any Agreement Memorandum of Understanding (MOU) with foreign and foreign assisted Bangladeshi NGOs. Before signing such Agreements/MOUs the concerned NGO must be registered under section 3(2) of the Foreign Donations (Voluntary Activities) Regulation Ordinance 1978 (Circular: Section 4: 1993). Such agreements (MOU) are usually signed between an NGO and the government for programmes like running a certain number of schools on behalf of the government or collaborative programme like Expanded Immnunization Programme. The Home Ministry is required to give its decision within 160 days of receipt of the letter from the NAB. In considering the application, the Home Ministry is expected to look into the following matters:
- Whether the organisation or person (s) involved is/are involved in anti-state/antisocial activities and whether the persons concerned had been convicted for these or any other immoral act.
- Identities of the members of the executive committee of the organisation, their relationship and social status.
- Previous experience of the Organisation in social welfare activities.
- Whether the organisation has its own office (Circular: Section 6.1 (d): 1993).
If the NAB does not receive the Home Ministry’s decision within the specified time, the NAB is required to send a written reminder to the Home Ministry after 30 (thirty) days (Circular: Section 6. 1 (d): 1993). It will then be presurned that the Ministry does not have any objection to the application for registration of the NGO concerned. The NAB is required by law to issue the letter of registration 90 days of receipt of the application. The registration remains valid for 5 years unless canceled by the state (Circular: Section 6.1(d): 1993). The state retains the right to cancel the registration of an NGO. Registration can be renewed for 5 years provided NAB is satisfied with the performance of the NGO. The constitution of the NGO, names and addresses of the members of the executive committee, minutes of the annual general meetings of the NGO and the fee for renewal or registration should accompany renewal applications.
While scrutinizing, the NAB has to consider whether the project contributes to socioeconomic development, without duplicating existing state and non-government programmes (Circular: Section 7(l): 1993). After scrutiny, the NAB forwards the proposal to the relevant Ministry, which has to reply within 21 days. If does not, the NAB can assume that the Ministry has no objection to the project (Circular: Section 7(d): 1993). However, if the Ministry has an objection to the project or recommends modification of the project, the arguments will have to be presented to the NAB in detail. If it finds the objection/modification unacceptable, the NAB may approve the project after obtaining clearance from the Prime Minister’s Office (Circular: Section 7(e): 1993). The NAB, if necessary, can approve the project proposal after making changes and modifications. But in such a case the opinions and limitations of donor agency/agencies and relevant NGOs should be considered (Circular: Section 7(f): 1993).
The NAB is required to communicate its decision within 45 days of receiving the project proposal with the requisite details (circular: Section 7(g) :1993). Any person or organisation registered as an NGO may receive or operate any foreign donation only with prior approval or permission of the state (Regulation Rules: Section 4(l): 1978). To receive/utilize foreign donations for approved projects NGOs must submit the application (through FD-2 form in triplicate) to the Director General of the NAB. The NAB issues the order to release foreign funds after consideration of the activities and budget of the NGOs approved projects, the progress and implementation of on‑going projects and documents relating to receipt of foreign funds. The NAB sends copies of the order to the ERD, Bangladesh Bank (the central bank), relevant Ministries, Divisional Commissioner(s) and donor agencies for ‘information and necessary action. In case of an approved project, to receive further installment of a foreign donation the NGO has to submit an application using form FD-2 in triplicate. Subsequently, statements of foreign donations received and spent in the previous year must be submitted on form FD-3 in triplicate. The bureau communicates its decision within 14 days of receipt of the application, after examining the annual progress report on the project.
Applications to appoint/extend the tenure of expatriates in approved projects must be submitted by the relevant NGO to the NAB for approval or form FD-9. The NAB will ask the Home Ministry to comment within 25 days. Each proposal for appointment of expatriate personnel must be within the person-months approved by the NAB. Statements of their emoluments (even if received from outside Bangladesh) must be submitted to the NAB every year. To facilitate easy accounting, all persons or organisations, registered as NGOS must receive all funds in foreign exchange through a single specified account opened in any scheduled Bank of Bangladesh which must submit statements of such funds to the central bank, i.e., The Bangladesh Bank (Regulation Rules: Section 4(4): 1978). The scheduled banks maintaining such accounts (in both foreign currency and Bangladeshi Taka?) are now required to submit a statement on foreign funds to the Bangladesh Bank and the Director General of NAB every six months (Circular: Section 5(h): 1993). At present the Bangladesh Bank is supposed in its turn to submit statements to the ERD as well as to the Director General of NAB. All NGO payments exceeding Taka 10,000 have to be made by cheque and all salaries and allowances must be paid through bank accounts (Circular: Section 5(l): 1993).  The Foreign Donation (Voluntary Activities) Regulation Ordinance 1978 Section 3(l) and Section 3(3) and the Foreign Contribution (Regulation) Ordinance 1982, Section, 4(l).  The Foreign Donation Regulation Act of 1978.  The Exchange Control Regulation Act, 1947.  The 1860 Societies’ Registration Act.  The Government’s Audit Report, 1992.  Some sections of the Ordinance of 1961 may be incorporated in the Ordinance of 1978.  The Bengali version of Circular 1993, ‘Paripatra’ Section 6(KA).  According to the English version of the ‘Partipatra’ (Section 7.1:3).