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Good governance in our own backyards

Accountability and transparency are vital in every sphere of public life. But most of all in the voluntary sector. In 2004, Credibility Alliance was formed for self-regulation in civil society organisations in the areas of governance, transparency and accountability. Vijay Nadkarni reports

The collapse of banks and financial institutions in the recent past; the uncovering of scams and frauds in the world of finance and corporate affairs; various scandals, including those that were exposed and those widely believed to be covered up, in the political or administrative set-up. All these point inescapably towards the need for good governance and accountability. The practice of good governance and acceptance of principles of accountability and transparency is acquiring greater significance in all spheres of public life: government and public administration, corporate and institutional affairs as also in civil society organisations. In fact, the need to commit to these values is more pronounced in the voluntary sector for various reasons.  

The corporate world, no doubt, needs to be accountable to society at large. But the need for accountability to the entire community is restricted to broader aspects of its functioning insofar as the effects of its actions are expected to affect the community. For example, the corporate organisation needs to be law-abiding, ethical in its operations, sensitive to issues -- including cultural issues -- of importance to the community in which it operates, committed to preserving the environment, and willing to contribute to the betterment of the community in which it operates. The primary accountability as regards the performance of its operations and results is, however, restricted to investors and regulators. The very nature of its competitive operations allows, rather, makes it imperative for a business organisation to keep some of its operations beyond public scrutiny. Nonetheless, experience has shown that the misadventures of a few corporate organisations can prove disastrous for society at large. The failure of a bank or the closure of a company are no longer issues concerning only the business that has closed shop, they impinge on various segments of society with wide-ranging implications. These factors underline the need for a wider interpretation of the term ‘accountability’. 

As regards government and political organisations, the importance of public accountability cannot be overemphasised in an era when a democratic way of life is accepted as the natural form of political organisation almost across the globe. The challenge today is to widen the scope of accountability of the government and of the political apparatus towards the public and, more importantly, to ensure effectiveness of action for redress. 

Why is it that issues related to governance and accountability assume greater importance for civil society? Is it because the organisations working in this sector mostly draw their sustenance from public grants and donations? While this is an important enough reason, does it demand accountability from the organisations only towards donors? If voluntary organisations accept that the mission they have adopted is not a favour extended to the community in which they operate, that the community is an integral component not only of their machinery for implementing the programmes but of the very universe defining their philosophy, their accountability towards all stakeholders becomes a logical corollary. Voluntary organisations aim to bring about a better world, in some form or the other. The very purpose of their existence makes it imperative for the sector to be in the forefront of the crusade for good governance and transparency in public life. 

The point sought to be made is that voluntary organisations have to lead the rest of society in the journey towards governance and accountability, not follow the others. The practices put in place for ensuring good governance and accountability in the voluntary sector should set an example not only for the political system but also the corporate world. It is not uncommon today to find that discussions on accountability in the voluntary sector tend to be based on parallels drawn from the corporate world. In the absence of a regulatory system for the voluntary sector and in contrast to an elaborate statutory framework drawn up for the corporate sector, it is inevitable that the voluntary sector should look to emulate the practices of the corporate world. Ideally, it is the voluntary sector that should assume the mantle of leadership and set precedents in accountability and good governance. 

How do we ensure all-round adoption of good governance and accountability in the voluntary sector? In the absence of any statutory regulations (except the requirements of the current laws for societies, trusts and not-for-profit companies) how can the sector regulate itself? How do we identify organisations committed to accountability from amongst organisations which may not recognise any such obligation to stakeholders? How do we prevent the image of the entire sector being tarnished on account of the wrongdoings of a few? Such questions kept reappearing in the minds of some people in the civil society sector at the turn of the millennium. Various meetings, mails and consultative workshops eventually led the group to decide on the formulation of certain norms of governance and public disclosure for compliance by the sector. 

