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Governance – a key challenge for NGOs

Governance – a key challenge for NGOs

There is a huge need for many NGOs to find ways of addressing their own poor governance.

Widespread corruption and very limited accountability and transparency at higher levels are key characteristics of the Cambodia society. A patron-client culture favouring families and friends has a ripple effect at all levels of society, including non-governmental organisations. It is, therefore, not surprising that poor governance can also be found among some NGOs in Cambodia.

“When I need them they can come”, was the answer of an executive director of an NGO when asked how the relationship should be between him and the NGO’s board in the future. The executive director added: “I relate with them [the board] when I need them.” These statements express, in a nutshell, one of the key challenges with respect to governance of NGOs here. The executive director demonstrated little understanding of the role that the board is supposed to play, and, at the same time, saw it as a kind of service provider (a servant) to him.

Ideally, the role of a board of governors should be to provide oversight of the organisation, hire and dismiss the executive director, assess his or her performance, provide strategic direction, assess progress of programs and the organisation, approve budgets and reports, etc. In reality, many NGO boards play a limited role within their organisations; consequently, a number of governance-related decisions, for instance approval of budgets, are made by executive directors rather than the board.

In addition, the performance of the executive director is rarely assessed and he or she can remain in the position despite a poor record. What is the reason for the limited role of boards?

As already pointed out, executive directors sometimes have an incomplete and wrong understanding of their own role within the organisation; and additionally, they do not properly understand the role of the board. Another factor is the quality of governance that boards provide. Many board members have no or very little experience with governance. One of the reasons for this is that they sometimes are not selected based on their qualifications and/or experience in relevant fields, but are picked because they are a friend or acquaintance of existing board members and/or the executive director.

An example of this is an NGO that appointed a very close friend of the executive director as the board treasurer, although this person had very limited financial background and experience. This person was supposed to ensure financial oversight on behalf of the board, but, as could be expected, this did not happen.

A further aspect is the gap between the bylaws (constitution) of an organisation and their implementation. Many NGOs have bylaws, which clearly outline the role of the board and the board members, but when it comes to following the bylaws, many boards fail.

For instance, boards are often supposed to approve budgets and reports, but frequently this does not happen. Some NGOs also state in their bylaws that they should have an Annual General Meeting at which the board and management report on the progress of the programs and the organisation, but these meetings rarely take place.

Additionally, many boards have short meetings, sometimes over lunch or dinner. This happens a few times a year, giving them far from enough time to deal with important board matters. In short, the performance of boards is often poor and needs considerable improvement if they are to provide proper oversight of their organisations.

One reason that boards are frequently unwilling or unable to hold the executive director accountable and assess his or her performance is that several board members may belong to the executive director’s network. These people feel afraid of and uncomfortable criticising the executive director; consequently, poor performance by the executive director remains unchallenged.

Sometimes the consequence is that the board becomes a tool for the executive director, as noted in the beginning. Another factor is that board members do not live up to their responsibilities: they attend meetings infrequently, they are inactive during meetings, they resign with short notice, etc.

A further aspect is that some board members do not know about the exact purpose of the board. A foreign board member was once asked about this; the person did not know whether the board was an advisory board, governance board, managing board, etc.

If one is not aware of the purpose of the board, it becomes hard, almost impossible, to function effectively as member. As a result of the limited knowledge and sense of responsibility of some board members, the executive director has to assume a bigger role within the organisation. The lack of functionality of the board can, therefore, lead the executive director into temptations, and if this is coupled with irregular performance assessment of the executive director, the board may put the organisation at risk.

Another essential challenge is the issue of accountability. To whom is the board meant to be accountable? It is supposed to be accountable to the stakeholders of the NGO; the beneficiaries, partners, staff, management and donors. The boards of many NGOs are, however, seldom accountable to anyone. They do not meet the beneficiaries, staff or donors, and they do not report to anyone. As a consequence, they are not held accountable for their decisions and performance.

They can continue to perform poorly without being replaced. Unfortunately, when boards are occasionally accountable, it is either to the executive director – as some of the Board members might belong to the network of the executive director – or it is upwards, to the donors. Boards are rarely accountable to their primary stakeholders, the beneficiaries.

Transparency is another problem. Many boards are not transparent about the activities and decisions they make; thus, the stakeholders hardly ever receive information from them. Some of the stakeholders might know that a board exists, but they do not have a clue about its role: what it does – or is supposed to do.

A further challenge is the constituency of the board. It rarely happens that the board is composed of representatives of the stakeholders, to whom the board is supposed to be accountable. More often, boards are comprised of people who do not represent the stakeholders, and, as a result, the stakeholders may have limited influence in holding an NGO to account.

One of the stakeholders that is in a position to hold the Board accountable is the donor(s). However, this seldom occurs. When donors visit NGOs they infrequently, if ever, meet with board members, leaving them with an incomplete understanding of the state of governance or none at all.

The donors are mainly interested in meeting the executive director and seeing program activities. Once in a while donors assess or ask a consultancy company to evaluate the governance of the organisation.

The quality of these assessments is, however, sometimes very superficial. An example is an NGO that was assessed to have good governance – based on conversations with the executive director only.

A few months later this NGO faced severe governance issues. Another instance is a donor that commissioned an evaluation of the governance of their partners. The donor asked whether the partners in question had bylaws, but did not ask whether the bylaws were actually applied.

Some of the reasons for this state of governance among NGOs are: the governance of NGOs mirrors to a large extent the reality of governance that is seen at the highest level of the society. It is often the case that the quality of performance at the top level trickles down to and affects the lower levels; as pointed out in a report on civil society in Asia, many NGOs in Cambodia have been established by international organisations rather than internally grown and they lack links to grassroots levels; finally, governance is a foreign concept that was introduced by international NGOs during the past two decades.

In Cambodia NGOs, for very good reasons, criticise the government for poor governance, but as shown there is a huge need for many NGOs, at the same time, to find ways of addressing their own poor governance record. A first crucial step for NGOs could be to consider to what extent they live up to the ideals of governance, as described above, and compare them with the reality within their organisations.

Based on this, a concrete plan for improvements can be developed. Improved governance of NGOs will greatly help to raise their credibility among stakeholders and in the wider society.

And that is needed.

Ernst Jürgensen is Danmission’s country representative


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