Industry/Sector Analysis

SECTOR: NGOs
PREPARED for:

Strategic

Professor Dr. A. K. M. Saiful Majid

Course Instructor W650: Business Strategy

PREPARED by:

Monamee Afroze Ishika (Roll: 119, MBA 46D) Mohammad Zulqar Nayen (Roll: 126, MBA 46D) Tahmina Tamanna (Roll: 153, MBA 46D)

Institute of Business Administration University of Dhaka

May 31, 2013

LETTER of TRANSMITTAL May 31, 2013

Dr. A.K.M. Saiful Majid Professor Institute of Business Administration University of Dhaka Dear Sir: We are submitting to you our assigned term paper entitled Industry/Sector Strategic Analysis: Sector-NGOs as part of the course requirement. By working on this report we were given a chance to test our analytical ability and to apply our theoretical conceptual knowledge in a practical scenario. This report was done through both primary and secondary information gathering and analysis. Data were recorded and analyzed explain the facts accurately. Findings from the information analysis regarding the strategic aspects are revealed and discussed in this report. We also have cited some recommendation for the sector improvement as per the analysis. We are hoping that you will overlook minor inconsistencies found in the report. Thank you for giving us the opportunity to work on this paper. It's been a real educative journey. If you have any questions about the report, please contact any of us at any time.

Sincerely,

Monamee Afroze Ishika (Roll :119, MBA 46D)

Mohammad Zulqar Nayen (Roll :126, MBA 46D)

Tahmina Tamanna (Roll :153, MBA 46D)

Acknowledgement We would like to express our heartiest gratitude to our course instructor Dr. A.K.M. Saiful Majid, Professor, Institute of Business Administration, University of Dhaka , for assigning us with this term paper work and giving us the opportunity for a educative journey. Our special thanks goes to the expert who spend valuable time giving us valuable information, without which completion of this report would not have been possible. Here, we specially mention about the expert for her support, Ms. Nirjharinee Hasan, Country Director, HelpAge International, Dhaka, Bangladesh

We thank all the websites and also all the reports and journal authors, from which we got all the valuable information for completion of this report. Above all, we want to acknowledge and thank God that we have been able to complete this journey successfully.

EXECUTIVE SUMMARY This report work is an initiative to understand and conceptualize the strategic practices in different industries/sectors in Bangladesh thoroughly and to compare and contrast the practical and theoretical scenario. Information for analysis was collected from both primary and secondary information sources to complete this term paper. Bangladesh is a country where approximately 22,000 NGOs (Devine 2003) operate with different objectives and activities. There are both local and international NGOs in the sector. NGOs in Bangladesh serve different kinds of with having different kinds of problem and background including rural poor people, unemployed people, women etc. NGOs in Bangladesh are now in the third stage of their growth. The impact of political, economic, legal factors on Sector in is High on a three point scale. On the other hand the impact of social factors on NGO sector will be Low in the three point scale. Drivers of changes are donor agencies, regulations and policies, government initiatives and alliances with different organizations. NGOs have been playing an important role for the socioeconomic development of the country especially for the disadvantaged group- women, children and the poor. Bangladesh has made remarkable progress on a range of social indicators over the last 15 years, an achievement widely credited to the country's pluralist service provision regime. As per complementary strategies this sectors members have gone for strategic alliances with government, donor agencies banks etc. The legal framework for NGOs in Bangladesh set the code for operation for all the organizations. Ethical issues in NGO sectors can be divided into three important sub parts, Accountability, Transparency and Intention. For the betterment of the destitute and the helpless, the untended population of the society, NGOs are much acknowledged. Active presences of NGOs are essential for the overall and social development of Bangladesh in every aspect.

Table of Content 1. Executive summary 2. Introduction to the report 2.1. Origin of the report 2.2. Rationale of the Report 2.3. Objective of the report 2.3.1. Broad objectives 2.3.2. Specific objectives 2.4. Data Collection Method 2.5. Limitation 3. Sector profile 3.1. History/Background 3.2. Sector Size 3.3. Major players in the sector and competition 3.4. Beneficiary profile analysis 4. Sector life cycle analysis 5. PESTEL analysis 6. Factors driving the changes in the sector 7. Key activities and impact for the sector 8. Growing opportunity and threats in the sector 9. Diversification analysis

10. Complementary strategy analysis 11. Legal issues in the sector 12. Ethical issues in the sector 13. Conclusion 14. Recommendation 15. Bibliography 16. Appendix

Introduction
Origin of the report
This report on Industry/Sector Strategic Analysis: NGO sector has been authorized by Professor Dr. A. K. M. Saiful Majid as a fulfillment of the Business Strategy course (W650) requirement. This report contains detail strategic analysis on various aspects of NGO sector in Bangladesh.

Rationale of the Report

This report work is an initiative to understand and conceptualize the strategic practices in different industries/sectors in Bangladesh thoroughly and to compare and contrast the practical and theoretical scenario. This particular report is on NGOs of Bangladesh, which is one of the dominant sectors in Bangladesh. This report can help to have a picture how NGOs are operating their strategic thinking behind every decision they make.

Objective of the study

Broad Objective To identify how the NGO sector work on different strategic aspects while

operating in Bangladesh and how these strategic choices has made them able to have growth and sustainable position among other sectors.
Specific Components To attain the broad objective, following specific objectives will be

pursued: To analyze the life cycle of the sector to identify in which position are this now and what are the opportunities and threats they can face To do the PESTEL analysis to understand the impact of external environment on NGO sector. To analyze the legal and ethical issues related to the sector

To understand how the complementary strategies work in this sector identifying the outsourcing and strategic analysis activities by the organizations in this sector

To analyze diversification strategy followed in the sector and To identify the foreign competition and relevant strategies followed in the sector

Data Collection Method

Information for analysis was collected from both primary and secondary information sources to complete this term paper. Primary Sources: Data was collected through interview from one expert in the relevant sector. The expert gave valuable insights on the sector and shared her experience regarding several issues. Due to time constraint the group could manage to get appointment of one expert and collect information. Secondary Data: Secondary data has been collected from following sources were the main source of collecting information due to shortage of time and this source is used to know in depth about the sector and also different information on strategic aspects. o Literary publications (e.g.: Conference papers, journals, Text books) o Previous strategic analysis reports by other authors o Several NGOs website and other relevant websites

Limitations
There are few limitations for this term paper which might have an impact on the analysis part in the paper. Due to time constraint and busyness on respondents part, only one appointment could be arranged with the expert in the sector. The analysis is done on the basis of secondary information and base on the knowledge that was gathered through the course contents.