The need was felt for an independent body to promote these norms, which led to the birth of a consortium of organisations called the Credibility Alliance, in May 2004. This is perhaps the only initiative born from within the sector for self-regulation on the basis of certain norms. The norms broadly cover the areas of governance, transparency and accountability along with norms related to identity and legal status, vision/mission/objectives and operations. They are in some ways basic but nonetheless very important for transparent functioning marked by a commitment to accountability. For example, some of the norms related to governance require that the governing body meets at least twice a year (with meetings suitably spaced), that the minutes are recorded and circulated. There are norms ensuring that the governing board is adequately involved in functions such as programmes, budgets, annual activity reports and audited financial statements. The independence of the board is assured by the norm requiring that no more than half the members of the governing board should have remunerative roles. Norms related to operations emphasise the need for participatory decision-making processes, compliance with the laws of the land, maintenance of proper accounts with audit over a certain level of budget, etc. 

Transparency is one of the core values for ensuring accountability and credibility. A number of Credibility Alliance norms require disclosure, especially in the annual report, on various issues. One of the most fundamental requirements of transparency and good governance is the quality of disclosure about the governing board. The norms lay down that the organisation should not only disclose details about the gender, age, position of directors but also indicate the remuneration drawn. As the annual report is one of the principal means of communication for an organisation, details of an organisation’s activities and plans are to be included in the report. It should also include brief financial details. Besides the minimum norms, which all organisations that join the alliance have to comply with, there are desirable norms, some of which are enumerated above. The desirable norms of governance require that at least two-thirds of the board members are unrelated by blood or marriage, and that a board rotation policy exists and is practised. Desirable norms of transparency require disclosure in the annual report about the gender-wise break-up of salaries of staff in certain slabs and disclosures about international travel by all personnel. 

As a mark of recognition of organisations complying with these norms, Credibility Alliance also accredits organisations based on these norms. This is a process that begins with self-assessment by an organisation about its compliance with the norms. A form filled up by the organisation for this purpose, and the necessary documents, are then reviewed by Credibility Alliance. If the review indicates compliance with the norms, it is followed by a visit to the organisation’s office and its projects by an independent assessor who is a person experienced in the voluntary sector either in the management or audit of organisations. The report prepared by the assessor is then submitted to a Central Accreditation Committee consisting of experts in the field of voluntary sector management, academicians and chartered accountants. The committee takes the decision on accreditation of the organisation based on its compliance with either the minimum or desirable norms. It is worth mentioning here that the application for accreditation is not rejected but is kept on hold until the organisation achieves compliance. 

The norms and process of accreditation ensure a certain level of transparency and governance. A remarkable feature of the norms is that they have been formulated after extensive consultation within the voluntary sector. A stakeholder today is reassured about the functioning of the organisation if he is convinced about the organisation’s commitment to transparency. Credibility Alliance’s norms aim to achieve this level of transparency and governance which provides a reassurance not only to the stakeholders of an organisation but the entire voluntary sector and those interested in seeing the rise of a strong and committed voluntary sector. 

The promotion of norms of transparency and accountability purely as an initiative from within the sector is a concept that will take time to be firmly rooted across the sector. A beginning has been made, and the movement needs to be strengthened with active participation from all players. There is also a need not only for improving upon the norms and the accreditation mechanism by a continuous process of consultation, but also for devising innovative measures to promote a culture of accountability and transparency. 

The voluntary sector in India has displayed remarkable resilience over the decades while responding to the challenges posed by deep-rooted changes and developments in the economic, social and political landscape. It has also demonstrated its capacity to accommodate diverse viewpoints and practices in the course of its journey towards making society more just and humane. It has to redefine itself continuously to strengthen its role in the polity to be able to contribute more effectively. In discharging its role of ushering in changes in society, it will have to demand good governance and accountability from all segments. It will be in a position to do this with authority only when it demonstrates its own commitment to these fundamental tenets of responsible citizenship. 

(Vijay Nadkarni is Deputy Director, Credibility Alliance (http://www.credall.org.in))

Infochange News & Features, November 2009