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Governance- A Study
Governing Third Sector Organisations (TSOs):[1]
Lessons from Non-Formal Organisations[2]
Yashavantha Dongre[3]
Shanthi Gopalan[4]
I
Introduction
Discourses on governance have received increasing attention in the recent past, among researchers, policy makers and all those pondering about development issues. Apart from the universal acknowledgement and acceptance of its importance, there are also differences in the theoretical formulation, policy prescription and conceptualization of what constitutes ‘governance’ and what is the process of ‘good governance’. The fact that discourses on good governance emerged from the multilateral agencies in the late 1980s and the institutions such as the World Bank granted currency and pursued dialogue on the issue, adds a new dimension to the discourse. Of course much of what is discussed about Governance has been in relation to State (Narayan: 2001). However the State alone cannot go about this process and realize the objectives of good governance. The citizenship and other segments of the society are also equally important actors in creating a state with effective governance or good governance (Chandhoke: 1995). Therefore, apart from state (governments) the need for good governance got extended to corporate and other non state entities also. The idea of Public-Private partnership or tri-sector partnership in realizing overall development and facilitating good governance has also become an important issue (Gopalan, et.al: 2004). All this has in turn lead to varied approaches to understand and practice governance. The TSOs are considered to be an important player in ensuring better governance of both State and the Corporate. Obviously this role necessitates looking at the governance practices of TSOs also. Therefore, a comprehensive study was undertaken to examine the governance issues of Third Sector Organisations, by looking in to their internal governance practices. The present paper is based on the findings of this comprehensive study, the report of which is under preparation.[5] The study has gathered data from 62 Key informants representing those having first hand knowledge of working of TSOs and representing a wide array of fields such as academia, activists, government officials, politicians and corporate representatives. This data was primarily used to understand the conception of governance and how the governance process needs to be in relation to TSOs. For the purpose of primary data the study covered in all 140 TSOs, from four geographical divisions in
Significance of Governance to the Context of Third Sector
Governance has been considered to be a critical issue for the State and the Private sector (CII: 2004.) It is viewed that the Third Sector Organisations (TSOs) generally perform the role of watching and facilitating governance of the first two sectors. However, the issue of ‘governance of those facilitating governance’ is also equally important (Jayal: 2000). Governance in relation to TSOs is probably more important than that of the other two sectors for, TSOs are primarily ‘not for profit’ in nature. Any organization that gets labeled as service organisation would be subject to public scrutiny to a greater extent and at a higher level. Further, TSOs are increasingly seen as the watchdogs ensuring good governance of State and the Corporate. As representatives of civil society, they are the ones who would raise issues, voice people’s opinion, set standards, bring pressure and thereby make sure that the state and the corporate would not go off track. TSOs compel the first two sectors to be ever vigilant and exercise due accountability. If this be true, what about the governance practices of TSOs themselves? Is it not necessary that they propagate a code of governance through practice? (Dongre: etal. 2004). Obviously, this is a crucial question and hence there is a need for TSOs to demonstrate their governance practices.
As not-for-profit organizations most TSOs would be generally dependant on external sources for funding. Be it domestic or international, these sources would like to make sure that the funds are put to right use. This calls for establishment of credibility on the part of fund seekers. Governance practices would go a long way in establishing credibility and ensuring support to the endeavours of TSOs. By their very nature, these organizations are the benchmarks of gauging the societal values. People would always look for good things in these organizations, since they are people’s organizations. It is governance again that speaks of the value system of TSOs and makes them real representatives of people.
Good governance of TSOs has many functional dimensions. Setting the purpose, mission, objectives and strategies for the organization, ensuring that the goods and services the organisation offers are the most appropriate to achieve its objectives; that they are produced efficiently and to predetermined quality standards, defining and maintaining relations between different components of the organization - the board, staff, members, volunteers and beneficiaries and relating the organisation to its wider society; its local community, government regulators, funding agencies and the media and providing an assurance that the organization is faithful to its mission and is sustainable. All these elements need to be looked into while evaluating the governance practices of TSOs. In the countries of the North, the TSOs are generally incorporated and there is always a Board of Directors that ensures the above functions. But in many countries in
Decision Making and Governance:
Decision making is an important element of governance process. It is often believed that the most important decisions on policy, strategy and actions are made by a Board. It is also held that decisions are to be made through a democratic and transparent process. In actuality decisions may have to be made at different levels in the organization, depending on the need. However, if the decisions are to be made on time and if these decisions are to be in accordance with the vision and mission of the organization, then there will have to be a smaller group responsible to take such decisions. Therefore, this becomes the responsibility of a Board.