Sector Profile
NGOs are usually defined as an association of persons organized on voluntary basis through the initiative of one or more dedicated persons committed to the planning and implementation of development projects at the grass root level. NGOs although work outside the government structure but they are within the legal framework of the country. Abdul Halim in his book Social Welfare Legislation in Bangladesh said, A broader definition of NGO refers to associations voluntarily formed by individuals for the purpose of rendering welfare and development services outside Government structures; drawing funds from national or international sources; and functioning within the legal frame work of the country. Non-Governmental Organizations or NGOs have become an extensively discussed theme in the third world countries. Bangladesh is no exception. The NGOs are working on poverty eradication by directly involving the poverty stricken population. Their target groups are basically the poor and vulnerable ones with hardly any possessions. Their main tasks are to organize these people, create awareness in them and make them development oriented. In Bangladesh the term NGO is very well known and NGO activities are wide spread. There are many publications, books and research on NGOs and their activities. Besides, this countrys state administration has developed certain constitutions and laws to authorize the NGO activities. Unfortunately these constitutions and laws do not give any clear and specific definition and explanation of NGO. In Britain, USA and other English spoken country NGO refers to nonprofitable organizations.

History
Non-Government Organizations dedicated to Aid and Development were relatively unknown in Bengal. There was however a range of voluntary associations through which charitable and

voluntary activities took place in Bengal. For example the Muslim community has long used institutions of zakat and chanda for both social welfare and cooperative development of public infrastructure such as roads, madrassas and mosques. Village Welfare Societies were sometimes organized by public figures. Foreign organizations were involved in social welfare in Bengal from before the colonial era, the Baptist Missionary Society active since1794. In addition to religious activities, mission organizations provided medical services and general education to the rural poor. In spite of its wealth of natural resources, the then East Pakistan also had its share of sufferings. Ten tidal waves in the coastal area of Noahkali have been reported between 1960 and 1970. Floods were common and the disparity between the poorest and those who benefited from the natural wealth increased with each calamity. One of the earliest institutions for rural development in the East Pakistan was the Academy for Rural Development, based in Comilla, from which emerged the so-called 'Comilla Model' for small farmer cooperatives. The success of cooperatives of farmers with relative small landholding inspired a national scaling up or roll-out of the model through the Bangladesh Rural Development Board with links to the Krishi (Agriculture) Bank after the emergence of Bangladesh. The non-government organization CARE initially distributed food parcels to survivors of World War II, mostly in Europe but according to CARE Bangladesh, also East Pakistan in 1949. In the 1950's CARE distributed food aid more widely to newly emerging countries using American agricultural surpluses. In East Pakistan this took the form of powdered milk for schools from 1955 and lunches for school children from 1962, the year CARE established an office in Dhaka. In 1970 CARE sent relief to the victims of the cyclonic tidal wave which hit East Pakistan on 1213 November 1970. The Catholic agency CARITAS Pakistan had a branch in East Pakistan from 1967, but following the cyclone it was renamed Chittagong Organization for Relief and Rehabilitation (CORR) in November 1970. It reorganized and became a national organization called Christian Organization for Relief and Rehabilitation in January 1971 with several Cyclone rehabilitation projects.

(http://www.caritasbd.org/about.html). Then with the outbreak of conflict in the liberation struggle for Bangladesh on March 25 1971, CORR became heavily involved in sheltering vulnerable displaced people, particularly Hindus. At the end of the war CORR undertook to rehabilitate 200,000 families. These early histories of CARE and CARITAS illustrate how the Cyclone of 1970, followed by the collapse of the democratic process and the slide into the Liberation War of Bangladesh changed the economic and social circumstances of Bangladesh and brought into the international consciousness a picture of a nation in crisis. They are also indicative of the way NGOs adapted to the changing environment in which they found themselves. The suffering of the Bengali people due to a combination the cyclone of 1970 and the political turmoil that lead to the emergence of Bangladesh as an independent nation following liberation war from March to December 1971 prompted a massive response in multilateral, bilateral and non-government aid. In addition to the outside humanitarian organizations which responded, many local organizations were created to care for orphans and widows and assist the many refugees returning from neighboring India after the war ended. BRAC, the largest NGO in Bangladesh today, was formed in 1972 as the Bangladesh Rural Advancement Committee. Its early objective was to deliver relief and rehabilitation programs for refugees returning from India to resettle in Bangladesh. The Lutheran World Federation is typical of the many international NGOs which provided assistance with relief and rehabilitation: Rangpur Dinajpur Rehabilitation Service (RDRS), then a field program of the Lutheran World Federation, India, began providing relief and rehabilitation to some of the one million refugees returning home from India after the nine-month War of Independence. Food, shelter and healthcare were the priorities; later, there was rehabilitation of the farms, the schools, the hospitals. With one disaster following quickly after another, RDRS also found itself providing emergency relief to those caught up in the famines and droughts that devastated the young country into the next decade. During the first years of Bangladesh's independence in December 1971, humanitarian agencies and media coverage were focused on the apparently overwhelming needs of a mainly rural

