| Governance
Meaning of Governance
“Good governance means the effective management of an NGO's
resources in a manner that is open, transparent, accountable, equitable
and responsive to people's needs. The rule of law, transparency,
accountability and effectiveness of NGO management are all essential
components of good governance”.
Need of Good Governance
To ensure accountability towards the society
To establish credibility of organization
To achieve sustainable development
Governance Pattern
The governance of an organization should have the following pattern
covering all the necessary elements required to run the NGO.
Ø Board Composition and it’s significance in the Governance
(refer roles & responsibilities of Board below)
Governance mechanism itself starts with the board formation and
board processes. A governance structure can be single tier or dual
tier. NGO should exemplify openness and transparency by having desirable
criteria for selection and rotation of trustees
Ø Direction and control of organizations: in respect of
financial sustainability, social relevance, monitoring and evaluation
and overall growth of organization to put good impact in ever changing
social conditions
Ø Three fundamental principles of governance:
Accountability –
o Signed audited statements should be available which includes
balance sheet, income and expenditure statement, receipts and payments
account, schedules to these, notes on accounts and the statutory
auditor’s report.
o There should not be any serious adverse notes on any material
point.
o There should not be any material transactions involving conflict
of interest between a Board or staff member and the organization.
Transparency-
o The organization’s Annual Report should be disseminated
/ communicated to the community and others and should be made available
on request every year within 8 months of the end of the organization’s
financial year.
o The Annual Report must contain information on the board members,
their names, positions in the board, remuneration or reimbursement,
objectives and description of main activities, a review of the progress
and the results achieved in respective financial year.
o There must be zero corruption since NGO is run on the funds donated
by society. It should ensure clean service culture and should be
able to demonstrate it society.
Participation-
o Outside stakeholders / beneficiaries should be taken in to consideration
when there is an issue related to any programme, project, and campaigns.
NGO can conduct a seminar or consultation to incorporate the opinions
of our stakeholders.
o Entire staff of the organization should be considered for some
critical decisions which are somewhere related to them.
o Same level of motivation should be flowed among all the members
of the NGO right from Board of Directors to the security person.
If vision, mission is well communicated to all of them, then level
and quality participation can be raised.
Key roles & responsibilities of board:
o The board should formulate the mission statement of the organization
and should revisit it every three years in order to ensure that
the programmes and resources are in consonance with it.
o The board should formulate the structure of authority and responsibility
to be delegated to the CEO and other staff.
o The board should determine the procedure of electing/selecting
the CEO and the compensation thereof.
o The board should formulate important policy documents and guidelines
on gender, human resource, finance etc.
o The board should develop proper policy and systems regarding
the title, safeguard, location and verification of fixed assets.
o The board should ensure strict adherence with all statutory compliances.
It should also ensure that requirements/ obligations towards other
stakeholders is diligently done.
o Reviewing the performance of key staff members
o Constituting advisory committees for specified purposes
o The board should prepare a position paper every three years on
issues such as (i) Financial Sustainability, (ii) Institutional
Sustainability, (iii) Programmatic Sustainability, (iv) State, need
and relevance of corpus, endowment and general funds, (v) Risk and
contingencies.
o The rights of stakeholders including those of the staff should
be defined and a suitable mechanism be put in place for redressal
of grievances in regard to violation of their rights.
o Setting key performance indicators for themselves.
o To determine staff capacity building measures
o Resource mobilization
Very importantly, there has to be clear distinction between strategic
matters and operational matters what are those strategic in nature
and what are those operational in nature.
Meetings
Meetings are an important element of the governance rather we can
say it is a soul of entire governance process in any NGO. There
should be periodic meetings of various responsible people working
in an organization. (For more information, refer the module of “Internal
Writings”) Board of directors should meet at least once in
a quarter. Whereas meeting of executive committee could be held
in each month.
Committees
Committees play important role in implementation of various tasks
in organization. It ensures lesser burdone on top officials and
it could be a learning experience for many others to work in some
committee. These committees can be formed internally in executive
committee or some outside staff members can also be included in
these committees.