Good governance has a lot to do with who takes decisions and how? The more democratic the decision making process, the better it may be from the view point of ideal governance. However, such transparent and democratic decision making is often very difficult. It is believed that if decisions are to be taken at a larger body, say all members or say through the participation of beneficiaries, then there may be more confusion, delay and lack of clarity on how to implement the decision. Further, the absence of Board or Committee generally makes one think that there is no proper platform for decision making and hence the governance process may not be good.
The Traditional and Informal organisations are set in a situation of working in the absence of a Board or a regular committee. Therefore, it is of interest to note how they take decisions and ensure that they comply with the spirit of good governance. This paper examines the subtleties involved in decision making process of such traditional and informal organisations.
Characteristics of Informal organisations
Traditional and non-formal organisations are those that generally function without a formal/legal structure. Collective action is the crux of their functioning. They are not registered or incorporated under any legislation. Traditional organisations include organisations of indigenous people which normally have a community based lifestyle. They have a hierarchy but collective action and consensus is the key. The other type of traditional organization is religious organisations that work mainly on conventions. They normally have an almost rigid hierarchy but all actions are done according to the conventions practiced over a period of time, many over riding the provisions of law. The informal organisations include modern unregistered organisations that are evolved out of group needs and collective action/responsibility. There is no strict hierarchy that decides position and power and almost all activities are done through collective decisions. The representatives will have the responsibility of executing particular tasks assigned to them. The roles and responsibilities keep changing based on situational needs.
According to estimates there are about 1.2 million TSOs in India (excluding cooperatives) and nearly 50 per cent of all the TSO activity is small and unincorporated, loosely structured and informal (PRIA: 2002). Due to their informal and unincorporated status, one need not conclude that all unregistered, informal organizations are badly governed or incorporation ensures good governance. In fact unincorporated and informal TSOs provide us an ideal setting to examine the process of governance. Therefore, there is a need to examine as to how effectively such initiatives are governed.
II
Decision Making Process:
The decision making process is the most crucial aspect of an organisation. How decisions are taken? Who takes decisions? What factors influence the decision taking process? To whom are the decisions made? Is some of the major questions one need to ask to understand the decision making process?
Presence of a formal Board or Managing Committee is seen as an important prerequisite for ensuring better governance. The Board is supposed to have a role in Policy formulation, implementation, feedback and follow-up. However, in the context of traditional/informal organisations it is difficult to build a one-to-one relationship with the presence of a Board and good governance. This can be better illustrated by looking in to the mode of planning and development of policies of the organization as practiced in traditional/informal organisations.
Development discourse recognizes participatory mode of governance as the most effective way of running any initiative. But what is equally important in this mode is that the participants have to be equally interested and engage in the discussions in a proactive manner. Participatory mode calls for a high level of involvement, commitment and awareness to understand the issues and efficiently respond to them. The general perception is that common citizens do not have such interest, innovative ability and intelligence. Contrary to this understanding, through out the Indian sub-continent there have been innumerable efforts of the people to come together and address the issues effectively (Awasthi: 1998; Mohapatra: 2000; Patel: 1998; Sainath: 1996; Shah:2000; Sharma & Bareth: 2004) and bring about positive shifts in their life situations. The TSOs under study are also examples of such collective efforts.
The non-formal TSOs under study are locally based and are addressing the regional needs of the people. In most cases they have members and the target group drawn from among the local community.
Vision and
Among the non formal organizations studied, 5 TSOs are found having a Board/Committee, where as 14 of them do not have any such arrangement but follow group approach to decision making. Of the 5 TSOs that have board, 3 have board members elected by the members of the organisation and the other two organisations have boards that are formed by the founder and the religious head of congregation. Three of these five organisations, have formed Board by invitation. The Board members in these organisations are the regular participants in the activities of the organisation and are always available to the organisation for any kind of assistance. The chosen board members are capable of addressing the issues in relation to the organisation and these board members are within the reach of the organisation. These organisations have board members who are not ‘mere friends coming together’ but are people who are conscious of their responsibility. The board members take individual responsibility to know about the organisation. The Board members of these organisations are not members who are away from the organisations for long periods of time. The geographical proximity to the organisation makes it more conducive for the Board to work as a unit. They have formal mechanism in their governance pattern but the emphasis is clearly less legalistic and purpose oriented. These initiatives most often are relatively small, localized and participatory in nature.
