Archive for January, 2013

Governance in countries of limited statehood or in a hostile environment

Thursday, January 3rd, 2013

Non-profit organisations are like a “civil society” in a nutshell. Members could be compared with citizens, having voting rights. The Board is a bit like a parliament, with control duties. Management is, in this comparison, like the executive power. The strength of NPOs is, to a large extent, that management is somehow controlled through democratic process.

Can NPOs exist in an environment that is clearly no “civil society”? Is it possible for a human rights organization, working in a dictatorship, to establish a system of checks and balances? Is it possible for a self-help group in a country suffering from civil war to be governed in a democratic way? Governance in a stable society is not like governance in chaotic circumstances. Of course there will be differences.

 In a hostile environment, i.e. in a surrounding, in which all activities of an NPO are carefully scrutinized by an over mighty state, the organization would, at least partly, try to work “under cover”. Internal affairs would be negotiated secretly – one cannot expect that all decisions are put into the minutes of the meetings of the Board. On the other side, the organization cannot expect that legal claims could be enforced with the help of the state. Consequently, the organization would rely more on other mechanisms in order to enforce its claims – usually these are networks of relations. This makes NPOs sometimes “opaque” – internal control is weakend. The decision making power might be focused on very view individuals – a system of checks and balances is mostly absent.

Please note that this process of concentrating power in very few hands is not necessarily an objective need. Due to my experience, it is more like this that all stakeholders (i.e. companions, supporters, beneficiaries) tend to allow this process to happen. Sometimes, there is a nuance of self-defense in this: It is better for the collective, if the permanent legal threat is limited to one or at least very few individuals. The person, who takes the lead, has more a feeling of a scarifying him- or herself, than of usurping power – this also contributes to this tendency. If fully developed, the relationship between leader and companions is by no means a contract in the framework of a civil code. It is a heroic pact.

However, it could be that these kind of conspirative behaviors survive even political changes. A habit that was acquainted in a period of harsh repression might be still kept in a period of thaw – unnecessarily, like an atavism. For a supporter or donor, it is sometimes difficult to say in which stage the organization is. Management has an interest to exaggerate the dangers of the hostile environment, because this enforces the individual power position.

Similar situations appear in countries of limited statehood. While there is no reason for conspiracy, anyway claims cannot be enforced by law. These cases lead to situations in which auditors may play a role as an independent arbiter in order to settle mutual claims. This has also an effect on the legitimacy of the auditors. The legitimacy is not created by law or by a process of certification, but by mutual consent of the parties under audit. In other words, legitimacy is generated on the spot. It would be worth to go deeper into this phenomenon.

 Frank Fabel, CPA

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