Finance Committee - functions
o Preparing long term financial strategy which dovetails into long
term vision
o Preparing budget, operational plans & to contribute in project
proposals
o Effective implementation of budgetary control systems
o Shaping of investment policies, creation of corpus
o Analyzing income generating activities
Audit committee – Functions
o It should comprise of financial experts, members from beneficiaries
and staff, statutory auditor, members from board and executive committee
o Reviewing the annual financial statements before submission to
the Board
o Significant adjustments/alterations in the statements, arising
out of audit, if any;
o Compliance with accounting standard and suggested changes, if
any;
o Help the Director/Chief Functionary by providing a forum in which
he / she can raise issues of concern and which he / she can use
to get things done which might otherwise be difficult;
o Looking at the long term sustainability and strengthening of
networking.
o Compliance with legal obligations/ requirements.
Human Resources Development committee- Functions
o Reasonably defining roles and responsibilities of entire staff
as well as volunteers
o Issuing letters of contract / appointment to all the personnel.
o To conduct performance appraisal and deciding the compensation
structure in consultation with the board members.
o To conduct various experimental programmes and projects which
can be helpful to raise self as well as group motivation
Program Committee – Functions
Programme committee can be appointed internally among the staff
members. It could be formed on temporary basis if the programme
is undertaken for short period. Or it could be permanent in nature
in every year. In such case members of Programme committee may change
every year as per the need and competencies among staff.
o Preparing and planning regarding the programme in advance and
in detail
o To run and execute the programme
o To undertake documentation for the entire programme
Resources mobilization committee- Functions:
Resource mobilization committee can be formed separately other
than core group of Board of directors and chief functionaries of
organization. This committee primarily plays role of fund raising.
o To work out for increased the present resource structure.
o To widen the base of funders
o To increase and improve the Public Relations which can be further
used for raising funds from them
o To create corpus
.
o To keep communicating with funders and to update them regarding
achievements of organization and utilization of funds received by
them.
Here, we provide you some practical examples which are some of
the factors that influences day to day practice of organization:
---------------------------------------------------------------------
1. Weak Governance, Leadership and Management
Symptoms:
o The authority flow is not defined or clearly understood.
o Decisions are not documented clearly
o Little or no monitoring of performance or measuring of results
Results:
o Staff is frustrated at lack of clarity
o Quality and effectiveness of service delivery suffer
o Personal fulfillment of staff and volunteers is lacking
o Good people leave and aren’t missed.
2. Abusive Leadership and Management
Symptoms:
o Overconfidence
o Constant interference in the work of staff
o Staff discouragement
o Broken relationships
o Manipulation
o Personal agendas are forced on the entire group
Results:
o Individual rights are violated
o People are abused, discouraged, unfulfilled
o Good people leave
o Effectiveness suffers
o Without accountability, abuse increases and becomes chronic
o Culture is damaged
3. Vague Strategic Decision
Symptoms:
o The organization has no statement of values, vision or mission
or they exist but are outdated, unknown and/or without ownership.
o Future is based on “chance event” instead of “careful
planning”.
Results:
o Strategic direction is assumed by the CEO instead of being led
by the board.
o Confusion and/or disagreement of purpose and priorities lead to
lack of focus and ineffective use of resources.
4. Unclear Roles and Responsibilities
Symptoms:
o Authorities and responsibilities are not clear.
o Few or no current job description
o There is a reliance on precedent and tradition rather than present
reality.
o Assumptions differ
Results:
o There is a significant duplication of effort
o Some responsibilities are not covered
o Confusion leads to disagreement and strained or broken relationships
o Staff is frustrated and unfulfilled
5. Unclear Expectations
Symptoms:
o Goals are not established for strategic outcomes or tactical
outputs
o Goals are established by the source of authority but not negotiated
with staff in proportion to available resources and potential
o Expectations are assumed but not expressed.
Result:
o Variation between expected and achieved outcome
o Staff and volunteers have no way of knowing when they have succeeded
o Differing expectations lead to misunderstandings, a sense of failure
and breakdown of relationships.
6. Square Pegs, Round Tables
Symptoms:
o No proper criteria for selection of staff.
o Inadequate training or orientation are provided
o Skills are not matched with needs of the position
Result:
o Service quality is limited by lack of availability of the competent
staff
o Quality of work is affected.
o Staff and volunteers are unfulfilled and demoralized, wanting
to make a positive contribution but without the “right skills”.
7. Forgiveness Confused with Accountability
Symptoms:
o Accountability mechanisms are poorly defined, not used or does
not exist.
o Poor performance or behavior is tolerated, treated with understanding
and forgiveness.
o Annual performance reviews are rare or non existent – especially
at the board level.
