Archive for January, 2012

The difference between the right to assembly and partisan politics

Thursday, January 12th, 2012

Free citizens have the right to assembly – the freedom of association is one of the cornerstones of any civil society.

In Egypt, this right is affected in many ways: Frequently, the registration of associations is blocked or delayed. Grants from other countries have first to be scrutinized by the Ministry of Social Affairs. This process can easily take 9 months, and the scrutinizing administration has not to justify its negative decision.

Egyptians who wish to organize themselves frequently choose the form of commercial firms in order to circumvent the administrative procedures applicable to associations.

Non-profits aims are camouflaged “as if we are in this for business”. This has negative side effects: Participants have permanently a feeling as if they do something wrong; participation of members is not enforceable by law; inflows of funds to Egypt are disguised as “services”; reports on the usage of funds are disguised as invoices, and – last but not least – any gain would be taxed with the profit tax.

There is also a secondary effect: This permanent “As if”-game puts the reputation of these groups, of their supporters, if not of the whole civil rights movement at risk. Rumors grow that these NPOs are not fully honest, that management is doing this only for its own benefit, and so on.

In order to take action we, a group of lawyers and auditors, founded the organization Shafafeia – “Clarity” or “Transparency” in Arabic – in a form of a firm. The aim of Shafafeia is to increase the trust into civil society institutions, mainly with two tools: removing administrative obstacles for associations and supporting good governance.

1. Giving an Example

We think that we should show in practice that even under the current conditions, citizens can do a lot in order to guarantee a minimum of public control and participation in their affairs. We think it is mandatory that we start with our own organisation:

The majority of shares of Shafafeia are in the hand of persons that have committed themselves not to receive a dividend nor to take a management or employment position in Shafafeia. The function of these persons is to establish an oversight over management, to determine the remuneration of management, to approve budgets and plans. This is, of course, also possible in the legal form of a firm.

We have developed a model-shareholder contract, that obliges our shareholders to leave any profit in the firm. This shareholder contract also obliges the owners, in case of a liquidation, to transfer the remainder amount to an entity of similar aims. We have established a due diligence study, in order to harden the shareholder contract from possible allegations.

We think that these two elements (division of oversight bodies and management as well as the model-shareholder contract) are a good tool, to establish at least a minimum layer of trust into activities of citizens, who wish to organize themselves in the form of firms. We will share this practice of developing good governance of associations with others, in the form of seminars and trainings. Good governance in the non-profit sector would also include trainings in management, administration and bookkeeping, it would include giving examples in public reporting, developing honest tax solutions e.a.. It is a myth that we cannot do anything, because the laws are bad. At least we can use the space – that current legislation gives -up to a maximum.

 

2. Challenging restrictive administrative decisions

Second, we will challenge restrictive administrative decisions in court – as soon as we can find a funding for this. Examples are: Rejections to register an association, malicious execution of oversight duties, unfair interpretations of tax laws, or other allegations. We will also try to challenge administrative practices and procedures. It goes without saying that such trials should be supported by adequate media coverage.

 

3. Promulgating the reform of laws and standards

Third, we will promulgate reform of laws and standards applicable to associations and foundations. This would include a revision of

·       Law 84/2002 on Associations and Foundations

·       Income Tax Law

·       Administrative Procedures and Criteria for Registration

·       Administrative Procedures and Criteria for Scrutinizing Foreign Aid.

·       Accounting standards for non-profits in the framework of EAS

Lobbying and measure for awareness raising could include: dissemination of articles to journalists, conferences on international exchange of experiences, translation of laws from other countries, meetings with deputies and other measures. We think that our board members are sufficiently connected in order to establish an echo in the media and elsewhere.

 

4. Developing good governance in NPOs

Good governance is not only a question of commitment, legal support and legal reform, it is also a question of knowledge. We thus will try to transmit “best practice”-examples from other countries to Egypt, or to find teachers who train the following topics:

·       fund raising and management skills,

·       work with volunteers,

·       knowledge in Egyptian laws,

·       accounting and reporting skills

 

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We would like to make it clear, that it is also a fundamental right of the Egyptian people to prohibit “partisan politics” i.e. the attempt of foreign powers to support political parties or election campaigns. We support public oversight on foreign aid; what we criticize is the way how this control is currently established – a mixture of administrative hypocrisis and – parallel – a bonanza rally.

We would like to ask you to support our idea. Please ask for further information at fabel@fws-audit.com.

With best regards,

Frank Fabel, CPA