population living on the edge of subsistence in a 'disaster prone' environment while the national infrastructure was still being reconstructed from the destruction of guerrilla warfare during the struggle for independence. In spite of working in an extended emergency environment, the organizations involved in relief and rehabilitation soon saw their mission in terms of development. After only one year working with returning refugees in the Sulla area of North-East Bangladesh, BRAC commenced a 'program of integrated community development' seeking to develop 'agriculture and horticulture, fisheries, adult education, health and family planning, vocational and other training programs. RDRS also describes itself as shifting 'from relief-and-rehabilitation to Sectoral Development Program. RDRS grew from a small, somewhat slapdash charitable body working in the remotest corner of Bangladesh into a major player in the country's development. It became known for its innovative spirit, its readiness to improvise according to the resources available and to the needs of the poor. Integrated Rural Development had become the 'dominant methodology' for community development, so it was natural that the NGO sector would adopt this approach, especially in the context of multi-sectoral needs of Bangladesh. An organizations credibility became tied to the comprehensive reach or 'holism' of its program. Alongside the increased focus on development, organizations also began to consolidate their Bangladeshi identity. For example Gono Unnayan Prochesta formed from a partnership between some Bangladeshis and the international Quaker Peace and Service organization, whose representatives suggested that the Bangladeshi partners form their own organization which the Quakers would fund. The organizations created directly by international NGOs and the great many more that have emerged endogenously following their example have diversified their funding sources and the role of those international NGOs is now much reduced. In 1977 BRAC adopted a 'targeted approach' to development. Its target was the poor and landless and the main vehicle through which BRAC sought to address their needs was the establishment of village organizations (VO). The basic groups or Samity were comprised of 2025 poor people, their homogeneity based on land-ownership class. The Samity were to

eventually be linked 'into a federation of the poor' which would act as a buffer between the poor and the village power structure, which BRAC had shown was the most immediate constraint on mobilizing the poor. Subsequently the BRAC approach was adopted by other NGOs working in rural community development. That these ideas were widely adopted within the NGO sector is shown by Gono Unnayan Prochesta (GUP or 'People's Development Efforts') which itself claims to be the first non-governmental organization in Bangladesh to build associations of the poor as a core poverty alleviation strategy'. The next major innovation in NGO philosophy and strategy was the extension of the community group structure by incorporating them into secondary associations and even tertiary federations in 'community based people's organizations in the early 1990s. This formulation of Community Based Organizations (CBO) shows its antecedents in the 'federation of the poor'. Some NGOs are now the largest providers of a range of services in Bangladesh, and their role with respect to the poor, business and government has become increasingly subject to debate.

Sector Size
The NGO sector in Bangladesh is one of the largest and most influential in the world. The size of the NGO sector in Bangladesh is remarkable. Bangladesh is a country where approximately 22,000 NGOs (Devine 2003) operate with different objectives and activities. Their activities may be put into two broad categories - NGOs with advocacy roles, to promote human rights, and those working with the socio-economic development of the people of Bangladesh. Development NGOs are flexible in nature, nearer to the poor and innovative in problem solving. This sector consists of the following organizations: 206,000 not-for-profits, 189,000 of which are religious (1999 Statistics Bureau); 45,536 organizations registered with the Social Welfare Minis-try and 1,925 NGOs registered with the NGO Affairs Bureau (2004 statistics from NGOAB)

However, according to a list published in April, 2013 by NGO Affairs Bureau, there are 2227 NGOs in Bangladesh. The List is available on this link http://www.ngoab.gov.bd/Files/NGO_LIST.pdf.

Major players in the sector

A number of factors contribute to the success of scaling up in Bangladesh. Strong institutions are built on a foundation of effective leadership and appropriate human resource management systems, and practices of experimentation and institutional learning fed continuous improvements. Constructive donor-client relations play a role, including appropriately timed financial and other support. The presence of an enabling macroeconomic environment and a liberal regulatory regime allow the NGOs room to grow. Population density, ethnic homogeneity, and religious tolerance all contribute to the ease and rapidity with which new practices could spread, especially with respect to rural women taking loans from NGOs. Finally, the presence of a professional autonomous apex body (PKSF) is important. There are both local and international NGOs in the sector. BRAC, CARE, UNDP, ActionAid are some big names operating in the sector.

Beneficiary profile
NGOs in Bangladesh serve different kinds of with having different kinds of problem and background. The types of people served by different NGOs are described below:

Rural Poor Requiring Humanitarian Progress and Structural Development

Despite the fact that poor people have vast experience about life, still they are incapable of developing exact ways to scientifically analyze and fix their problems and whatever possessions they have. In this case, efforts of the NGOs are worth mentioning to help these people analyze the society and problems in the backdrop of old, superstitious, anti life perspectives. For example: primary training, improved training, organizing exchange of views program among

different groups or areas, regular adult education activities, weekly analytical discussion etc. Different NGOs are playing essential role for humanitarian development through joint analysis and seeking solution through different seminars and workshop, joint social activities, and application of socio-economic projects. Besides, they have introduced certain essential concepts like developing small groups, credit based cooperatives, mother welfare society and cooperatives etc. for homeless/ landless etc. and thus have strengthened the root of organizational structure for rural poverty.

People in Need of Employment

In order to encourage the rural poor to participate in different economic activities and to increase their income through employment generation, several policies, methods and strategies of the NGOs have attracted the attention of some foreign development experts. NGOs usually create employment in two ways. First of all, they provide employment in their own organization since they also need human resource to operate. Secondly, they provide loans and management assistance to individuals, which create new employment opportunity. Currently the projects that are being conducted under the supervision and assistance of NGOs are: Irrigation project for landless, fishery in ponds (khash), Fishing in the coastal area, weaving, equipment supplies for landless share cropper, bee keeping, small business, rice and popcorn production, sericulture, handicrafts i.e. earthen wares, wood and cane works, developing nursery. Besides, they are providing training to hundreds of men and women on vaccination and treatment of domestic livestock and poultry, construction of sanitary laboratory and slabs; to be mechanics of pump machine or rice/paddy mills etc. Thus they are significantly contributing in eradication of poverty by providing the above-mentioned essentials.