Result:
o Successful staff and volunteers are not affirmed
o Weak staff and volunteers are not supported or redirected
o When forgiveness fails to produce change in unacceptable performance
and behavior, judgment and unfair dismissal may follow with accountability
and redirection never happening.
Inputs given by Experts are as under:
Governance & Sustainability:
A good and well governed organization is very important for its
sustainability. Sustainability does not related only with the financial
sustainability but it is more related with the social relevance.
How relevant is the organization is more important than its financial
status. Organization and its programmes should be relevant to the
civil society today then only it will ensure its sustainability.
Prime role of Board of Directors is to maintain such relevance to
ever changing social requirements. The moment when the work is not
relevant any more then sustainability can always become an issue.
(Inputs given by Sanjay Patra, FMSF)
Organizations who fail to put an impact are found as very week in
their financial as well as human management and therefore there
has been a question of their sustainability for these NGOs. (Inputs
from Dr. Prof. Santosh Kumar, EDI).
ATP - Accountability, Transparency &
Participation (ATP) are the inbuilt mechanisms by which the process
of governance should take place in a proper manner. Accountability
is nothing but to keep a check whether the job has been done with
the responsibility and has yielded that particular and expected
result or not. (Inputs from Dr. Prof. Santosh Kumar, EDI).
Board members should be very careful for ensuring transparency
and accountability. For Example, Kuchh Navnirman Abhiyaan publishes
their balance sheet every year in newspapers. That is the level
of transparency which helps to ensure credibility of organization.
(Inputs given by Dr. Prof. Meena Galliara, NMIMS, Mumbai)
If people working in an organization are well aware, about the routine
operations, they can contribute in the governance of NGO. It also
has an external context. One can start with having a governance
cell in the organization which looks at the various functioning
pattern of the organization. We can call them Governance officers
or NGO officers. They can be one amongst the staff. They should
further look at delivery mechanism form the best practices of governance
point of view. So, governance policies can be designed on the basis
of day to day life of the organization. It need not come from Outside
and need not be imported from another organization. Each and every
organization is unique in itself. They have to develop own mechanisms
of the governance of the organization. (Inputs from Dr. Prof. Santosh
Kumar, EDI).
Efficient Compliance:
NGOs must comply the legal and financial formalities in the given
time period with Charity Commissioner. They should submit their
statement of accounts, annual report, and legal certificates with
charity commissioner every year without fail. Considering the sector
at large, it has been seen that large Part of NGO governance is
related with legal part of if. NGO should not lapse registration
of 80G and 35AC.
(Inputs given by Dr. Prof. Meena Galliara, NMIMS, Mumbai)
Board Processes:
There should be clearly defined policy for recruiting and election
of board members and trustees. Induction of new board members should
be through an open process of providing opportunities of being elected
from larger group of stakeholders.
So, ideally there could be a nomination committee of the board
and it should be responsibility of that nomination committee to
bring in names of potential board members of experience and understanding
in the area in which the organization is involved. And as an ideal
process, staff members and even the CEO should not be part of the
nomination committee just to ensure independence for the entire
process. These are some of the basic steps. one can take to form
a board of NGO. (Inputs given by Sanjay Patra, FMSF)
“National Policy on Voluntary Sector states that “Accountability
and Transparency are key issues in governance, and the voluntary
sector is expected to set benchmarks in this regard. Accountability
to funding sources, though important, is not enough, and greater
emphasis should be placed on social accountability to the stakeholders.
Recognizing the diversity of entities comprising the voluntary sector
and the undesirability of specifying uniform standards for all,
VOs shall be encouraged to evolve their own codes of conduct and
governance standards. These should be appropriately notified and
given publicity by the federating or network organizations along
with disclosure and reporting procedures”.
National policy on Voluntary Sector2003 states that………
Governance is nothing but the environment of your organization.
In the entire process of governance you must see that your employees
also are getting some benefits out of it. Organization should have
right people to do right job.
Most importantly the people behind your organization should have
right attitude. Organization should bring their work in the public
image through right processes. Organization should always see that
whether they are able to rightly stand in the NGO sector or not.
You should confirm that everybody in your organization contributes
towards a social cause. Money raising is directly connected with
the governance. Organization should ensure easy operations which
is also the part of governance. Governance is holistic idea which
goes to facilitate many things as a catalyst. Every new NGO should
have certificate 12A & 80 G which is nothing but the birth certificate
of organization. Governance builds the credibility of organization
as more you belong to years.