Even though Boards are mandatory for the incorporated organisations it is observed that in most cases Boards are constituted only to fulfill the legal provisions. The Board members are generally the close associates of the founder or the CEO. The organisation gets formed first by the founder or a group of founders. It is only after that they bring people together, who they think share the same ideals or as in some cases to fill the required number to form the Board. In course of our interaction with the staff of the organisations and individual member of the board, it emerged that in 63 per cent of the formal/registered organisations the Board members meet once a year and for a few hours. This will not provide enough time for addressing the issues of relevance. Revisiting the mission statements, evaluating the organisation’s work and the working of the CEO and the staff and such other responsibilities cannot be executed in such meetings. In all these organisations, it is either the founder or the CEO who attends to these issues and a yearly report is presented during the annual meet of the organisation, which are only a formality. Of the 121 formal TSOs, 66 per cent of the organisations have on an average 3 Board members actively participating in Board’s activities, while other are sleeping partners. In most cases, persons of eminence have lent their names to the TSOs mainly due to their personal acquaintance with the key person in the TSO than out of concern for the goals pursued by the organisation. Only in about 26 percent of the formal organizations, Boards were found working as a cohesive unit with all the members of the Board taking active part in decision-making and execution of the board’s responsibilities.
Collective Decision Making
The 14 TSOs without a board/committee structure are either membership based or community based organisations. They generally design a fixed programme on collective basis on the activity to be taken up during the year. Among these organisations, those having law and advocacy as part of their activity other than the identified tasks, address the issues as and when they emerge. These organisations have a very commendable collective decision-making and execution system. No single individual is important here. All decisions are taken collectively in the presence of members and/or target group. Then based on the task to be undertaken, a group of representatives will be selected to execute the work. These groups are in charge for a stipulated period of time. Each year the groups change by rotation. In two organisations the sleeping (inactive) members were eliminated once in three years. The members attend the weekly meetings very religiously. A smaller group is generally formed to take decisions during emergencies when a meeting could not be convened or the other members could not be reached.
Unlike the general assumption that, such informal groups do not / can not take decisions and discharge them within a stipulated time, 85 per cent of the initiatives have taken quick and timely decisions. For example one of the sample organization, the tea plantation women workers’ group, has fixed programmes of awareness building on the rights of the employees, to educate women to handle the work place harassment and providing literacy and alternate skills to the members and also non-member tea garden workers. Other than this they handle the cases of exploitation. The group meets every Thursday evening in the village hall. As and when the cases come they hear the case and discuss the issue very elaborately and decide the immediate course of action. Identifying the activity, course of action to be taken and allocation of responsibilities are discussed in the presence members and the target group. The action group chosen from among the larger group has to address these issues. Once the course of action is approved, action groups are given freedom and time framework to function and report back. The group also identifies another set of members whose responsibility is to follow up the case and report in the next week’s meet.
Traditional patterns and values of governance seem to be the key factor in many informal initiatives. Eighty per cent of these initiatives have recorded the existence of group interaction and involvement of the target groups at all stages of decision making process. Consensus, the most popular way of arriving at a solution to the problem or an issue, is evident in eighty five per cent of the initiatives.
The case of the forest dwelling communities’ council that addresses the land rights and the right to collect minor forest produce will explain the point. This group has members drawn from different communities living in the forest areas of the lower Western Ghat region in southern
Open Discussion; Sharp and Focussed Decision Making
Even though there is no Board or even a President or CEO in these14 initiatives, the discussions and decision-making are very specific and sharp with reference to the issue on hand. It is really interesting to note the method adopted by these initiatives in handling differences. In 11 initiatives, the differences in course of discussions were handled in the light of the group’s interest through consensus. The ideological and individual differences that arose and the instability thus created were identified in the early stages. The differences that emerged were not just patched up but were very seriously addressed in the light of the basic values of the group. The case of an organisation that is addressing the issue of refugees settled in Kolkata will highlight this point. This initiative, initially formed to address the women refugees who live in camps, later has concentrated the work on one refugee camp addressing all the residents of the camp. The group has members drawn from different degrees of ‘left’ and ‘non-left’ ideologies. Whenever the members/target group had to face extreme forms of abuse and deprivation due to unequal values and distributions the members have clashed in methodology to be adopted. The ‘extreme left’ ideology members wanted to handle the issues through immediate retribution where as some members were for non-violent modes of operation. This had resulted in bitter differences amongst the members. But the members and the target group in the light of the initiative’s values that they will seek justice within the constitutional means, laid the matter on floor and had detailed discussion on the pros and cons of different approaches to address the issue on hand and also revisiting the basic philosophy of the organisation. The group also invited some prominent thinkers from the state to address the issue. A very heated argument that ensued helped the organisation to rediscover that all the members (except one member) still cherish the basic value of seeking justice with in the non-violent method. The group also agreed upon to address the issue by mobilizing general public opinion. Each individual member’s ideological moorings are respected and at the same time the principal philosophy of the organisation and adherence to it was re-stressed.