People in Need of Micro Finance

Overall economic development is essential for poverty eradication at the rural level. Besides employment generation, per head income and scheme to increase savings is required so that a sustainable development and poverty reduction can be seen for the poor. The identification of loan as a significant necessity for sustainable economic development for the poor as well as developing an effective method for meeting the demand for loan is a competent model of poverty eradication. The micro credit scheme launched by Grameen Bank is now established worldwide for its success in poverty eradication. This model has been accepted even at the government

level. The government has established Palli Karma Sahayak Foundation (Rural Activities Assistance Foundation) or PKSF and till December 2001, has provided loans to several eligible NGOs 1,04,089 crore taka for micro credit scheme. Different NGOs so far have given (June 2001) 1, 04,089 crore taka micro-credit loans. The number of people enjoying such benefits is 116.05 lakh. Almost 23.50% of these loans are collected from PKSF and 9.15% from local Banks.

Poor Rural Women

Although half the population of Bangladesh is women still they are leading a much backward life. The NGOs of Bangladesh have consciously targeted the fallen behind poor women folks as their beneficiaries. The NGOs, which are enlisted under the Bureau of NGOs, have more than fifty- percent women clientele (population). In 1995 with financial aids from ADAB and BRAC almost 549 NGOs worked for only women. Almost 96% of the credit facility holders are women. Swanirvar Bangladesh has 71% women as credit holder. Till the year 2001 BRAC has provided loan to 41.38lakh beneficiaries worth 6953.78 crore taka throughout 64 districts and 460 subdistricts of Bangladesh. Statistics shows that 99% of these beneficiaries were women. Palli Karma Shahayak Foundation (PKSF) has 86.43% Women credit holders. Besides till 1998 ASA distributed 13,183,46 million taka to 7,34,684 women which is about 93.41% of total credit holders. Till 1998 Grameen Bank provided loan of 1,06,14,242 million taka to its total member of 23,64,755 out of which 22,40,139 were women and 1,24,616 were male. The importance that NGOs have placed on women to eradicate rural poverty has truly improvised the economic and health status of rural women. This has brought in the possibility of representing women as a media to change the socio-economic standing of the country. Changes can be seen in the way our society regards its women folk now a days. Empowerment of rural women and their participation in development process has brought in a long-term positive effect, which is a direct contribution by the NGOs in Bangladesh.

People beyond the reach of Health, Nutrition and Hygiene Facilities

In Bangladesh, Health and nutrition status of the rural populace is very poor. Majority is deprived from even minimal health and nutrition facilities. For this reason, a significant part of the active NGOs of Bangladesh are providing training and education service in the field of health

and nutrition. An independent organization named Voluntary Health Services Society (VHSS) is supervising the NGOs that are working on the health and nutrition sector. Health and nutrition is one very important indicator of poverty measurement. In some specific area of primary health care sector like diarrhoea control, vaccination against six hazardous diseases, campaigning for health consciousness, expansion of water and sanitation services, reproductive health care and family planing services etc. the NGOs have achieved extensive success. World Vision has spent in heath sector taka 65,841,474.45 which consist of 20.20% of their budget. In order to develop the health and nutrition situation, around 350 NGOs have brought in sanitary toilets for 14 lakh people and safe water for 1.5 crore people through establishment of 1.5 lakh tube-well, 186 rural sanitation centers and 2.5 lakh latrine. Till 1990, 85% children were vaccinated and 90% families women were given training on how to make oral saline under the EPI project. In one research it was found that, in terms of food intake, knowledge on nutrition, mother and child care, tendency to take purified water etc. those poor people under Grameen bank projects had daily intake of 2,171 calorie where as those not included in the projects took only 1,982 calorie. 50% children under Grameen Bank project have normal nutrition and those not included under Grameen Bank, only 30% children aged nine years have normal nutrition. In other words, NGOs are playing notable role in changing poverty state by bringing in primary and other health and nutrition care services within the reach of poor people.

Natural Disaster Affected People

One major cause of poverty rate increase in Bangladesh is natural disaster. The NGOs are working for the poor people in time of regular need as well as emergencies. Whenever there is a natural disaster like flood, drought, famine, storm, contaminated diseases, tidal waves etc. they would extend their hands and conduct relief works. Besides after disasters are over, then they would also undertake different rehabilitation activities for the betterment of the disaster affected people. In 1991 Cyclone, World Vision gave taka 110,788,560 in aid and rehabilitation assistance. They also built 11 disaster time shelters and one multipurpose center, which was worth taka 60,441,713. Moreover in 1998 they also gave taka 378,292 as relief for the flood affected people and health care service for 3,00,000 people. Till 1999 Mid June, ASA rehabilitated around 450 families in Saturia and Manikgang and built 2,171 houses. Thus, through management of different relief and rehabilitation programs also the NGOs are playing

crucial role in helping out the unfortunate people from problems encountered during any calamity.

People without Informal and Non-formal Education

The NGOs are highly active in the sector of informal and non-formal education. The best way to develop human resource is through appropriate education. Illiterates created due to lack of education is one major obstacle for socio economic development hence also for poverty eradication. The Bangladesh Government and UNICEF are trying at their utmost level to eradicate illiteracy. The low rate of admission in the primary schools, failure to attract the children to schools, unlikable education method and syllabus for etc. reason the rate of primary education in the rural area are not at all hopeful. The largest NGO in our country and also worldwide, BRAC have started satellite school system based on informal education policy. As a result the poor children at the rural area are now being given special importance. More emphasis is given on the participation of parents as well as community in this regard. This program has turned into a vital accompaniment for the primary education system by the government. In 1998, World Vision spent taka 13, 06, 87,996.58 which amounted to 40.10% of their total expenditure. So far the NGOs have been successful in providing education to 23 lakh people in the last five years through establishment of 30 thousands primary schools and 44 thousands adult-education centers. At present almost 9 lakh men and women are studying in these schools.

