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The voluntary sector needs to promote and address issues of governance, accountability and transparency. Photo: HT (HT)
The voluntary sector needs to promote and address issues of governance, accountability and transparency. Photo: HT

Accountability in the voluntary sector

The time has come to create incentives for good governance, accountability in the voluntary sector

The first exhaustive study of the voluntary sector (non-governmental organizations, not-for-profit organizations and civil society organizations) in India was conducted by Society for Participatory Research In Asia and Johns Hopkins University in 2001. The study estimated that there were 1.2 million such organizations in India. The Central Statistics Office (CSO) in a study in 2009, albeit with a limited methodology, pegged the number at 3.3 million. The sector according to CSO’s study burgeoned after 2000, and in fact grew by 194%.

Contrary to popular perception and frequent references to the “foreign hand", the government is the single largest contributor to the voluntary sector by far. Can the single largest donor create incentives for greater accountability and transparency in the voluntary sector?

The voluntary sector is not a homogeneous entity. The range of organizations that comprise the sector is vast: It ranges from resident welfare associations to charitable dispensaries and from research institutions to organizations addressing issues such as poverty amongst rural or urban poor. Even the Board of Cricket for Control in India is part of the voluntary sector based on its registration.

With the growing acceptability of voluntary agencies, the bias of self selection has disappeared. Instead the sector has begun to mirror the trends one sees in society in general. Two decades ago if you chose to set up or even worked with a voluntary agency amongst the rural or urban poor, one was considered either to be deviant and/or a Marxist. No more.

The voluntary sector needs to seriously promote and address issues of governance, accountability and transparency – and to set its house in order. However, given that it is not homogeneous and that motivations as well as objectives to set up institutions have changed and become diverse, for the sector to seek to do so on its own is nigh impossible.

Since the government is the largest donor, should it then step in and regulate? Set up a rating agency such as CRISIL? Absolutely not. There is adequate regulation of the voluntary sector and this has gained momentum in the past five years. We should not lose sight of the reality that increased regulation will only hit honest and committed organizations. Many such organizations have in any case, reduced their partnership with government simply because the transaction costs are too high.

Any donor, prior to making a grant or donation, primarily considers the following: governance, financial systems and procedures, audited accounts, legal compliance, past track record based on annual reports or studies, the proposal and budget and credibility and commitment of the team representing the organization. Assessing the past track record is indicative at best. Similarly, assessing the potential of the idea and the credibility and commitment of the team are relative and prone to biases. However, the quality of governance, systems and processes, audited financials and legal compliance are easier to evaluate objectively.

Currently, there are three independent organizations—GiveIndia, Credibility Alliance and Guide Star India—that undertake due-diligence for organizations from the voluntary sector. The rigour, emphasis and process vary, but they are all committed to promoting good governance, transparency and accountability.

The Government of India by virtue of being the single largest donor, should require organizations seeking grants be registered with one of these. This will guarantee a minimum standard amongst partners of the government. It will create incentives for improvement. Further, it will provide officials who are uncertain about which organizations to work with, a basis for arriving at a short-list to partner with. The time has come to create incentives for good governance, accountability and transparency in the voluntary sector—and the government should play a supportive role.

V K Madhavan has worked in the not-for-profit sector for two decades and spent 15 years living and working in deserts and hills. He’s still on the fringe asking questions and looking for answers. He will write every fortnight.

Comments are welcome at otherviews@livemint.com

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