(Inputs given by Pooranchandra Pandey – Director, Times Foundation)
Inputs by Gagan Sethi – Janvikas
o Never borrow or copy pate the strategies of governance from another
organizations to your organizations.
o Governance policy has to be fit to the needs of the organization
that you work for.
o If small organizations have written policies then, they can not
grow faster. For the good growth of organization, they have to remain
little flexible in their initial years. When they become medium
size, they can have few written policies and when they become larger
of 25 or 30 years their entire policies get converted in to their
formal processes.
o Do not make a bureaucratic framework of governance in NGO.
o Keep some flexibility in certain rules related to employees of
organization.
Conclusion
Running an NGO is perhaps more complicated, more demanding than
running a publicly listed corporation”, as the public’s
expectations are higher and their demands for transparency are likely
to increase in the future. Good governance is a ‘must have’
if NGOs are to earn public confidence. People are not going to support
an organization where they don’t know whether money is directed
to the right and proper cause. In other words, public support follows
only when good governance and management policies are evident, and
the primary responsibility for that lies with an NGO’s board
and staff. For NGOs are going to be judged not only by their transparency,
accountability, and financial sustainability, but also on how well
they mobilize and manage resources and deliver services.
References:
1. Governance Matters’ a book by Les Stahlke and Jennifer
Loughlin
2. Article on Good Governance – Credibility Alliance
Listen Noshir H Dadrawala on NGO Governance
http://www.youtube.com/watch?v=oKFEpz3dHlI
Listen Noshir H Dadrawala on Individual Foundations
http://www.youtube.com/watch?v=ROPDMiGR9GA&NR=1
Listen Noshir H Dadrawala on importance of professionalism in NGOs
http://www.youtube.com/watch?v=tCZA7SOsuP4&NR=1
Annexure – I
Glimpses of Model Governance policy by Smile Foundation
Governance is the need of the hour in the development sector in
order to ensure and promote application of best management practices,
compliance of law and adherence to best possible ethical standards.
The entire management processes and practices of Smile Foundation
are in compliance with the principles of ‘Good Governance’.
I. Making Policies & Decisions
Smile Foundation, from the inception itself, works on a delegated
work environment. Each and every person in the organization is involved
in the process of decision making in a scientifically designed system.
Making Policy & Decision in the Foundation are done through
a four tier system.
a. Departments & Divisions
Monthly review meetings are held for each division and department
regularly.
b. Executive Committee
The Executive Committee manages the Foundation’s operation
directly and it reports to the Board of Advisors. Members of this
committee are professionals working with Smile Foundation and it
is mandatory to include a member from the Board of Advisors.
The Executive Committee of Smile Foundation holds a meeting each
Quarter (every three months) and looks after day to day management.
c. Advisory Body
The Board of Advisors comprises of technically competent people
from diverse backgrounds and expertise. The body is formed for a
period of one year and a few independent members with eminence and
reputation are nominated each year. Members of this board also meet
once every Quarter.
The Board of Advisors advises the Trustees of Smile Foundation,
taking regular inputs from the Executive Committee.
d. Board of Trustees
The Board of Trustees sets the vision and broad guidelines for the
Foundation and ensures good governance in liaison with the Board
of Advisors; although, the Board of Trustees is not involved in
the day to day operation of Smile Foundation.
II. Credibility Norms
Smile Foundation encourages its partners to follow Credibility norms
for ensuring good governance in the development sector. Smile Foundation
also follows norms of good governance itself.
The Foundation strives to build capabilities of its grassroots NGO
partners towards good governance.
The Governance & Credibility System includes a systematic set
of norms, which is administered and monitored by a qualified Company
Secretary.