Small and Seasonal Farmers

In Bangladesh during the 70s the government agencies initiated irrigation in agriculture. But it was not that successful in small farmland. In small size farming land, deep and shallow tube-well was not that suitable when growing vegetables and spices. On demand from the small and seasonal farmers the NGOs have developed bamboo/cane tube-well, oar pump, star pump, dheki pump etc. type of irrigation technology. As this can be produced with little cost, the small and marginal farmers can now easily afford these. Right now in Bangladesh 400 irrigation projects are running with loans from NGOs. The NGOs arrange to teach appropriate technology for fruits, vegetables, fish and cooking through transfer of suitable technology for family agriculture. The NGOs also use newer communication and transportation technology to play significant role in poverty eradication.

Sector Life Cycle Analysis

Nature of the NGO sector
Is there an NGO life cycle? The simple answer is no, not a predictable one, but organizations of all types go through life cycles: they are born, learn, mature, reproduce and, in some cases, enter a period of senility before they die or fall into a coma. So what can we say about NGO life cycles? The first thing is that there are flushes of NGOs, just as flowers bloom in the desert after rain, NGOs thrive on upwellings of issues and there are periodswhen a new generation wakes up to a new set of issues and decides to take action. Focusing on international NGOs, most have emerged in response to a specific set of needs and issues, but often these needs and issues have evolved over the years. In the case of groups like CARE, they have shifted from delivering aid packets to Europe to helping to address the root causes of poverty in communities around the world, predominantly in third world countries such as Bangladesh. Lifecycle of NGOs can be explained by two theories: 1. More traditional business life-cycle theory 2. M, N and O form theory

Business life-cycle theory

According to this theory, NGOs also go through life cycles that are predictable. It is at these points where the balance between leadership and management changes, the focus on mission

versus money shifts, and the leadership style differs. Frequently the people who we need leading our organizations at one stage are not appropriate at the next stage of development. Stages of lifecycles of nonprofit/no are described here: STAGE ONE | Idea Stage Nonprofit organizations, or NGOs, start when someone has an idea to make a difference in their community or to change the world. Usually this idea comes from someones vision or passion and reflects a desire to fill a vacuum or create a program, project or issue to do something about it. The life cycle analysis assumes that all organizations begin with an idea and then many of them never come to fruition --while others can develop into a start-up organization. Sometimes the ideas can incubate for months or even years and then the visionary takes steps to grow the idea into a fledgling organization. During this stage there is no organization per se and, if money is needed, the visionary of the idea contributes the resources necessary. STAGE TWO | Start Up Phase If the idea stage incubates well and the founder (or a small group of people) of the idea begins to involve other people an organization can begin to grow. During this phase, people come together and work to solve the issue or develop a program around the reason they came together. Decision-making is by consensus, and almost everybody is a leader with a different role. If the group needs money, it passes around the hat, has a bake sale, or uses other simple fund raising techniques. The entire focus of the organization is on the mission that first brought people together. People enjoy meeting each other, tasks are simple and results are tangible. Many informal organizations never get past this stage. Many neighborhood associations, crime watch groups, or small theatre and cultural arts groups operate exclusively with volunteers. STAGE THREE | Growth Stage Organizations enter the growth stage of their development when money comes into the picture (some people say the money gets in the way). This stage begin when people realize that their expectations exceed their resources of time, people, talent, and money, and they write a proposal or receive a grant or funding. This starts the growth process and the organization begins to

fertilize itself. During this stage the informal steering committee or leadership team generally turns into a board of directors and they file for their incorporation with their respective state or country. There is now a need for the organization to become organized because there is staff to manage and lead systems to set up, reporting to donors to be provided, etc. At this stage the focus of the organization is almost exclusively on mission. This stage is a very exciting stage in the life cycle that is exemplified by lots of energy, passion and compassion. One characteristic of this stage is that almost all ofthe focus is on mission and not establishing the infrastructure so the organization is out of balance. The programs are way ahead of the ability of the organization to manage, evaluate and set up the systems that create effectiveness and efficiency. In our own lives, when we are out of balance we get sick. When an organization gets out of balance it suffers much the same way and begins to experience a great amount of stress. The organization is so focused on mission that anytime new dollars come in they go to build the programs rather than the organizational foundation. Frequently their financial, fundraising, marketing, evaluation and other systems are either thin or nonexistent. The growth during this stage is horizontal with good program growth, but not vertical where the organization is deepening its organizational roots. During this phase, the board of directors becomes formalized and passes by-laws, elects officers and may set up a committee structure. The organization hires its first executive director that usually is the founder or visionary of the group. Most of the people on the board are still the founding members who bring a lot of passion and are rooted in both the personality of the founder and the mission. STAGE FOUR | Governance / Maturity Stage If the organization continues to grow and is succeeding in terms of gaining credibility, raising new funds, and increasing the number of staff it may enter governance or a maturity stage in its life-cycle. In this stage the staff does not have to worry about whether they will get paid next week or not. The board meetings are very structured and well organized. There are standing and ad hoc committees. On the staff level, the executive director may have an assistant director and there is probably a program director to supervise other staff.

The financial needs of the organization are now great and larger amounts of time are being spent on raising money. The organization begins to risk "mission drift" because it is starting to follow the money rather than just the mission. During this phase, there is starting to be a reversal of means and ends. During the start-up and growth stages, the entire focus of the group was grounded on values, mission and principles-these are the ends. At the end of growth stage, because of the great need for money and the high expectations of the external community (funders, media, general public, etc.), the NPO/NGO starts to reverse the means and ends and begins looking at making decisions based on "how can we maintain the organization" rather than "how can we fulfill our mission." The board of directors increases its numbers yet again with people who can raise new money or bring new money to the table. The prominent people on the board of directors during this stage are the wisdom and wealth--and the workers are no longer as visible or not even on the board. At some point during the governance/maturity stage, there is invariably a crisis of leadership. The founder who began the organization adjusts to the changes, fights them, or does not recognize that changes are taking place. At this stage, the founding executive director (often the original visionary and founder) is often fired or resigns from the organization. What used to be a small group operating on consensus is now an organization with rules, structure and a developing "organizational culture." The organization has outgrown the ability of the founder to manage and lead the organization. The founder syndrome is present and the board of directors realizes that it has to change the executive director in order to survive. In some cases, an enlightened founder realizes his or her inadequacies and brings on a COO to manage the people, programs and systems. During this stage the balance between leadership and management changes. The organization begins to look more to management of people and systems rather than leading a vision. The organization begins to hire a development director and other staff responsible for raising the money necessary to sustain itself.

