NGO Governance in Nepal: Convoluted Exercise for Ideal Desire

Shree Krishna Shrestha's picture
Abstract: 
The notion of good governance is viewed as an important component for the effective service delivery. Good governance with moral conduct and ethical behavior is tied up with the accountability. This paper, owing to this fact, attempts to see the trends of NGO accountability for establishing good governance in Nepal. Furthermore, this paper sketches briefly the emergence and the growth of CSOs and NGOs in Nepal and their pursuance to achieve good governance by being accountable and responsible entities. It also assesses the legal background for the support of NGOs activities. The paper discusses the practice followed by the surveyed NGOs in major activities like planning, financial management, operation programming, staffing, board management and community relationship of the Nepalese NGOs. A total of 93 NGOs were selected on the basis of purposive sampling. Attention was paid to include NGOs operating in different parts of the country, and carrying out various activities ranging from advocacy to community development and human rights. The respondents were mainly the board members of the sample NGOs.
Main Article: 

1. Introduction

The significance of ‘Good Governance’ in any organization, irrespective of nature, size, scope and mandate, is being increasingly recognized for its due contribution to the overall effectiveness of an organization. Comparatively, this concept is new for the third sector or civil society organizations that always claimed working for the betterment of the society and community, though it seems hard to eschew when questions are raised about their conduct and behavior than their accomplishments (Jordan and Tuijl, 2006; Peterson, 2010; Laughlin and Andringa, 2010) ). It is generally conceived that everyone's actions should be ethically or morally guided without exception to the non- governmental organizations. In this context, this paper attempts to present the trend of accountability practices of the non-governmental organizations (NGOs) in Nepal, and its reflections on establishing good governance practices. For the purpose of this paper, the term the civil society organizations (CSOs) and NGOs are interchangeably used.

Over the past two decades, there has been an exponential growth in the number of CSOs, operating across the entire spectrum of development activities in the globe, and Nepal is no exception. Despite the increasing number of CSOs playing crucial role in a number of areas, there has been an absence of a plausible framework to ensure the accountabilities to good governance.

The definitions of CSOs are diverse. The differences among them are often rooted in alternative social and political philosophies, which are generally difficult to reconcile with each other. The concept of civil society, at an elementary level, reflects the values of associational life such as interest groups, professional associations, voluntary agencies, grassroots organizations, social movements, social networks and shared concerns (Ebrahim, 2003; Edwards and Fowler, 2003; Kaldor, 2003; Kearns, 1994; Lloyd, 2005).

The recent shift in the emphasis from government to governance indicates that addressing the concerns of people cannot be left only to the goodwill of the state; it must include other actors like CSOs and the private sectors which together can ensure that managing the affairs should reflect the fulfillment of the needs and aspirations of the ordinary people (Jordan and Tuijl, 2006; Peterson, 2010; Antlov, Ibrahim and Tuijl, 2005; Gill, 2001; Edwards, 2004). Democratic political framework for governance has suggested three independent but interrelated functions: legislative, executive and judiciary, so that the public institutions would function as check and balance in the interest of the hoi polloi. With the growing disenchantment of the ordinary in the governmental institutions; its limited capacity to respond to the diverse interests and expectations of the people; increasing gap between the government policies and their implementation; and the prevalence of the incidences of poverty due to exclusion and marginalization of the most disadvantaged have created further passage to the role of CSOs in governance. Besides, CSOs are viewed as effective watchdogs that can curb authoritarian tendencies of the democratic state (Independent Sector and Board Source, 2009; Panel of Nonprofit Sector, 2007; Bendell, 2005; Jordan and Tuijl, 2006; Salomon and Geller, 2005).

In many countries, CSOs are viewed as formidable partners to meet the modern governance challenges. As more authoritarian and ineffective approaches to governance lose ground, the CSOs are emerging as qualified agents in the implementation of policies and programs that are more concerned with the people, and are generally beyond the easy reach of bureaucracy and of little interest to the private sector. (Antlov, Ibrahim, and Tuijl , 2005; Edwards and Hulme, 1995; Bendell, 2005; Kaufmann and Kraay, 2002; Mulgan, 2000).

2. Governance of Civil Society Organizations

Graham, Amos and Plumptre (2003) define governance as “the interactions among structures, processes and traditions that determine how power and responsibilities are exercised, how decisions are taken, and how citizens or other stakeholders have their say.” But, what does governance mean when it comes to civil-society-based organizations or NGOs? At present, there is no consensus about one preferred structure. However, the structure of CSOs is mostly based on legal mandates having size, mission policies and established procedures so that (1) boards and office bearers understand their fiduciary responsibilities, (2) assets are managed properly, and (3) the charitable purposes of the organization are met. A failure to meet these obligations is a kind of breach of responsibilities. Therefore, effective internal control to protect the organizational interest definitely ensures the accountability, and promotes the governance of CSOs regardless of their size or complexity of operations.