III. Project Management & Monitoring system
The project management & monitoring system in Smile Foundation
comprises of a systematic and well laid down processes. These are
as follow –
a) Selection of NGO Partners
Partners are invited selection of partners for required locations
under specified programme through advertisement in relevant forum,
websites; and also through reference from credible partners as well
as perennial ‘submit a proposal’ section in Smile Foundation
website. Also, prospective partners keep on submitting proposals
directly to the foundation round the year. Initial selection is
done on these bases.
b) Desk Appraisal
Prospective proposals are put through the desk appraisal process
at respective programme divisions.
c) Field Appraisal
Short-listed proposals from desk appraisal are considered for field
appraisals by the programme departments located across India.
d) Monitoring
Once a partner is selected under a particular programme, an MoU
is signed, guidelines and initial trainings are imparted and the
particular project is started. The project is put under a systematic
and periodic monitoring system. The processes include the following
steps:
i. Project Auditing ii. Activity report analysis iii. Field evaluation
The process of project monitoring is followed by impact analysis,
which is a done internally; and external evaluation, done by an
external and professional agency.
e) Impact analysis
f) External evaluation
IV. Audit System
Smile Foundation has a four tier audit system to ensure that funds
are utilized to the optimum level in an accountable manner.
A. Programme & Project Audit System – is followed to
assess and ensure impact of the investment and proper use of money
by its NGO partners and projects
Programme & Project Auditor
N.K.S. Chauhan & Associates
(Chartered Accountant)
B. Internal & Process Audit System – This is conducted
throughout the year in order to ensure accountability in the internal
operation of the organisation
Internal & Process Auditor
Agarwal, Gupta & Sahu
(Chartered Accountant)
C. Statutory Audit – is held by the statutory auditor for
finalization of balance sheet and statement of affairs. This is
also done to comply with standard statutory norms.
Statutory Auditor
M.K. Kuchhal & Co.
(Chartered Accountant)
D. External Evaluation & Audit – Impact and outcome of
various welfare projects of Smile Foundation are evaluated by an
external agency having decades of relevant experience on the subject.
External Impact Evaluation Agency
SIDDHANT, New Delhi
Audit reports are discussed with the Advisory Body and the Executive
Committee to take suitable and necessary steps if required.
IV. Use of Technology for Good Governance
a) Online Monitoring System
Smile Foundation advocates use of technology for ensuring impartial
monitoring and to cut down over head cost.
Smile Foundation has already started the system in a few of its
national level programmes. Gradually, all its projects will be compatible
with this system. The biggest challenges so far have been lack of
access to technology in remote project areas and lack of working
knowledge among grassroots NGO partners. The Foundation is taking
up the task of building capacities of all its NGO partners and project
staffs.
Two separate and customized monitoring systems have been developed
for 50 Smile Twin e-Learning Programme (STeP) centres and 41 Mission
Education projects across India.
b) Beneficiaries Management System
A successful beneficiary management system is operational across
100 projects in 21 states of India. This technology is helping Smile
Foundation in tracking the progress and development of all the beneficiaries
in two major national level programmes as of now.
c) Microsoft Groove – the decision making software
Smile Foundation practises participatory and democratic decision
making process, which involves all possible professionals in the
organisation.
Microsoft Groove software is operational, connecting all major offices
and divisions, since last one year.
d) Management Information System (MIS)
A monthly MIS is prepared and analyzed by the MIS Officers and it
is submitted and discussed in Executive Committee meetings for assessing
the operational activities and to do future planning.
e) Accounting System
With increasing use of relevant technology in each division and
department, along with projects, both quantitative and qualitative
MIS are managed technologically.
The Accounts Team of Smile Foundation consists of competent and
qualified accounts professionals. The accounts are maintained on
daily basis through advanced and updated computerized systems. The
same is also analyzed and checked periodically by the internal control
system and Internal Auditor, in compliance with standardized HR
and Management Policy.
f) Future Technology
Smile Foundation is exploring various technologies like GPS (Global
Positioning System) to track and to do real time monitoring of all
Smile on Wheels projects, its national mobile hospital programme.
Next in line is also video conferencing system which would eventually
connect all Smile Foundation offices and centres. It will facilitate
decision making, monitoring, optimum involvement of all stake holders
– including supporters, capacity building and training etc.
V. People Management
Our people are our assets.
Smile Foundation believes in a democratic and participatory work
culture.
Appraisal and review system is conducted twice a year in a democratic
way to identify the future leaders of the organization.
VI. Education Support
Smile Foundation encourages its employees to take up higher studies
so that they emerge as future leaders and grow individually as well
as professionally.
Annexure II – model governance policy by Tech Mahindra (given
as separate pdf file)
Annexure II
Inputs given by Meena Galliara – NMIMS
Considering the sector at large, it has been seen that large Part
of NGO governance is related with legal part of if. Many NGOs feel
that governance is only submission of their accounts and small report
about their activities to charity commissioner, income tax office.
