Dear Colleagues,
Nilda Bullain and Miklos Marshall would like to present to you the report of the workshop entitled “Good Governance and Accountability in the Non-profit Sector in the Visegrad Countries”. We would like to thank you again for your cooperation and great effort in this workshop. If you have any questions regarding this document please do not hesitate to contact us.
Yours sincerely,
Nilda Bullain Miklos Marshall
Good Governance and Accountability in the Non-profit Sector in the Visegrad Countries
December 2-4,2004, Budapest
Workshop Report
INTRODUCTION/BACKGROUND
A closing workshop, entitled “Good Governance and Accountability in the Non-profit Sector in the Visegrad Countries Workshop,” for the NGO Integrity Project in the Visegrad Countries, supported by the Mott Foundation (Grant: 2002-02749) and by the Trust for Civil Society in Central and Eastern Europe, was held in Budapest, Hungary from the 2nd-4th December, 2004. The purpose of this workshop was to bring leading members of the non-profit sector in the Visegrad countries and beyond together in order to share experiences, expertise and concerns regarding NGO accountability and governance in the region. The purpose of the workshop was also to identify potential areas for cooperation in order to reach the general goal of increasing the public’s trust in the non-profit sector. The workshop was hosted by Transparency International and the European Center for Not-for-Profit Law.
SESSION 1: “Setting the Context“
Presentations:Introduction to NGOs, transparency and accountability – Miklos Marschall, Regional Director, Europe and Central Asia, Transparency International
Governance in the global arena and its ramifications for CEE – Marilyn Wyatt, Consultantand Governance Expert
Gap – a model for measuring accountability – Monica Blagescu, Accountability Programme Manager, Global Accountability Project, OneWorld Trust
Accountability and governance of NGOs: Frameworks of thinking – Nilda Bullain, Program Director, European Centre for Not-for-Profit Law
Highlights, findings, key issues
· The initial growth period in the countries undergoing transition in the Visegrad region is ending, thus ushering in the period of civil society maturation. This means that institutions and mechanisms should be established in order to deepen and entrench best practice norms in the NGO sector in the Visegrad countries.
· NGOs have a moral responsibility to be more accountable because they are usually formed for the public’s benefit and are supported by the public as well.
· It is necessary to maintain the vital features and comparative advantages of NGOs and the NGO sector, which include freedom of action, social entrepreneurship and trustworthiness.
· NGOs are currently experiencing an accountability deficit due to a lack of full transparency and good governance.
· NGOs are perceived as a moral force in society. However, it is not clear that they are being held or are holding themselves to the highest or most consistent standards of accountability.
· The independence or non-partisanship of the NGO sector must be re-affirmed. Therefore, there is a need to make the public and the international community aware of our internal governance structures, our mandate, our role and our constituency.
· There is a need to build public confidence in the NGO sector.
· Should the NGO sector develop benchmarks or uniform standards in order to make it easier for the public to judge the quality of any given NGO?
· Self-regulation vs. legislation: there is very little agreement in the NGO sector about which means is best for ensuring accountability of NGOs on the one hand but permitting freedom of action and self-determination on the other.
· Should codes of conduct be voluntary?
· If codes of conduct were to be legislated or imposed, who would create these codes and how would adherence be enforced?
· There is a need for the NGO sector to consider the questions: accountability for what and to whom?
WHAT ARE THE KEY ELEMENTS OF ACCOUNTABILITY?IMPACT - Theory and indicators of change
PERFORMANCE - How to ensure quality in process and results
GOVERNANCE - A system of checks and balances in order to ensure accountability
STAKEHOLDERS - Ultimate judges of an organisation’s accountability
(Nilda Bullain)
There is a general question to be decided. Either we include parts of people’s presentations without making reference as to whose presentation is was, or we specify that in each case. The material as is chose not to include references/authors of the presentations except in the case of Kuba. Sometimes it is also evident, like inthe case of GAP or Guidestar. I realize also that in some cases it is difficult to separate out what was presented and what was discussed. However, for the sake of fairness and consistency I suggest that we include the references where we can to make it clear which presentation the material comes from.