STAGE FIVE | Institutional Phase Most organizations never get to this point and many organizations never even try to. At this stage, the NPO is established in the community, has a prestigious board made up of people who principally can bring money into the organization. The workers (original founders) are long gone; the wisdom side of the board (technical experts) is not needed because the organization can buy whatever expertise it needs. The majority of board discussions whether public policy, mission, etc. is discussed through the filter of money. At this stage, the means and ends are reversed, and the end goal becomes one of "maintaining the institution, because without the institution there would be no services." The leadership on the board tends to be very strong in this phase because both the board members and the organization itself are very visible in the community. Board service has prestige, and members take their roles seriously--even though their main roles are fund raising, public relations, damage control and institutional maintenance. The most common leadership style is READY-AIM- maybe fire. A lot of the decisions are made to minimize risk and to study, evaluate and make measured movements toward the mission and institutional support. In this phase, the CEO is frequently more of a manager operating in a much decentralized system. Many times organizations that are sidetracked by a scandal get this way because the board is totally out of touch with the ultimate constituency of the organization's programs and services. Once again, the organization is at great risk for mission drift because its energies and time are directed almost solely to raising money--and focusing more on the question How do we maintain this institution in its current form? rather than How do we best fulfill the mission? Turnaround stage Another phase that sometimes happens in the organizational life cycle is when an agency in the governance or maturity stage goes into an organizational crisis. When these circumstances happen, the organization may shrink, lose supporters/sponsors/staff, and needs to be turned around into a growth phase organization before the crisis proves fatal. During this critical time, the organization needs to find a turnaround champion to lead the organization into a new growth phase. Frequently the person who is acting as CEO or executive

director of the governance phase is a manager type and not a leaderand thus does not have the skills or personality to make the tough decisions that turnarounds usually require. The leader that can turn around the organization needs to be very strong and possess an ability to make hard decisions, reduce staff, and build trust and confidence. This type of leader must be secure enough to have very honest communications with the board and staff of the organization. Usually the entrepreneurial person is the correct personality and leadership style that has steered the organization during its growth phase and is the right type to lead the organization from the turnaround stage back to the growth phase of the life cycle. M, N and O form theory Before diving any deeper, we need to learn a few terminologies which are used to classify NGOs. Helmut Anheier of the London School of Economics (LSE) Centre for Civil Society 43 has suggested that there are three basic organizational forms: the unitary (or U-form), multidivisional (M-form) and network (N-form) varieties. U-form organizations include traditional unions, the Red Cross and Red Crescent Societies. These organizations are hierarchical, stable, predictable and centralized. They also tend to be somewhat conservative. M-form organizations include NGOs like CARE and Human Rights Watch. Some may incline to conservatism over time, but they can also be extremely challenging. In some ways, perhaps, they have had less time to be tamed and co-opted by the system. N-form organizations are different again; their primary characteristic is network structure. Global public policy networks like the World Commission on Dams, the International Action Network on Small Arms and the Coalition for an International Criminal Court would be considered Nform NGOs as would Climate Action Network, Friends of the Earth International, the World Social Forum and many other anti-globalization movements. For example, established groups like Environmental Defense, or World Vision International have adopted the campaigning techniques of the hugely effective internet campaigns or dotcauses which are often no more than loose networks of activists.

Wise heads might argue that N-form organizations will eventually grow up and adopt many M- and even U-form characteristics. Certainly, such networks are likely to crystallize out into a cluster of new, semi-permanent or permanent organizations. The largely N-form World Social Forum, for example, may need to become more institutional over the years if it is to translate the energy that it has rallied into effective change. But there is no inevitable migratory path from N- to U-forms, and many U- and M- form organizations may well adopt aspects of the N-form business model to ensure success in their changing environments.

Bangladeshs position in the lifecycle When considering the overall expansion rate of the NGO industry, we can assume that NGOs in Bangladesh are now in the third stage of their growth. In the late 1970s, there occurred a gradual shift from the first generation strategies that is, relief and welfare services to the secondgeneration strategies characterized by small-scale, self-reliant local development initiatives for building people's capacity. Throughout the 1980s, this thrust continued. Pursing the third generation strategies that focus on the policy changes at different levels is recent phenomenon visible since the early 1990s.

PESTEL Analysis
PESTEL analysis stands for "Political, Economic, Social, Technological, Environmental and Legal analysis". It is a part of the external environment analysis if conducting a strategic analysis of any organization. Political factors are basically to what degree the government intervenes in the economy. Economic factors have major impacts on how businesses operate and make decisions. Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Technological factors include technological aspects and its effect on the organization. Environmental factors include ecological and environmental aspects and Legal factors include different laws and regulations which can affect how a company operates. The effect of the six individual factors on NGO sector in short term (1-2 years) and long term (5 years) period are as following:

Political factors
The impact of political factors on Sector in short term period is High on a three point scale. It is so the election year and due to chaos created from Islamic and anti-state activities may hamper the activities of many foreign funded non-islamic and missionary NGOs. registration of some 6,000 NGOs have already been cancelled because of links to anti-state activities and is in the process of examining the registration certificates of an additional 4,000. In long term, we can say there would be Medium impact on three point scale; depending on the fact that probable changing government might change the regulations and those can affect the NGO sector. There might be more new entrants based on political reluctance and thus competition will be increased within the sector.