They perceive that if they fulfill these formalities then there
is no need to do anything additionally for governance. It has been
seen at wider level among many NGOs in India.
Governance should be taken in a professional manner by NGOs as
it is seriously taken by corporate organizations.
Small NGOs working in rural areas may need hand holding at earlier
stages of establishing governance. These NGOs can approach big NGOs
working in the same area for such hand holding support.
If the NGO is family based, then everything is taken for granted
by the board members. This should not be happened. One man show
is not advisable or reliable to run the entire NGO. Friends and
family members can start having conflicts among them whenever they
sit together as a board.
There is a need to draw a clear line between governance and execution.
There should be clear differentiation between the roles of executives
and trustees.
NGO can have a separate group of people to design the policies
and execution. But these are relatively elite NGOs who can afford
to have such kind of boards. Board should not be involved in routine
day to day activities and small decisions of an organization.
Board Members required to be trained in Financial Literacy. At
least there should be two members who can understand the financial
accounting and financial management procedures. Appointment of board
members should be a rotational. Make board membership itself rotational
which will be useful to bring new blood and ideas in the board.
It can be sized for 3 or 5 years of time period rather than keeping
it lifelong. Every member of Board should have diversity skills.
There is no need to get board members only from social work or medical
Background. Diversified skills of board members are needed to serve
many aspects of management such as advertising, media relations,
brand building etc.
Board members should be very careful for ensuring transparency
and accountability. For Example. Kuchh Navnirman Abhiyaan publishes
their balance sheet every year in newspapers. That is the level
of transparency which helps to ensure credibility of organization.
It also increases people’s belief on organization. If possible,
NGO should organize a formal training on governance for all the
employees of the organization right from Board members to security
person. Governance should be made a religion that has to be followed.
Executive trustee remain very busy in doing all the things and
he is not able to concentrate on strategic exercises. Many board
members become sleeping partners due to improper definition of roles
and regulations of each member. This should be avoided. Everybody
should have a specific role to play and he / she should contribute
substantially in the growth of organization. Each board member should
be able to contribute in strategic planning and evaluation.
It is has been observed very commonly that all board members remain
busy in fund raising activity vigorously whereas effective utilization
of funds is not being taken care of. Impact and effectiveness of
organization’s work should be properly measured by them.
Second team of board members should be prepared by existing board
members over a period of time. Otherwise, existing board members
will get stressed out in the entire time period. Capacities and
competencies of non profit board should be at high level because
they have to do everything like marketing, advertising, fund raising.
Largely, governance depends upon the agency that is funding you.
If there are some conditionalities against funding, respective organization
has to accomplish these conditions of governance. If donor agency
expects certain things to be done, then only NGOs get in to good
practices of governance. Therefore all NGOs should implement governance
practices by themselves which help organization to attract the funds.
Legal aspects should be taken care of. NGOs should fulfill legal
and financial formalities. NGO should not lapse registration of
80G and 35AC. But this is not the only governance. There should
be performance evaluation independently for each board member then
only organization can proper. Wherever possible, NGOs should bring
young energetic & vibrant blood in the board. These young people
can bring freshness to the entire set up. Board members should be
made aware about new professional code of conduct. So that, they
would be capable enough to match up with new executive people working
in the organization.
Inputs given by Sanjay Patra – FMSF
Steps to form a Board of any NGO:
Ideally board size should be within the rage of 5 to 10 members
unless the legal requirements are different. The board should not
be permanent in nature except for institutional nomination. E.g.
Organization working for some institution is abided to involve certain
members are who are nominated by concerned institution.
In case of a Trust, sometimes there is a clause regarding permanent
trustees, in that case it should be ensured or it is desirable that
the total voting rights of founder trustees is approximately less
than 50%. Otherwise it will entail absolute control over the organization.
Board should be comprised by diverse skills. E.g. people should
be there with right balance of gender, finance, legal and other
specialized skills. There should be participation from various stakeholders
who are some way connected with the vision and mission of an organization.
There should be clearly defined policy for recruiting and election
of board members and trustees. Induction of new board members should
be through an open process of providing opportunities of being elected
from larger group of stakeholders. The process of formation of board
should be an independent one. It should also be ensured that there
should not be a conflict of interest among board members. So, ideally
there could be a nomination committee of the board and it should
be responsibility of that nomination committee to bring in names
of potential board members of experience and understanding in the
area in which the organization is involved. And as an ideal process,
staff members and even the CEO should not be part of the nomination
committee just to ensure independence for the entire process. These
are some of the basic steps one can take to form a board of NGO.