Bradshaw, et al (1998), point out that there is no single, but best governance structure that would meet the needs of CSOs and, thus, recommends the use of a contingency approach in this respect. CSOs can be classified in many ways (Woodward, 1965; Thompson, 1967; Perrow, 1967), which can be used as guidance. Such classifications in various typologies are mega hospitals, universities, zoos and museums, public galleries, theaters and community centers that are not sponsored by the government and may have one thing in common i.e. lack of profit orientation. But, they are different in other respects, like organizational structure, complexities in their operations, financial resources, the size and characteristics of the public they serve, their legal base and the technology they use to conduct their business. The literature is full of innovative and interesting ideas about possible ways to create a typology, to classify or to categorize CSOs, as illustrated by various work (Bradshaw et al 1998; Frey 2003; Ruys, 2005; Mayhew, 2005).

3. Status of Nepalese NGOs

The altruistic notion, philanthropic works and serving the people are cultural values associated with religious theme since the very beginning in the Nepalese society (K.C., 2007). We can find many 'dharmasala'/pati/pauwa (guest/resting houses)', kuwa/panera (wells), Chuatari (resting place) (Shrestha, 2005; Chand, 1999). CSOs existed in the form of social, cultural, philanthropic and religious groups (Dhungel, 2002). The noted social institutions such as Guthi (trust for land in hill areas and social institutions for social activities basically in Newar community), dhikur (saving/credit) emerged out to address the economic and social needs of the then society. Traditionally, the role of these institutions was confined in and around the welfare-ambit, revolving around charitable, philanthropic and altruistic activities. These institutions are still prevailing and continuing their activities confined to their members and is governed by their own norms. But, these are not yet registered with the government, and, hence, they are not recorded.

The evolution of modern non-governmental organizations (NGOs) in Nepal has been rather slow as compared to the rest of the world, and even with its neighboring countries (Chand, 1999). It is evident that the establishment and operation of NGOs is aligned with Nepal's democratic polity, which evolved only after 1990. However, during the democratic era of 1951-61, CSOs were established and operated. Before 1990, the country was governed by the autocratic regime that always thought CSOs and NGOs were not suitable to its very survival, though NGOs were promoted with the support and control of royal family members. Therefore, the increasing role of NGOs as a development partner in Nepal has been observed only after the reinstatement of democracy in 1990. Since then, the wave of forming NGOs, focusing in various fields and areas, has shown an upsurge, as indicated by Table 1. Considering the important role played by NGOs, especially at the grassroots level, Nepal government has promoted NGOs as development partners from the Eighth Plan (NPC, 1993). On the basis of their objectives and functions, the Nepalese NGOs, now, have been categorized into ten broad areas viz. Children Welfare, Health Services, Services to the Handicapped and Disabled, Community Development, Youth Development, Moral Development, Environment Protection, Education, and HIV/AIDS and Drug Control ( NPC, 2003; Social Welfare Council, 2003). In the subsequent plans (Ninth Plan 1998 and Tenth Plan 2003), the government further expanded their roles and responsibilities.

The Tenth Plan (2002-2007) had explicitly mentioned the expected roles of the NGOs and CSOs. Such expected roles were to support achieve the target of poverty alleviation, support in social reforms, population control, campaign for people’s consciousness, skill development, women’s education and employment, mainstreaming of indigenous people, disabled and dalits, and provide security to helpless people. The Plan also mentioned the need to maintain transparent accounts with regular audit by NGOs. Since the last few years, NGOs have also been involved in conflict-related sector, such as peace-building, conflict-management, etc. (Maskay, 2000; Chand, 2004). The Interim Plan (2007-9) has also visualized the importance of the continuation of I/NGO activities in development, however, the Plan has shown little apprehension on their transparency and accountability, so it has focused more on making these organizations accountable.

The NGOs engaged in social development have now been actively involving themselves in relief package and development, along with other activities like resource mobilization, social mobilization, awareness-building, skill development and rehabilitation (Timsina, 2007). Social development has been gradually covered in projects like drinking water, micro-hydro, forest conservation, human rights protection, and educational and economic development.

