Are large not-for-profits undermining civil society?

Future World Giving

Do large not-for-profits feel remote? Image by Don Harder via Flickr

On August 6th CIVICUS published a letter, co-signed by organisations and individuals from leading civil society organisations, calling for a debate about the structure, and indeed the very nature of formal, professionalised civil society.

 

The letter asks whether large, professionalised not-for-profit organisations are alienating the public through bureaucracy and their failure to engage with informal community networks. It questions whether large organisations have become too integrated into the political economy to be able to effectively challenge it and whether increased scale brings reduced appetite for risk. The letter considers whether courting funders in order to pursue a charitable mission means a transfer of accountability from beneficiaries and communities to donors and grant makers.

 

I, like the CIVICUS general secretary, Dhananjayan Sriskandarajah in an article he wrote for the Guardian, recognise the irony in my debating issues of detachment in a policy blog for a large global and highly professionalised not-for-profit organisation. Nevertheless, for Charities Aid Foundation to ignore such questions would be negligent of our duty to engage in debates that concern the development of civil society.

 

The first thing to note in this discussion, as Mr Sriskandarajah does in his article, is that the number of not-for-profit organisations has increased radically in recent years. There are thought to be around 81,000 international NGOs and networks, 90% of them launched since 1975. With so many international organisations – often large, professional bodies with complex governance structures – it is understandable that many feel that the sector has become detached from its beneficiaries. However, I think we need to segment these international organisations rather than see them as a homogenous group.

 

The remoteness of international operational organisations

 

For operational organisations, i.e. those who deliver projects and services on the ground, any sense that the management and governance of the organisation is out of touch with the communities in which they operate should be the source of grave concern. In CAFs report, Building Trust in Charitable Giving, which is part of the Future World Giving series, we suggest that international not-for-profit organisations have a responsibility to engage the communities in which they work, not merely to improve their operations, but to leave people with a positive impression of the experience of participating in civil society. Indeed, we have suggested that governments should issue guidance to not-for-profits with headquarters in their jurisdiction, establishing the expectation that they engage local communities in the foreign countries in which they operate.

 

“With massive long term growth forecast for many developing economies, governments should be holding international not-for-profits to account for the extent to which they are engaging beneficiaries – who may one day be donors themselves – in civil society. Not-for-profits are currently encouraged to engage beneficiaries to aid impact measurement and to identify improvements in service delivery. However, by making not-for-profits understand that by engaging beneficiaries fully, they can hasten the development of domestic philanthropy, governments could ‘nudge’ not-for- profits into more collaborative approaches.”
Building Trust in Charitable Giving, Charities Aid Foundation

 

Though many international organisations are now committed to building trust in local communities and designing services around their input, many are still failing to do so. However, to blame the influence of donors for this failure to focus accountability downwards oversimplifies the issue. According to a 2006 survey by Keystone – admittedly a rather old source – 89 per cent of donors felt that it was ‘critically important’ (58 per cent) or ‘important’ (31 per cent) to factor the voices of beneficiaries into assessing the quality of performance. However, only 26 per cent of donors regularly asked for performance indicators to be designed with beneficiaries in mind. Donors then, are concerned with the need to engage beneficiaries and communities, but not enough to demand it. As such, it is the responsibility of not-for-profits, or possibly even governments, to establish the expectation that such information is forthcoming to donors.

 

Appetite for risk and transnational advocacy networks

 

The concern expressed in the letter published by CIVICUS; that the size and professionalization of large (and small)  not-for-profit organisations, and the extent to which they have become integrated into the political economy, reduces their appetite for risk, merits more scrutiny. Clearly, for many not-for-profit organisations that is a real concern. Indeed, there has been a clear trend for many organisations to be funded through corporate commissioning processes to deliver projects and services on a contract basis. This financial dependence on funders can diminish an organisation’s appetite to speak out in criticism of their funders, especially when those funders are agents of the state.