How board plays a significant role in running the NGO
and its sustainability?
A good and well governed organization is very important for its
sustainability. For this purpose sustainability should be understood
in right context. Sustainability does not related only with the
financial sustainability but it is more related with the social
relevance. How relevant is the organization is more important than
its financial status. Because organization and its programmes should
be relevant to the civil society today then only it will ensure
its sustainability. But the moment when the work is not relevant
any more then sustainability can always become an issue.
There are three factors which contribute towards the NGO sustainability.
One is effectiveness of the programme, financial self reliance and
the impact of programme. So, these three areas interplay in the
sustainability of an organization. And the board through its good
governance should play a very critical role in the interplay of
all these factors. If the governance is weak, it will eventually
lead to lack of clarity and poor direction in vision and missions.
It will directly impact relevance and programme effectiveness. It
will also lead to loss of credibility of organization. Donors will
also loose the faith on that organization and it will impact the
financial sustainability as well. It is primary responsibility of
the board to ensure that organization retains it relevance and serves
the need and purpose for which it exists.
How roles and responsibilities of the board should be
designed?
In order to be Board work effectively, it should be properly structured.
Proper orientation and sensitization should be held of board members
regarding their roles and responsibilities when they come in to
the board. There has to be clear distinction between strategic matters
and operational matters what are those strategic in nature and what
are those operational in nature. Determining the vision and mission
and strategic direction of the organization is the responsibility
of the board. However, how the entire organization is managed is
the responsibility of management team or the staff. One can not
look at day to day operational aspects of organization. It can not
be done by the board that will be too much for them to do in a limited
time available. Otherwise it will become hands-on management team.
It will definitely hamper structure of the organization.
Board is responsible to set vision, mission, core values and the
directions and most importantly it should set out the policies.
And based on these policies, chief executive functionaries should
manage the organization with the cooperation of staff members. These
are the areas where board should look at. Another thing that the
board needs to look at is how the whole board can be structured.
So, there has to be key office bearers e.g. chairperson has to be
elected to lead the board. And then, there is another very important
role of the treasurer who should be also elected among the board
members to oversee the financial management matters of the organization.
Apart from that, there has to be various committees among the board
members. E.g Finance Committee, Audit committee. Sometimes, in smaller
organization they combine these both the committees as per their
strength and requirements. In some situations board members and
staff should come together to take certain critical decisions. There
could be executive committee including office bearers as well as
chief staff members of the organization. There could be a Human
Resource Committee which will look after human resource issues.
Board Development committee or advisory bodies could be there. So,
this is the way now entire governance can be structured.
What kind of special efforts should be taken by the board in order
to ensure the good impact of the work that the organization is doing?
First board should understand what they should do and what they
should not do. It is very important to develop a sort of board manual.
Such manual can clarify what comes under the domain of board and
what comes under the domain of staff or the management. Few important
things that board needs to do is the review of the mission, whether
the organization is going with right way or not. Strategic planning
of the organization and what are the activities the organization
is to be taking. Very importantly, the board should get involved
in monitoring the progress of the plan. They should look after whether
the plan is getting properly implemented in due time or not. They
also look at evaluation by which effectiveness of work can be checked.
It is also most important that ensuring the accountability of chief
functionaries of the organization. The board delegates the authority
to the chief functionary for overall management of the organization.
Board hires the CEO and monitors his / her performance. CEO is the
key decision making authority and is answerable to the Board. And
board should also ensure that the mechanism of the CEO’s accountability
is in place. The CEO also owes to the board the accurate and timely
information about the environment and its activities of the organization.
For this, CEO should provide quarterly or monthly reports to the
board regarding his / her work and involvement. Processes like the
appraisal of the chief functionary should also be there. These are
some of the issues where the board should be involved.
Some of the practical issues in board processes are as under.
Many times it has been seen that board is formed by the chief functionaries
itself. Therefore the board looses its effectiveness. Therefore
formation of board is very important skill. There should not be
any vested interest of the board members. This has been very common
where the family members and relatives sits on a board of organization.
Very commonly it has been seen that there is no distinction between
the governance and management. Board need not get to involve in
the day to day management of organization. Board should be only
the policy making body.