The Local Self-Governance Act 1999 has categorically indicated the need to develop partnership with NGOs. Article 47 has especially mentioned that while formulating local plans and programs, the local bodies i.e. Village Development Committees (VDCs), Municipalities and District Development Committees (DDCs) shall have to maintain coordination with governmental, non-governmental and donor agencies to implement programs in their respective areas.

The following table represents the types and number of NGOs registered under Social Welfare Council. However, the number given in the table might not have included those NGOs which have been registered under District Administrative Office or other governmental organizations.

Table 1: Number-wise growth of NGOs in Nepal

SN Sector-specific Number of NGOs registered with Social Welfare Council
1 AIDS and Abuse Control 85
2 Child Welfare 879
3 Community and Rural Development Services 16463
4 Education Development 415
5 Environmental Protection 1229
6 Handicapped and Disabled Services 548
7 Health Services 618
8 Moral development 738
9 Women Services 2112
10 Youth Services 3931
  Total 27018

Source: Social Welfare Council, June 2009

The nature, size, objectives, scope and structure of the NGOs in Nepal vary significantly. Some are larger covering each and every district and involved in varied sectors, whereas many are smaller concentrating on the limited areas with very limited responsibilities. Also, the growing number of NGOs is one of the signs of the development of governance partners in the service delivery sector. However, it does not reflect whether the growing number of NGOs is indicative of the promotion of governance practices or not.

4. Objectives and Methodology for the Paper

This paper attempts to present the development of governance practices and adaptation of governance mechanism by non-governmental organizations of Nepal. A cursory study was conducted at 2008-9 to assess the nature of governance of NGOs. A total of 93 NGOs were selected on the basis of purposeful sampling. Attention was paid to include NGOs operating in different parts of the country, and carrying out various activities ranging from advocacy to community development to human rights. The respondents were mainly the board members of the sample NGOs. The questions were basically centered on the decision-making process of NGOs, and other responsible agents (Board or Management or Joint), since the decision-making process of the board has much to do with the governance practice of NGOs. The governance index developed by Singapore NGO Board has been adopted to analyze the governance status of Nepalese NGOs (Annex 1).

5. Discussion and Results

This unit discusses the practices followed by surveyed NGOs on various issues. The major activities included are: Planning, Financial Management, Operation Programming, Staffing, Board Management and Community Relationship, Governance Dimension and the Present Status of the Nepalese NGO. Each of the activity has certain statement supposed to be decided by either the Board, Management or Jointly. The ideal responsibility for deciding or performing the task is presented in ANNEX 1, as per the guidelines of Singapore NGO Board. The deviation between ideal framework and practice indicates the stages of NGO governance of the NGOs in Nepal.

5.1 Strategic Direction

It is generally agreed that an NGO should have vision, mission and values that provide strategic directions to carry out their activities. It is the primary objective to assess whether NGOs are seriously engaged in governance practices. Through the survey, it was found that more than two-third of the total surveyed NGOs have vision, mission and values, whereas the rest do not. This indicates that the governance concept has just begun among the NGOs.

Table 2: Strategic Direction

Vision Mission Values
Yes No Total Yes No Total Yes No Total
62 31 93 62 31 93 57 36 93
67 33 100 67 33 100 61 39 100

Source: field survey

5.2 Comparing Board and Management Responsibilities in different activities of NGOs

5.2.1 Planning

Responses from the surveyed NGOs on the seven statements concerning planning (Table 3) reveal that except for a few functions such as ‘approval of long-range goal and strategy’ and ‘approval of annual plans’, there exists deviation between practice and ideal framework indicating that the governance practice related to planning function among the NGOs is still in its infancy.

Table 3: Responses on different aspects of Planning

Functions Board Mgmt Joint Ideal Major Responsibility
Direct the process of planning 51 44 5 Management
Provide input to long-range goal and strategy 51 19 30 Management
Approve long-range goal and strategy 81 14 5 Board
Formulate annual objectives/plans 16 56 28 Management
Approve annual objectives /plans 81 19   Board
Prepare performance reports on achievement of goal and strategy 16 56 28 Managemen
Monitor achievement of goal and strategy 56   44 Joint

Total number of NGOs 93 (Figures are percentage)

Source: field survey

5.2.2 Financial Management

The responses to ten statements reflecting the governance practice in financial management from the surveyed NGOs, as presented in Table 4, indicate that financial management is one of the significant aspects of an organization in the sense that it is sensitive and critical for the governance practice. Most of the NGOs have been found to be following the ideal governance framework as regards financial management, except for ‘monitoring expenditure” and “signing of funding arrangement”. This shows that NGOs are still unaware as who is to undertake which responsibility.