 

But whilst this is a concern for many operational organisations, we should note that, for international organisations at least, the trend has been for many such organisations to become funders of, rather than delivers of projects and services on the ground. In many ways, these global organisations have a larger appetite for risk than organisations with a presence on the ground. The success of this model can be measured by the recent trend of governments attempting to suppress the advocacy of not-for-profits through regressive legislation and the subsequent development of transnational advocacy networks that can internationalise issues and transfer legal risk away from domestic organisations – as detailed in our publication, Enabling an Independent Not-for-profit Sector.

 

In the past 3 decades a growing civic space and infrastructure improvements in many developing nations has led to more domestically-founded not-for-profit organisations displacing international organisations as the channels for aid. In addition, the number of small, local advocacy organisations has boomed. A 2008 University of Oslo study found that the number of not-for-profit advocacy groups devoted to public interest causes such as the environment, human rights, women’s issues and anti-corruption has been “multiplying  exponentially in recent years, particularly in countries undertaking democratic transitions”.

 

This new environment, in which domestic organisations are growing in number and influence and global organisations are increasingly focusing on advocacy, is creating a transnational advocacy web in which small, local movements can be passed up to large international organisations who, due to their lack of domestic presence, can speak freely without fear of reprisal from government. In this way, large international organisations can increase the agency of local movements by up-scaling advocacy.

 

“The advancement of democracy and political pluralism in emerging economies has thus created a double opportunity for not-for-profit advocacy with domestic organisations having greater resources and an improved civic mandate to campaign. At the same time international organisations are increasingly engaging in international advocacy work as their role as implementers of aid diminishes.“
Enabling an Independent Not-for-profit Sector, Charities Aid Foundation

 

Part of the system, subject to its failings

 

There is a simple truth to one element of the letter published last week; the larger an not-for-profit is, the more beholden it is to the political economy. Large, formal organisations are regulated by governments, are accountable to donors and funders, have to be responsive to political machinations and are to some extent driven by staff with a vested interest in perpetuating their existence. As organisations grow they require more complex and interdependent relationships with others sectors. With every connecting thread, not-for-profits become more securely stitched into the fabric of the very system that they seek to influence. Good governance is the only way to address this inevitable problem and trustees should be encouraged to challenge strategies which prioritise stability above charitable mission.

 

But even where not-for-profits are able to resist succumbing to the emasculating systemic forces, all formally recognised organisations are reliant on financial resources and as such sacrifice a certain amount of sovereignty to funders, regulators and financial institutions such as banks. The extent to which formal civil society is subject to the financial sector is being made increasingly apparent in the wake of the financial crisis and the post 9/11 environment in which banks, in response to the threat of legal challenge and guidance by the Financial Action Task Force (FATF), have a reduced appetite for risk in funding not-for-profits which operate in conflict zones. The effect has been crippling for those seeking to aid the people of Somalia for example.

 

But there is an alternative reading of the relationship between not-for-profits and the political economy. Though the odds are stacked against us, we have a strong history of affecting the system rather than merely being subject to it. Looking back at the Somalia example, we see how the tail is attempting to wag the dog. Oxfam America and Adeso have been applying mounting pressure on the US Treasury to relax restrictions on fund transfers to Somalia through writing letters, creating viral videos and creating petitions. This brings us to an alternative understanding of large international not-for-profits. Whilst on one hand size brings dangers for organisations, it also brings increased reach and the ability to influence.

 

 

The initiative started by CIVICUS should be welcomed and the opportunity for introspection should be grasped by large not-for-profits. We should all be able to step outside of our short-term operational mindset and view our organisations from the perspective of the man, or woman on the street. In an increasingly globalised world many people feel that the forces which affect their lives are increasingly remote. Not-for-profit organisations cannot afford to allow that perception, even if it is false, to diminish public trust in civil society.

 

 

Adam Pickering

 

 

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