SESSION 2: “Governance and Accountability In CEE”
Panel membersHana Pernicova Via Foundation Czech Republic
Balazs Sator Civil Society Development Foundation Hungary
Lenka Surotchak PONTIS Foundation Slovakia
Kuba Wygnanski FIP Poland
This is what an average NGO does to be accountable
Czech Republic: Accounting, public relations, annual reports emphasizing financial issues, publishing information about activities in order to make it public.
Slovakia: Website, annual report, names of board members published on website. Concern: Accountability activities seem to be practised all in one shot (near the required reporting time) rather than all year round.
Hungary: Submitting and evaluating financial statements at end of year. – main responsibility of board. Concern: Public relations is not being utilized enough in order to cultivate a kind of user-consultation model where beneficiaries might be used to encourage accountability in NGOs.
Poland: Accountability is still a somewhat procedural activity in Poland. Enforcement is an issue. Reporting to the public is not so good. However, NGOs are obliged to send annual reports to stakeholders.I think only to the state, the competent Ministry Concern: Little understanding that NGOs should be changing some of their practices.
Governments and the accountability of the NGO sector
Slovakia: The government during the Communist era was repressive. In the post-Communist era, it has not been very interested. Self-regulation is the main tool that is used/that can be used to reform or to become more accountable.
Hungary: There are fairly good regulatory systems affecting the country’s NGO sector. The sector’s situation in Hungary is better in comparison to other countries. However, best practice is not as strong in Hungarian non-profit sector due to a lack of vision and/or clear sector model which would generate an adequate regulatory system. It is more likely that increased individual giving to NGOs will encourage greater accountability.
Czech Republic: The government is fairly strict about the regulatory framework for NGOs in Czech Republic. Endowments were given to the non-profit sector after the fall of Communism and the government was very interested in controlling these and maintaining transparency. Regulation of the sector tends to be a bit too bureaucratic. There is hardly any legislation for civic associations (approx. 90% of NGOs) in C.R., therefore public mistrust of these (and therefore the entire non-profit sector) remains very high.
Poland: The Public Benefit Council in Poland sets standards for the sector because self-regulation in the non-profit sector in Poland has generally been a failure. PBC deals with issues such as separation of power, transparency of finances, publication of annual reports, disclosure of corporate donations, etc. However, consumer choice remains a concern in Poland, ie. the public is not being provided with adequate/relevant information in order to make informed decisions about who to support
Internal governance of NGOs
Czech Republic: Many organisations do not see the need for independent monitoring or control, therefore do not see the need for a board. A third of NGOs make decisions without boards.
Slovakia: Organisations are beginning to understand the functions of boards more now and are starting to move beyond “circle of our friends are the only people we can trust” idea. This is indicative of a major attitudinal shift in the country.
Hungary: CEOs are still acting as chairs of boards, etc. (conflict of interest still a challenge here), lack of clarity about board and management functions - many organisations are in violation of this. Attitude shift is also taking place in Hungary to some extent although it seems to be due mainly to market pressure. The East European model of establishing quasi-boards (circle of friends – conflict of interest problems) is changing slightly due to intense competition for funding and for public trust.
Poland: The concept of a board is not well understood in Poland. Conflict of interest is a problem here as well. There are also major challenges concerning NGO treatment of the board that need to be overcome: 1) Excuse of voluntarism – we don’t need to treat the board seriously, 2) Excuse of friendship – is the board about advice or control?, 3) Increased procedural regulation of NGOs is seen to ruin the classic NGO strength of spontaneity and creativity.
Board effectiveness vis-à-vis the issue of NGO accountability
Slovakia: Boards answer external questions about NGO accountability
Hungary: Boards serve a vital strategic oversight function. They provide a check on the CEO’s power but also provide support concerning the CEO’s actions and decisions.