Table 4: Responses for the various aspects of Financial Management

Functions Board Mgmt Joint  
Prepare preliminary budget 13 75 12 Management
Finalize and approve budget 75 6 19 Board
Monitor that expenditure is within budget during the year 22 21 57 Management
Approve expenditure outside authorized budget 81 13 7 Board
Prepare financial statements 13 75 12 Management
Approve financial statements 88 6 6 Board
Draft financial management policies and procedures 25 63 12 Management
Approve financial management policies and procedures 94   6 Board
Sign -off on funding arrangements with the government 48 31 21 Management
Ensure annual audit of NGO accounts 88 6 6 Board

Total number of NGOs 93 (Figures are percentage)

Source: field survey

5.2.3 Operational programming

Operational programming includes those activities that are to be carried out for the implementation of the policies, plans and programs. Except for a few strategic functions such as monitoring and evaluation, most of these activities are related to the purview of management. With respect to the major responsibilities concerning various functions of operating programming, most of the surveyed NGOs (Table 5) have been following the practices as suggested by the ideal framework. It indicates that these NGOs are fairly clear about the governance pattern regarding the operating programming.

Table 5: Responses regarding major responsibilities for operational programming

Functions Board Mgmt Joint  
Assess stakeholders 'needs 7 72 21 Management
Oversee evaluation of products, services and programs 75 6 19 Board
Prepare and maintain program report   75 25 Management
Solicit contributions in fund-raising campaign 31 31 38 Joint
Organize fund-raising campaign 25 56 19 Management
Mange the delivery of program/services 12 75 13 Management

Total number of NGOs 93 (Figures are percentage)

Source: field survey

5.2.4 Staffing

The staffing function includes hiring, providing direction and managing disputes within the organization. The responsibilities, depending upon the nature of function, for handling these functions need to be divided between the board and management. Employing Chief Executive Officer is to be solely handled by the board, and the research findings show that all the respondent NGOs have followed this ideal framework. With respect to other functions of staffing, the majority of the surveyed NGOs have similarity (Table 6) to what has been suggested by the ideal framework, except in the case of 'managing dispute'. Managing dispute is a function of management, but it has been handled mostly by the board, which is an unnecessary interference by the board in the managerial function.

Table 6: Responses regarding the major responsibilities for Staffing

Functions Board Management Joint Ideal framework
Employ the CEO 100     Board
Hire and discharge staff 25 75 25 Management
Direct the work of staff 43 50 7 Management
Decision to add staff (if outside approved budget ) 63 12 25 Board
Manage discord among staff and management 49 31 20 Management

Total 93 NGOS (Figures are percentage)

Source: field survey

5.2.4 Board Management

Essentially, the board is the central policy-making body constituted from among the organization members. The board has to translate the general wishes, guidelines and direction of the general assembly into strategic vision and plan of the organization. The board is responsible to formulate policies, rules and regulations for undertaking the strategic vision, and plan into real practices. The majority of the surveyed NGOs have been found to be following the ideal frame work (Table 7), except for 'taking minutes' and ' follow-up activities'.

Table 7 : Responses regarding the major responsibilities of Board Management

Functions Responses Ideal Framework
Board Mgmt Joint
Appoint Board members 89 6 5 Board/General Assembly
Promote attendance at Board/committee meetings 89 6 5 Board
Plan agenda for Board meetings 37 26 37 Joint
Take minutes at Board meetings 71 25 4 Management
Determine committee structure 81 9 10 Board
Sign legal documents and contracts 69 10 21 Board /Management
Follow-up to ensure implementation of Board and committee meetings 38 31 31 Management
Appoint committee members 88 6 6 Board
Settle conflicts between members 81 6 13 Board

Total 93 NGOs (Figures are in percentage)

Source: field survey

5.2.5 Community Relations

NGOs have to maintain, develop and sustain the relationship with community through the promotion of their strategic directions, performances and achievements of the organization. These functions are eventually associated with the responsibilities of all the actors affiliated with the NGO. NGOs in Nepal have been found to be marching in this direction (Table 8), however, the level of their involvement varies.

