The contribution of self-regulation by individual NGOs in an effective regulatory system

Diagram of The Regulatory Bridge
Sector Self-accountability Government Public / Funders

The first place where the potential misuse of an NGO can be prevented is within the NGO itself.  In a major review of misuse (of all types) involving NGOs in 2000, researchers found that the underlying problem was often one of governance, especially the lack of separation between the Board/Trustees (in charge of governance) and the Chief Executive or Director (in charge of management). This internal relationship is critical. Some key elements in this regard are: the NGOs constitutional document; responsibilities of the Board / Trustees; clear staff roles and responsibilities; and other internal controls (such as staff recruitment, approving purchases, cheque signing).

This is also the experience of the Charity Commission, which emphasises the responsibilities of trustees through personal liability.

The importance of self-regulation is also why the Charity Commission and other organisations produce a lot of guidance for the sector on how to run an NGO well:

  • There are interesting overviews on how the Charity Commission looks at the Characteristics of an effective NGO and the obligations of trustees. Governance and financial management are key areas in an NGO's life, although it seems to be far more effective for a regulator to produce guidance and principles rather than prescriptive rules.
  • For governance: The UK's Governance Hub offers trustees fresh ideas and inspiration to help them develop their organisation and become more effective; it has produced a Good Governance Code to help ensure that NGOs reach the highest possible standards of governance. In South Africa, meanwhile, the Non-Profit Organisations Project promotes good governance and accountability in the NPO sector, with the overall aim of strengthening NPOs and their potential contribution to democracy and socio-economic development; it has produced guidance on good governance.
  • The Central and Eastern European Working Group on Nonprofit Governance has produced an excellent Handbook on NGO Governance, which aims to help NGOs operate more efficiently while contributing to the larger goal of improved transparency and accountability in the NGO sector as a whole.
  • Turning to the quality of a NGO's financial management: Management Accounting for Non Governmental Organisations has created a Guide to Financial Management for NGOs, defined some related roles / responsibilites for staff and trustees, and created a simple Health Check. This has been specifically designed for small and medium sized organisations (or field offices) and covers all the areas of NGO financial management, including keeping accounts, financial planning, financial monitoring and maintaining control.
  • Amongst other tools for NGOs, CIVICUS has produced information on Financial Controls and Accountability.
  • Independent Sector's Checklist for Accountability points out that building an organisation committed to the highest ethical standards demands more than just following the law: it also requires fostering practices that create an environment of transparency, accountability and integrity.

Self-regulation feeds into the debate on accountability and is also an area that the international community is interested in.

Useful resources for NGO capacity development