(Sample Material) Study Kit on Current Affairs for UPSC Mains Examination

Polity, Governance and Social Justice: Utility and Governance Challenges Facing the NGO Sector

Non-Governmental organization, or NGO, is a legally constituted organization started by natural and legal persons operating independently from any government. The term has been originated from the United Nations (UN), referring to organizations that do not form part of the government and are not conventional for profit business. The cases in which NGOs are funded totally or partially by governments, the NGO maintains its non-governmental status by excluding government representatives from membership in the organization.

However, broadly, the term NGO could be applied to any non-profit organization which is independent from government. NGOs are typically value-based organizations which depend, in whole or in part, on charitable donations and voluntary service. Although the NGO sector has become increasingly professional over the last two decades, principles of altruism and voluntarism remain its key defining characteristics.

NGO Sector in India

NGOs in India are engaged in a wide range of activities. The same NGO may be involved in multiple areas of operation. Micro-credit is one of the most’ common and increasingly popular type of operation of NGOs, not only because of its outreach to the poor, especially women, but also for the reason that it has also become a legally endorsed income generating activity helping development and sustainability of the NGOs themselves. Other popular programmes include education, health, family planning, environment human rights women and children welfare, etc.

The number of internationally operating NGOs 15 estimated to be 40,000. National numbers are even higher. In India, since the Fifth Five Year Plan recognised non-government organisations (NGOs) as an alternative tool to development, a number of them have sprouted up allover the country. India currently is estimated to have around 3.3 million NGOs in year 2009, which is one NGO for less than 400 Indians, and many times the number of primary schools and primary health centres in India.

For effective implementation of Government programme, monitoring and internal-auditing are two integral components. The NGO sector has contributed significantly to finding innovative solutions to poverty, deprivation, discrimination and excl us i on, through means such as awareness raising, social mobilization, service delivery, training, research, and advocacy. The voluntary sector has been serving as an effective non-political link between the people and the Government.

People’s participation in the process aids effective implementation to achieve stated objectives of the programme. Strengthening Panchayati Raj Institutions (PRIs), and organizations run by people who are articulate might further help. With the help of NGOs, quite often implementation of programs is possible in a cost-effective manner in areas where government machinery is inadequate.

Pratham is one of the largest non governmental organisation working to provide quality education to the underprivileged children of India. It has been doing commendable work in providing the assessment of elementary education in the country. It annually publishes report (ASER) on assessment of elementary education in India. ASER (meaning impact in Hindi) is the largest household survey undertaken in India by people outside the government. It measures the enrolment as well as the reading and arithmetic levels of children in the age group of 6-14 years.

Prayas, another leading NGO of the country has been doing excellent work in the power sector, with its two main themes (1) Energy Regulation & Governance and (2) Energy Policy for Sustainable Development. Both themes involve analysis, innovation, outreach, intervention and advocacy at state and national levels. Similarly, many NGOs have been doing excellent work in the drought prone areas of Bundelkhand region in the field of animal husbandry by helping out people securing alternative sources of livelihood.

Key governance challenges

In view of the emergence of a new paradigm of scaling lip, in which NGOs are seen as catalysts of policy innovations and social capital; as creators of programmatic knowledge that, can be spun off and integrated into government and market institutions; and as builders of vibrant and diverse civil societies, it’s imperative to critically analyze the role of NGOs in the process of development and understanding the’ challenges facing the Sector. Transparency and accountability are key ingredients of Governance in the NGO Sector as these determine operational efficiencies and risk mitigation. Over the years, corporate sector has been able to recognize and implement best governance practices through appropriate institutional framework. However, the NGO sector is yet to evolve any institutionalized framework, which could potentially play an important-role in overall development of the nation.

NGOs play an increasingly active role in today’s political and social arenas. Civil society organizations are increasing in number all over India. Of late, some of the local and national NGOs have been found involved in malpractices and acting irresponsibly, thus undermining the credibility of civil society. It’s a huge concern and poses a great challenge to the development movement spearheaded by NGOs in the country. There is a huge flow of funds into the non government organization sector and this requires prudence and good practices to maintain accountability and transparency to the benefit of all stakeholders.

Although, NGOs do internal auditing but for more accountability and transparency, it is advisable to go through external auditing also, especially where public funds are involved. Hence, issues of internal control mechanisms, professionalism, accountability, transparency and financial management must be given impetus. The challenge is multidimensional, and is compounded by the ‘unorganised’ nature of the sector, lack of regulatory frameworks and the fact that India boasts of more than a million NGOs of different roles, structures and sizes.

In particular, the Indian voluntary sector urgently needs self-regulatory guidelines and transparency mechanisms to increase the trust and awareness as to how the philanthropic funds are being utilised. This is a critical challenge that creates a barrier to raising funds and capital for the sector. The general lack of transparency in the functioning of a large proportion of NGOs leads to aversion in donating funds for charitable causes since the general public is largely cynical about the ‘genuineness’ of the non-profit spirit of the sector.

The stringent governance standards of an NGO will facilitate the effective management and increase the accountability to its stakeholders including donors, the government and the community. It is in the self-interest of the NGOs to realize the fact that to implement a structure of c corporate governance’ principles would provide the real value to the stakeholders. Also, this would enable to track the potentially dubious sources of funding coming in for the voluntary sector - an aspect which has gained impetus in the wake of the increased number of terror attacks and extremist activities. Recently, this Union Home Ministry has identified some NGOs as security threat to the country. Such security considerations have underscored the rising need of improving the governance practices in the Indian NGOs and exercising better regulatory mechanisms, disclosure norms, and management processes including financial management and budgeting systems as well. Moreover, in the larger interest going beyond the security considerations, the impetus has to be on inculcating a culture of including performance goals, conducting financial and performance audits, and reforms for increasing the operational accountability and transparency in the eyes of the public, volunteers, donors and other stakeholders.

Suggestions and Conclusion

• The implementation of a strategic framework is essentially important in the management of an NGO. The endorsement of such a framework brings in professionalism and internal control mechanisms, which further makes the organization’s performance more effective. Developing strategies also include establishing a mechanism of consistent monitoring of whether they are being implemented and linking the results to the organization’s goals.

• There is need to bolster public confidence in the voluntary sector by opening it up to greater public scrutiny. The Government will encourage Central and State level agencies to introduce norms for filing basic documents in respect of NGOs, which have been receiving funding by Government agencies and placing them in the public domain (with easy access through the internet) in order to inculcate a spirit of public oversight.

• Public donation is an important source of funds for the NGO sector and one that can and must increase substantially. Tax incentives playa positive role in this process. The Government could simplify and streamline the system for granting income tax exemption status to charitable projects under the Income Tax Act. At the same time, the Government might consider tightening administrative and penal procedures to ensure that these incentives are not misused by paper charities for private financial gain.

• The Government should encourage all relevant Central and State Government agencies to introduce pre-service and in-service training modules on constructive relations with the voluntary sector. Such agencies need to introduce time bound procedures for dealing with the VOs. These could cover registration, income tax clearances, financial assistance, etc. There must be a formal systems for registering complaints and for redressing grievances of NGOs.

• The Government should encourage setting up of Joint Consultative Groups / Forums or Joint Machineries of government and voluntary sector representatives, by relevant Central Departments and State Governments. It also needs to encourage district administrations, district planning bodies, district rural development agencies, zilla parishads and local governments to do so. These groups could be permanent forums with the explicit mandate to share ideas, views and information and to identify opportunities and mechanisms of working together. The Government also might introduce suitable mechanisms for involving a wide cross-section of the voluntary sector in these Groups/ Forums.

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