Economic factors
On a three point scale for both short term and long term the impact of economic factors on NGO sector is High. The economy is recently recovering from a recession, that is a positive fact but if

it fall under another recession that will certainly have negative impact. NGOs in Bangladesh have played a very significant role in opening up access to credit for the poor and people in distant areas. The NGOs of Bangladesh and Grameen bank has established a new approach to banking which has gained global recognition and its efficacy in addressing needs of the poor is widely acknowledged. NGOs in Bangladesh work under many economic constraints and challenges. Some of these challenges are lack of financial sustainability; lengthy fund release process; Unfavorable tax regime etc. Most NGOs rely upon funds received from foreign sources. International NGOs, development partners, foreign private organizations, and multinational organizations provide such fund. A World Bank Report (2003-04) informs that 34.10% of the foreign aid (US$ 379.4 million) received by Bangladesh was allocated for the NGO sector. There are no estimates of funds from other sources that are involved in this ever growing sector.

Social factors
In this country, NGOs are socially acceptable. Though there are some religious concerns activities of missionary NGOs. However both in short term and long term period the impact of social factors on NGO sector will be Low in the three point scale. The NGOs are also accepted and has a reach to rural level, helping rural women, farmers and SME business owners with no capital base.

Technological factors
In the short term the impact of technology is medium as the NGO sector is implementing the latest technological aspects to provide different services currently and the effect can be seen in the long run. Many NGOs are providing modern tools to farmers and using GIS and SMS based services to rural people to solve their problems. In future, the implementation of these technologies will increase. So the long term impact of these technological aspects will be High on a three point scale.

Environmental factors
The NGOs are not demeaning any environmental aspects and there are no restricting factors from environment to hamper the NGO services. So, though the impact in short term and long term will be Low on a three point scale.

Legal factors
The impact of these factors is relatively High for the sector in both short term and long term. New regulations and policies will certainly change the course of the sector in this country. Every sector in the country is highly abide by the regulations from government and thus impact of legal factors are very important for this sector also.

Factors driving the changes

The sectoral changes come time to time due to various factors. These changes come from different sides and affect different stakeholders. These change driving factors can be as following, The nature of donor agencies is one of the change agents in the sector. Though most of the NGOs in Bangladesh are assisted by foreign donors, but shift toward domestic donors are also seen. Here, operating framework is not very focused for this shift toward local funding. Government policies and regulations are another change driver for this sector. Any new reform in policy and law bring a significant change in operation and governance of the NGOs. The incident of establishment of NGOAB can be cited here as example. Economic aspect of the country also acts as the driver of change for this sector. NGOs basically work to improve the life of the poor people of the country. If the economic condition of these people change in any direction that will ultimately change the course of action for the whole sector. Improvement in lifestyle or economic condition will certainly reduce the importance of NGOs in society of Bangladesh. Technology improvement also improves the aids that are provided by this sector to the poor people. Better condition can be ensured to the remote area of Bangladesh with enhanced technical support. The affiliation and alliances of the sector members with different supporting organizations also serves as changing agent as this support help the organization modify their work process in a significant way.

Key activities and impact

NGOs provide a strikingly homogeneous set of services, with credit dominating. A survey of 300 NGO branches carried out by the World Bank in 2003 showed that while the total range of NGO interventions is wide, the typical NGO branch offices provide credit services, followed by health (56 per cent), sanitation (52 per cent), and education (45 per cent). A parallel community survey conducted as part of the 2003 NGO survey shows that the service delivery priorities identified by communities closely match the services that NGOs provide. Public awareness and advocacy are also common areas of NGO work: 93 per cent of NGO branches reported awareness-raising activities, usually relating to sanitation, health, and social issues, while 42 per cent reported having lobbied local or national government during the previous year. We now turn to the assessment of the three key services of micro-credit, health/sanitation, and education, as well as advocacy activities.

Microcredit
One of the main reasons for the growing presence of NGO programs is the expansion in microfinance. Micro-credit now reaches as many as 43 per cent of all Bangladeshi households and about 70 per cent of poor households. The sector is dominated by the Grameen Bank, BRAC, ASA, and Proshika, which between them lend to almost 87 per cent of all borrowers from non-government microfinance institutions. The impact of micro-credit on smoothing incomes and reducing household vulnerability to seasonal and other shocks is of critical importance to the rural poor. Improvements in key social indicators of well-being are also associated with micro-credit borrowing, most notably measures of female empowerment, children's schooling, and health status. These social gains in part reflect the complementary social mobilization, training, and awareness-raising activities that typically go hand in hand with micro-credit. While micro-credit has brought benefits to borrowing households, these have not been large enough to have had a significant impact on community level employment creation and growth. The strong emphasis on financial sustainability, vital to

the sector's success, has led to controversy about purportedly high interest rates. The comparative under regulation of microfinance also poses clear risks.

Health & sanitation

NGOs use village-based community health workers to provide door-to-door health services, focusing mainly on preventive care and simple curative care for women and children. While a nationwide network of these NGO para-professionals is successfully extending health care to large numbers of poor households, NGO facility-based care is relatively sparse. Hence, while expenditures by NGOs on health have grown significantly since the mid-1990s, they constitute only about one-third of public sector expenditures and less than 10 per cent of total expenditures on health (the latter include household spending on private care). NGOs also contribute to health outcomes by providing water and sanitation services, with notable successes in community-based programs promoting behavioral change. Achievements in health include programs on child nutrition and tuberculosis treatment in partnership with the government. The impact of NGO interventions on a range of health and nutritional indicators is striking. Cure rates averaged 85 per cent in the tuberculosis program. Malnutrition rate dropped by about 20 per cent among the poor due to the presence of NGOs in the community, after controlling other factors. Neo-natal mortality has been found to be significantly lower among NGO clients than in a control group of households.