Czech Republic: Boards provide a less emotional voice in decision-making processes.
Poland: People lost trust in institutions during the Communist era. This legacy continues to affect the degree of public trust in institutions in Poland today. People in Poland seem to trust individuals much more. Boards are useful in this regard.
Common actions to increasing non-profit sector accountability?
Generally, the panel seemed to agree that civil society organizations are not a significant power in East Central Europe because they are having difficulty proving their legitimacy. There is only a slow awakening to the fact that only increasing the sector’s accountability will increase the legitimacy of CSOs.
Poland: NGOs should/could develop a common accountability framework, although there has been little success thus far in accomplishing such a thing.
Czech Republic: Standards for codes of conduct are being developed slowly.
Hungary: The market analogy for developing standards and ensuring quality is useful in the NGO sector. Accountability of government ministries, agencies, quangos involved in NGO-type work needs to be improved.
Slovakia: There is evidence of some strong cooperation between some groups in Slovakia. More could be done…
SESSION 3: “Addressing the Challenges – The Legal Environment”
Presentations by Nilda Bullain and David Moore of ECNL: “Impact of regulatoryframework for NGOs in CEE on NGO governance”
What the law requires
Poland: Financial reports, disclosure of financial information, which is required by law if you meet a certain threshold of funding.
Hungary: PBOs have to file financial reports and annual reports. If you receive public funding, this has to be reported in detail. Reporting of salaries of leading officials is still a legal deficiency in Hungary.
Slovakia: NGOs and non-profits have to publish annual reports by law.
Czech Republic: Civic associations do not have to publish reports as it is not legal obligation for them. Public benefit organisations do have to publish reports. If funds were received from privatisation, they must be reported, but this includes only a small fraction of foundations. Compliance with laws and reporting requirements is generally quite weak.
CHALLENGES/CONCERNS:
· There was some concern expressed by several participants that there is no internal
motivation to conform to laws concerning financial reporting, and that the external
force of the law is not enough to guarantee real accountability in the sector.
· It was suggested that digital accounting and/or reporting online might be an easier means of being more transparent to the public.
· It was also suggested that a tiered system of accounting requirements might be
introduced in order to reflect the fact that the need to be accountable only increases
as you handle or make more money.
· There was some discussion about the extent of disclosure that is necessary in order to be considered accountable. Participants seemed to agree that reports should be a balance between being very detailed and general. Some maintained that while it is good practice to be as detailed as possible when reporting on spending of public funds, CSOs and NGOs also have potentially conflicting obligations to prevent infringement on privacy of personal information laws, to avoid giving too much information to competitors, to avoid breaking confidentiality with third parties, and to limit costs associated with extremely detailed disclosure.
· There were questions about the difference between qualitative and quantitative conclusions that can be drawn from disclosure. For instance, what does financial reporting really reveal? What are your aims when you are disclosing information? Does disclosure of financial information really prove the trustworthiness of an NGO?
· There were also questions about how to make sure that the right information is being disclosed and that it is being used properly by the public. What kind of information does the public really want? Should a public registry of NGOs be available? Is the non-profit sector doing enough to stimulate demand for information and/or creating educated consumers? How much information is enough to ensure accountability but not to overdo it (ie. incur more expense than the information is worth)? How does accountability improve an organisation, ie. help it to reform its practices?
· It was noted that there is lack of professional watchdogs in East Central Europe that could make use of the information provided by CSOs and NGOs in order to inform the public and assess these organisations’ degree of transparency.
· Should the law prescribe that ngos must disclose the names of all donors or should this be a matter of self-regulation?
· To what extent should states require NGOs to make information available to the public?
· In terms of the evolution of legislation, there is a need for review of what has worked and what has not worked in East Central Europe. Laws should be adapted to match good practice norms already operating in the region.
QUESTIONS FOR SMALL GROUP DISCUSSIONS
· What are the legal/regulations issues affecting governance and accountability in the region?
· What regional initiatives could help to address these issues?