Inputs by Prof. Santosh Kumar - EDI
How Governance is significant component to run the NGO?
Governance is the process where all the functions of management,
all the processes of regulation, and all the processes of managing
an organization. It is basically a process by which we try to ensure
that whatever has been assigned to a particular organization is
taking care of or not. Certain in-built mechanism and processes
have to be present there in any organization. Accountability, Transparency
& Participation (ATP) are the inbuilt mechanisms by which the
process of governance should take place in a proper manner.
Accountability is something different from responsibility. So,
responsibility means everybody is doing one’s own job very
properly but accountability goes beyond that. Accountability is
to keep a check whether the job which has been done with the responsibility
has yielded that particular result properly or not. Therefore accountability
is very important. As we all know that from Right to Information
and all those kind of things transparency has become a mandatory
function of any public or private associations. Transparency is
something which keeps updated everybody on the issues which are
happening in the organization. Everybody should be made aware or
informed about the work of organization in a particular manner.
Accountability and transparency, participation can be sought as
an effective tool to ensure good governance. So, if we do not have
participation of people inside or outside of organization, no effort
of the governance can be very successful. Therefore participation
is very important. Hence, these three (accountability, transparency
and participation) have become three important pillars for any kind
of process of any organization.
As far as NGOs are concerned, in last few years we have seen that
NGOs have actually become a very powerful medium of delivery of
the services in the social development. If we talk about social
development, then NGOs play very critical role here and now NGOs
have gone beyond the charity mode. It is not only the charity orientation
of someone who would want to donate some amount for the society.
Now days, NGOs have become professional in their operations. They
have all the resources and required expertise to work in development
sector. Since they have become professional, these three pillars
of ATP plays very important role in running the organization effectively.
ATP inside the organization ensures people of the organization to
remain aware about what is happening, how the decisions have been
taken in the organization. If they are well aware, about the routine
operations, they can contribute in the governance of NGO. It also
has an external context. Accountability of the organization is towards
the larger society outside with whom they are working. It is very
important how the outside world looks the organization. If organization
works with the people then, it should seek the participation from
the people of their community with whom they are working. If there
is zero participation from the community itself, then NGO can not
work effectively.
And to that extent, these three pillars of ATP are very important
to operate.
What is the process of designing the Governance policy?
Role of NGOs have been changing. It starts from the registration
of NGO itself. Earlier it used to be a family oriented NGOs but
now lots of commitments and professional requirements are there.
So designing the objectives, vision, and mission are very important
from governance point of view and as far as governance policies
are concerned, lots of experimentation has been happening to understand
how best the policies of NGOs are. So, processes of the functioning
of NGO are in right place. So, one can start with having a governance
cell in the organization which looks at the various functioning
pattern of the organization. They should take effort to implement
ATP in an organization. We can call them Governance officers or
NGO officers. They can be one amongst the staff or separate secretary
can be appointed. The people from existing staff and who knows the
vision, mission, objectives and programmes of the organization very
properly can play this role accurately. They should further look
at delivery mechanism form the best practices of governance point
of view. So, governance policies can be designed on the basis of
day to day life of the organization. It need not come from Outside
and need not be imported from another organization. Each and every
organization is unique in itself. They have to develop own mechanisms
of the governance of the organization.
What is the significance of governance with the sustainability
of the organization?
Yes, definitely. Sustainability comes in the terms of life of the
organization. It depends on how long they want to work in this field.
If we apply best practices in our day to day activities, sustainability
of organization will not be in trouble. All the people in the organization
right from their board members to the clerical staff of the organization,
they are accountable to themselves to their organization and also
the people outside. If we do not have three pillars very strong
then we know that many organizations fail even though it has stood
at the national level. Organizations who fail to put an impact are
found as very week in their financial as well as human management
and therefore there has been a question of their sustainability
for these NGOs. So, best practices in the process of governance
actually lead to sustainability of the organization. Sustainability
is a logical outcome or end result what we look forward to by having
the best practices of the governance.
Important points for NGO sector
Sector size has been developing, now it is not the only NGO sector.
It is Development Sector rather than NGO sector. It includes anybody
who is in the process of delivering well to our society. All of
them have to follow a same path. All the people working in this
sector right from the filling process up to the delivering processes
are social change agents. So, NGO and Development should go hand
in hand by applying good practices of governance which will assure
them for their long lasting sustainability which will finally lead
to development of our nation.
|
