This paper is from a session at the Regional Conference on CSRO Accountability & Sustainability -- Critical Lessons from Best Practices, February 18-20, 2002. Text of this paper was prepared by the Philippine Business for Social Progress. Download printable PDF copy (325K) of the entire conference proceedings.
Based on our experience in South Asia, accountability is always link with financial accountability, which is often defined as quantitative accountability. Donor agency also looks for qualitative accountability. This can be interpreted as value for money equated in terms of achievement of qualitative results. Accountability implies financial accounting but at the same time it involves achievements of objectives. This is giving the best value for money.
Since CIDA spends public fund, accountability both qualitative and quantitative, are the most important principles that all CIDA funding must look, whether the funds goes to CSO or government. CIDA cannot expect much difference between government and civil society in terms of accountability. It is difficult to generalize CIDA's experience with CSO in relations to accountability. It varies from country to country. Civil society displays varying accountability patterns. Often, CSOs falter on accountability because they pay less attention to accountability or don't have the capacity for appropriate financial management and accounting. CSROs are different. They are more advanced and their capacity is greater.
CIDA criteria:
In the absence of Board and annual financial audit, the accountability of CSOs suffers.
On the other hand, sustainability is closely link to principle of accountability. The organization will not be sustainable if it is not accountable. To be accountable, CSO must not be dependent on donor funds only. A number of CSOs in South Asia attain sustainability by operating viable commercial activities for continuous development operation. Commercial programs are not necessarily bad as income formed is put back to development programs. This is being done in Bangladesh and India. This is becoming an increasing trend in the region. In Bangladesh, CIDA was involved in the projects at the very beginning. These organizations have developed into almost big corporations. Along side this, capacity of smaller community have been developed.
What is saddening is, young breed of government development workers are missing out the opportunity to learn about the history of NGO development and understand how they operated. In 1968, CIDA started out its NGO programs in Canada. Government workers then are involved in development of NGO work. Most of these people now are retiring, and the younger people are having difficulty to understand its functions. CIDA don't do core funding for NGOs, but they think it does. They failed to understand the distinction between funding programs and core funding. If the young generation is not trained well enough, the good perception of CSRO may be lost.
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NOVIB is composed of member organizations for International Development Cooperation, which is founded in 1956. Its annual budget is $120 million. It has around 900 counterparts primarily NGOs in more than 50 countries, from Thirds world, Eastern Europe and former Soviet Republic. There are 350 staff and are in The Hague. Half of them work in grant making.
To NOVIB, risk is to dare for a positive outcome as well as to dare around danger of negative outcomes.
NOVIB Risk Management Appraisal Approach. It is fairly simple. It is composed of three elements:
So it is really managing three concepts in relation to grants or what the grantees want to achieve. Therefore, the questions are:
This is the simple part. The complex part is: any risk whether positive or negative is rooted in very specific cultural, political, and social context, the context that shaped people's responses and perceptions about the likelihood and consequences.
In previous appraisal approach, NOVIB had 30 pages of operational questions, which was an attempt to understand the whole problematic part, both external and internal. Now, it designs a better approach, which rely heavily on judgment of program officers. They are then provided with appraisal list to help them make judgment about their beliefs around likelihood and consequences or the value.
Japan Bank for International Cooperation (JBIC) was established 2 years ago with the merger of the Overseas Economic Cooperation Fund (OECF), which is responsible for the ODA, and the Export-Import Bank of Japan, which provides support to private sector. After the merger, the functions of these companies remain with JBIC. What JBIC is doing is what has been done before, but there are attempts and efforts to improve operations.
In the past during the OECF period (1960), assistance were channeled to infrastructure e.g. construction of dames, airports, roads, highways, telecommunication and the like. Recently, the social development type of project such as rural water supply, sanitation project, education, small-scale irrigation and income generating projects, have increased in number. In terms of commitment, 15% is for social sector (1996). JBIC has been providing roughly US$7 to 8 million a year for projects all over the world. Out of which, 25% is for social development. In even conventional type of project like construction of dams, JBIC is paying more attention to social consideration, promoting the participation of the community at the project formation stage.
When JBIC appraises project, some assistance are required from NGOs. Normally, proposals submitted by recipient countries recommend projects that are not matured. What was done in the past is to check the economic viability of the project. Other factors were not considered then. Now, JBIC is paying attention to social and environmental factors. Attempts to involve NGOs in appraisal of projects had been done just like in China. In the evaluation stage, JBIC fully depended on NGO support and third party. Evaluations are carried out transparently. With so many completed projects (50 to 60 a year), NGOs and 3rd parties carried out evaluations, and JBIC takes full responsibility for accountability to public.
JBIC has projects in Bangladesh, China, and Vietnam. In Bangladesh, we are utilizing knowledge of Japanese NGO. JBIC offers facility that could improve effectiveness of project, which is called the "Special Assistance Facility (SAF). The tools are:
Q. For Dr. Banerjee, you mentioned that for organizational sustainability it has to be accountable. You spoke about measures of accountability. Dr. Juree, yesterday, commented about how to look at organization in terms of Western style like Board management. I like to have your comment on this.
Another question is: specifically for organizations supported by (European) donor agencies, which are themselves grant makers, do you think donor agencies have an obligation to work with them in thinking through what other forms or mechanism could be provided?
R. N. Banerjee: On the first point, one could look at other means of course. But I look at it in the traditional, western ways. In Canada, NGOs who got funded are those with financial audited report, or with operating board having regular meetings. These are part of our criteria. What I've seen in Cambodia is not embezzlement of funds but misused of funds by a number of organizations. None has board. When problem arise, you really have nowhere to go. They say: I don't report to anybody; I don't need board; and I am the decision maker. That doesn't help. If given a better alternative, we could look at it and say okay. In my work in Thailand, it's a comfort zone for me to know that there is a board, audit statement and certification going on.
On second point, I would say yes, if we were asked to be involved in the case. Some of the donor agencies, when the organization has grown big, the kind of support established in early years get more difficult and distant. Definitely, CIDA can be involved in getting ideas or how it can be done, at the same time small bits of funding could be organized. But CIDA has not been approached in the area in recent past.
Y. Morimoto: Last year, JBIC established a pilot study in Indonesia. The purpose of the scheme is for JBIC once a year, to ask NGOs which are consulting companies for good proposals that could be used for projects. Under the scheme you can put your ideas in the project. So far, JBIC has not encountered this. By nature the taxpayers request JBIC to improve the quality of its projects. If JBIC could do everything, we then don't need to ask NGOs help. But it is not familiar with specific field so NGO cooperation is asked.
R. Wilson-Grau: In NOVIB, there is a policy with all its grantees to engage them in critical dialogue and pose the problems as well as the risks the grantees face. But the policy is not to become involved in the solution other than to provide funds for grantees to solve the problem. However, because of the power of donors, NOVIB goes beyond problem posing and become involved in problem solving. There could be a conflict, somehow.
Q. As an NGO, I ask for your attention. Is it possible for JBIC to be give information, because we the Indonesian NGOs have difficulty in accessing information on: how much money go to government; in what kind of project; and how much money go back to your country just to pay consultancy fee? It is very difficult to access this information. So as a social responsibility, please give Indonesian NGOs access in order to control government corruption and flow of money back to you.
R. Y. Morimoto: JBIC will make the best effort to follow your suggestion.
Q. JBIC only provide loan and no other form of assistance. Is this right? The special assistance opportunities, are they another form of loans? Are there other varieties of loans JBIC provide?
R. Y. Morimoto: Those are grant base. On concession loan, that depends on the component of project. It could be utilized for any project.
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