Open discussions in the group have been noted as an effective binding factor for the initiatives to sustain and continue to work. Governance is at its best when those who feel the impact of the decisions are those involved in making the decisions. Participation and transparency are the hallmark of effective governance in these informal initiatives.
Internal Leadership Issue:
The sustainability of the TSOs depends to a great extent on the internal leadership development opportunities. In the present study 11 of the 14 TSOs without Board and 3 of the 5 TSOs with Board have trained second line leaders. These organisations have created spaces and opportunities for new set of people to assume leadership positions both within and outside the organisation so that the sustenance of these organisations are not affected. On the other hand of the 121 incorporated, “formal” TSOs 46 TSOs have second line leadership generated and in 75 organisations no such efforts were made. The organisations that have developed second line leadership are the ones having democratic leaders. They have been able to decentralize the decision making process and delegate responsibilities to different groups of people in the organisation. Further, of the 75 TSOs without second line leadership, in 51 TSOs the leader’s absence from the institution would render the organisation almost paralyzed. Dependence on one or a few persons may have serious implications for ensuring continued better governance and sustainability of TSOs. It might be true that many of these organisations are recognized as ‘well performing’ at present. However, the leadership quality required to hold on to this position are different. Here, the issue of second line leadership becomes crucial as they have direct bearing on the sustenance of the organisation and thus the decision making process of the organisation.
Many studies note that Indian TSOs more often than not are individual centered (Srivastava & Tandon: 2005. Aarthi: 2003). This is a very important issue to be addressed in our understanding of governance and decision making process of TSOs. In our sample charismatic leaders head two organisations that have board. These individuals are the main decision makers in the organisations. They hold this position in their capacity as the founders of the organisations. In one organisation the individual leader is unquestioned/questionable monarch, who is totally in power. Others in the organisation follow the leader. The other organisation on the other hand has a leader who takes the final decisions but, has provided space for internal democratic spirit and has very effectively trained second line leadership to address the decision making process of the organisation. The rest of the other organisations in the sample are all group based and contrary to the popular view that most TSOs are individual centered (though it is true in case of 60 percent of formal and registered TSOs) these informal organisations nurture collective identity.
Knowledge Management Practices:
The informal organisations have very effective knowledge management practices. Of the 19 TSOs under study 16 have the system of documenting very effectively the activities of the organisations. It is not just a report but a detailed case documentation. The policy development mechanisms, the decision taking process and the actions discharged from the first stage to the end are documented. The documents also throw light on the hurdles faced and the methods adopted to handle them.
Of 16 TSOs that followed the detailed documentation, 10 TSOs have both oral and written documentation of the activities and 6 TSOs have only oral documentation method. To substantiate the above case, we can cite the example of Tribal Youth Association. In this organisation all the activities are handled through an oral method. Accounting and recording the proceedings of the meeting are done through songs that are on the spur of the moment formed and sung in public. Similarly the events of the day are recited in the form of songs. These are sung by all the members at the end of that presentation and passed on to others in the community adding to their rich heritage of songs. Many indigenous communities in
Organisations ensure that the experiences of the organisation and methods followed to address the issues are available to the organisation at all times and to every body in the organization. Loss of members/volunteers does not create knowledge gap in these organisations. The members/or volunteers are expected to understand this in the initial stage of entry into the organisation.
Amongst the incorporated organisations there is a legal requirement to submit annual report to different controlling authorities and also to the funding agencies. The annual reports that are prepared will discuss the activities taken up by the organisation in a given year. The reports do not document the knowledge of the organisations. In 25 percent of ‘formal’ TSOs documentation of the knowledge of the organisations was under taken, and in 10 per cent of the TSOs it was mandatory for the members/staff/volunteers update themselves with the documented information.