Table 8: Responses regarding the major responsibilities for Community Relations

Functions Board Mgmt Joint Ideal Framework
Interpret NGO to the community 12 44 44 Joint
Prepare marketing materials /news stories   88 12 Management
Provide linkage with other organizations 4 27 69 Joint

Total 93 NGOs (Figures are percentage)

Source: field survey

5.2.6 Focus to the Governance Dimensions

The focus of Nepalese NGOs on various governance dimensions considered for the study vary from 46% to 69%. Two-third of the surveyed NGOs have been found to be paying attention to financial management, followed by operational programming, community relations and staffing. 50% of the surveyed NGOs have paid attention to planning, and only four-fifth of the surveyed NGOs have been found to be paying attention to board management. This shows that these NGOs have initiated practices to follow those governance dimensions which are based either on hard data such as financial management or easy-to-practice such as operational programming.

Table 9: Governance dimension of Nepalese NGOs

Governance Dimensions Total percentage
Planning 50%
Financial Accountability 68.75%
Operating Programming 58.33%
Staffing 56.25%
Board Management 46.25%
Community Relations 58.33%

Total NGOs:93

Source: field survey

5.2.7 Stages of Nepalese NGO Governance

The surveyed NGOs were found to be practicing a combination of different governance dimensions as against the ideal framework. Some were found practicing a high level of governance dimensions in planning, as suggested by the ideal framework, while the same organizations have been found to be practicing less in governance dimension in board management. The score of individual organizations on the various governance dimensions as against the ideal framework has been computed. The score of total ideal framework is divided into 5 categories (Table 10), indicating different stages of NGO governance--working governance, collective governance, transitional governance, traditional governance and policy governance. What is observed is that most of the Nepalese NGOs are in the transitional governance and traditional governance.

Table 10: Stages of Nepalese NGO Governance

  Governance score  
Working Governance Up to 35% 8.60
Collective Governance 35-44.99% 18.27
Transitional Governance 45-59.99% 39.78
Traditional governance 60-75% 26.88
Policy governance More than 75% 6.45

Total no. 93

Source: field survey

The above discussions reveal that Nepalese NGOs have been striving to be in tune to stand up in the governance race, however, except for the fact that a few NGOs have not able to synchronize with all governance dimensions, that is to say they have not been able to distance themselves from the organization legacy and founder-syndrome. Similarly, those NGOs that could not adopt the ideal framework of governance dimensions are influenced by the founder-syndrome.

6. Conclusions

The issue of good governance is now widely regarded as one of the key ingredients of sustainability, which the NGOs would not like to lose sight of. Governance as a process and as a result should be internalized and expressed in the form of knowledge and action. Nepalese NGOs, which have emerged lately in the governance scene, have been advocating for promoting good governance and owing social responsibilities. Without exception, this study shows that they are trying to do so by playing their roles in this direction. However, the efforts to promote good governance within the NGO sector in Nepal are dawdling. The NGOs must improve their governance to contribute for good governance by being accountable both to designing and implementing their programmes. In this context, efforts are required to gear up the NGO governance. This shows that Nepalese NGOs need orientation and skills to improve their governance structure and inculcate accountability and transparency.

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Annex 1

Hong Kong NGO Board

Comparing Board and Management Responsibilities

A. Planning

Functions Major Responsibility
Direct the process of planning Management
Provide input to long range goals and strategy Management
Approve long range goals and strategy Board
Formulate annual objectives/plans Management
Approve annual objectives/plans Board
Prepare performance reports on achievement of goals and strategy Management
Monitor achievement of goals and strategy Joint

B. Financial Management

Prepare preliminary budget Management
Finalise and approve budget Board
Monitor that expenditure is within budget during the year Management
Approve expenditures outside authorized budget Board
Prepare financial statements Management
Approve financial statements Board
Draft financial management policies and procedures Management
Approve financial management policies and procedures Board
Sign-off on funding arrangements with the government Management
Ensure annual audit of NGO accounts Board

C. Operational programming

Assess stakeholders' needs Management
Oversee evaluation of products, services and programs Board
Prepare and maintain program reports Management
Solicit contributions in fundraising campaigns Joint
Organize fund raising campaigns Management
Manage the delivery of programs/services Management

D. Staffing

Employ the CEO Board
Hire and discharge staff Management
Direct the work of staff Management
Decision to add staff (if outside approved budget) Board
Manage discord among staff and between staff and management Management

E. Board management

Appoint Board members Board/ General Assembly
Promote attendance at Board/committee meetings Board
Plan agenda for Board meetings Joint
Take minutes at Board meetings Management
Determine committee structure Board
Sign legal documents/contracts Board/Management
Follow-up to ensure implementation of Board and committee meetings Management
Appoint committee members Board
Settle conflicts between members Board

F. Community Relations

Interpret NGO to the community Joint
Prepare marketing materials/news stories Management
Provide linkages with other organizations