One of the strengths of informal TSOs is their ‘informality’. Members/volunteers /staff have flexibility to address the issues. These organisations have very minimal differences in position between staff/volunteers. These TSOs are held together by trust and mutual respect. Of the 19 TSOs 18 TSOs have such relations. 12 TSOs have developed group modes of checking inadequate performances that may creep in due to informality. They have effectively laid down boundaries for responsibilities, roles and reporting actions. They are able to effectively handle informality affecting the performance of the organisation.
Funding Issues and Accounting Practices:
TSOs require steady source of income to discharge their set policies and programmes. Inconsistent and scant financial resources will hamper the organisation’s capacity to deliver. In fact, fund crunch is one of the burning issues ahead of TS. The cases under study, though are not legal entities, have sustained for long periods. The youngest TSO is 3 years old and the oldest 140 years (two oldest organisations are religious organisations). What is more important is that majority of the organisations are in existence for 20 and 60 years. (One, who is aware of the power dimensions that operate in Indian caste dominated communities, will understand that surviving for 20 or more years is no ordinary achievement. The formal organisations have found this survival rather difficult). How have they handled the financial resource is very important. The two very old religious organisations have foreign funds but they are not more than one third of their total income. One religious organisation receives funds from government. 76 per cent of the TSOs are self sustaining. For TSOs with membership it is the membership fee that is the major funding source. TSOs without members have been dependent on domestic funding sources that are local and most often individual contributions. TSOs, which have been able to sustain on their own and generate their own funds, are the ones, which use informal traditional modes of trust and openness in their governance mechanism.
Jan Sunwai (public hearing) is the most popular mode of accounting and reporting followed in 18 of the cases under study. The traditional mechanism of public accounting and auditing operates as a very effective controlling mechanism in these organisations. Those TSOs that have a board and follow a very formal accounting system to account for the funds raised by them also have adopted this practice.
The jan sunwai method which the organisations have been found to engage in are generally scheduled once a year. The method of oral reporting that these organisations have developed is very unique. 10 TSOs under study have used the reporting mechanism also as awareness building method. The example of the silk weaver’s organisation will substantiate the point. The small silk weavers in
Conclusion
As noted earlier nearly one half of all TSO activity in
The interesting feature of these informal initiatives is the extensive use of social capital base to sustain their credibility and strength. No expenditure on physical infrastructure, lesser emphasis on keeping records and files and much less dependence on outside source of funds is the hallmark of these organisations. Very frequent group interactions, continuous and natural feedback and follow-up mechanisms, adherence to community values and mutual trust are the primary mechanisms that operate in these organisations.
With the introduction of the TSO laws by the British in
Though this paper focuses on only a select segment of the governance process with greater emphasis on the decision-making process, a generalization based on this small sample is not possible. However, our study demonstrates that good governance has many ways and approaches and even informal and traditional organisations can evolve their own mechanisms of good governance. Obviously there is scope for plurality of approaches and methods of governance. Universalization of modes of governance is neither a necessity nor advisable in case of third sector organisations.
If we look at the research input and literature there is great deal of work done on the effectiveness of Boards, modes of developing a board that works as a unit and the advantages that might emerge out it. But, there are no such effort made to understand the organisations that are operating with group decision making at a horizontal level. As the studies in
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[1] TSOs include all types of civil society initiatives. In this paper Non Formal Organisations refer to those civil society/People’s Organisations which are not legally incorporated under any legislation. We have used terms like Traditional organizations, informal organizations and unincorporated organizations at different places, but for the purpose of this paper they are synonimous
[2] This paper is based on the paper presented at the 7th International ISTR Conference
Civil Society and Human Security: Raum Jai July 9 – 12, 2006
[3] Dr. Yashavantha Dongre is Professor of Commerce and Director,
[4] Dr. Shanthi Gopalan is the Research Associate at the Third Sector Research Resource Centre.
The authors acknowledge the contributions of Rajeev I.N (inrajeev@hotmail.com) & Srivalli A. J (valliaj@gmail.com) Research Fellows, APPIN Project, Third Sector Research Resource Centre.
[5] Project on
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G8/G20 Governance and regional integration
The facilitation group of the International Forum of national NGO platforms: calling for the G20 to deliver fundamental and far-reaching reforms of the global economic system pt
7 December 2011, Members of the International Forum of national NGO platforms, representing thousands of civil society organizations in both G20 and non-G20 countries, are calling for the G20 to deliver fundamental and far-reaching reforms of the global economic system; reforms that will ensure inclusive and sustainable development and deliver real opportunities for all citizens. Also they participated in a meeting with the president Nicoolás Sarkozy.
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