Education
About 1.5 million children, approximately 8.0 per cent of primary enrollment, are in schools run by NGOs, most in non-formal primary schools for which the NGO sectors is best known. The NGO education sector is highly skewed, with one large organization, BRAC, receiving about three-fourths of donor resources and accounting for a similar share of primary enrollment in NGO schools. BRAC also franchises its model by subcontracting 200 small NGOs to deliver non-formal education programs. Incidence analysis comparing different providers of primary schooling show that NGO education programs are effectively targeted to the poor, and to poor girls in particular. NGO schools have a

positive impact on school enrollment, particularly of girls, and record higher attendance and completion rates than formal schools. Educational achievements tell a more mixed story: NGO school students perform considerably better than their counterparts in government schools on reading and writing skills, but only slightly better on other basic competencies. A key concern is that the coordination between government and NGO education programs is weak. There is little official recognition of NGO education programs, which continue to depend largely on external grants. One obstacle in increasing NGO-government collaboration in education is that contracting arrangements have had a long history of being problematic, as discussed below. The recent diversification into pre-primary education by the market leader, BRAC, could lead other NGOs to follow suit. This diversification is being actively encouraged by the government and presents an opportunity for improvement NGO collaboration in future.

Advocacy
Most NGO advocacy focuses on issues affecting the poor (e.g., violence against women, dowry, land rights, access to justice, housing, education) and is seen as fully legitimate. However, in 2000-1 the government accused a few NGOs of stretching their advocacy work into partisan political activity and electioneering, and funding for their service delivery programs was sequestered as a result. As government funding for NGO services grows in importance, NGOs have become more reluctant to antagonize the government. Hence, the more prominent advocacy-oriented NGOs tend to be involved only slightly in direct service delivery activities, while large NGOs with many activities and services tend to avoid issues that could seriously antagonize the authorities. Nevertheless, even without taking on contentious issues such as human rights and electoral reform, multi-activity NGOs engage in a range of low-key advocacy activities that are of significant benefit to the poor (for example, campaigns to reduce violence against women and to promote poor people's access to resources). Advocacy fulfils and essential function in a democracy such as Bangladesh, and must be given space. Therefore, NGOs' scope to do advocacy should be entirely unconstrained, except for activities that promote one political party, or election candidate, over another. Returning to the analytical framework, we find that the role of NGOs in strengthening relations of accountability

between policymakers and poor service users has been mixed, as NGO advocacy efforts are to an extent constrained by their dependence on government. NGOs have had more success in bridging the gap between service users and providers in Bangladesh through their own services and by facilitating government, community, and private sector provision.

Growing opportunities and threats

Growing opportunities
NGOs have been playing an important role for the socioeconomic development of the country especially for the disadvantaged group- women, children and the poor. NGOs have been working in all areas of social sector and thus successfully contributed to reduce human poverty. At the

same time NGOs have created employments remarkably in Bangladesh. Still the challenges remain. Still large shares of population live below the poverty line. For resolution of crisis and a prosperous future, the government envisions a Bangladesh which by 2021 will be a middle income country where poverty will be drastically reduced; citizens will be able to meet every basic need and development will be on fast track with ever-increasing rates of growth. The milestones of Vision-2021 have been incorporated in the NSAPR II(reused) and became the core target of all development programs. NGO Affairs Bureau hereby, draws kind attention of the NGOs both national and foreign and the donor community supporting them to undertake and support suitable program in the light of the Vision-2021. Some of the milestones of Vision 2021 where NGOs have scope to contribute endless are as follows: 2013: Each house brought under hygienic sanitation. 2014: Bangladesh attains full literacy. 2015: Living accommodation for the entire population. 2021: Unemployment reduced to 15 percent from the present rate of 40 percent. 2021: Poverty rate comes down to 15% from 45% at present. 2021: Bangladesh known as a country of educated people with skills in information technology. 2021: 85% of the population have standard nutritional food. 2021: Poor people ensured a minimum of 2122 kilo calories of food. 2021: All kinds of contagious diseases eliminated. 2021: Infant mortality comes down to 15 from 54 per thousand at present. 2021: Maternal death rate reduced to 1.5% from 3.8%. 2021: Use of birth control methods increased to 80%

NGOs will have to undertake the very most suitable activities to contribute achieving Vision2021.They need to undertake more income & employment generating activities. NGOs are called for prioritizing activities; focusing on disaster-poverty-monga prone areas, avoiding overlapping of areas and duplication of interventions through coordination among themselves and with the government and thus ensure maximum resource is directed and used at the grassroots levels.

Growing Threats:
NGOs operating in Bangladesh already face an overly cumbersome and intrusive regulatory process, including needing multiple approvals to register and to implement projects. On August 25, 2012, the Bangladeshi government stated it was going to launch a commission to look into the operations of NGOs, claiming that many were involved in terror-financing and other antistate activities. The government announced at the same time that it had cancelled the registration of some 6,000 NGOs because of links to anti-state activities and is in the process of examining the registration certificates of an additional 4,000. The Bangladeshi governments recently announced commission to regulate nongovernmental organizations (NGOs) adds burdensome procedures that will hinder important watchdog functions.

Diversification Analysis
One of the great strengths of the NGO world is its very diversity, which in turn opens up a multitude of opportunities. This diversification has generally been a natural phenomenon, though in some cases it has been managed. In the environmental field, for example, much of the conservation agenda in the US was once carved up between WWF (focusing on parks)

Others, though, suggest that powerful NGObrands can even should house multipleactivities side by side. Whatever strategy they adopt, NGOs will need to recognize the business wisdom of sticking to their knitting. Diversification can lead to over- stretch and loss of focus. Given the widely differing roles now possible for NGOs, any single organization would be hard pressed to maintain credibility in every sphere. Dont be all things to all people, cautioned one interviewee. Select a niche and go for it. An interesting question, whichever route a given NGO takes in tackling markets, is whether, very much as Intel has developed the concept of Intel-inside, it could build truly value-added NGO-inside types of co- branding and relationships with business and other market actors. Bangladesh has made remarkable progress on a range of social indicators over the last 15 years, an achievement widely credited to the country's pluralist service provision regime. NGOs have significantly expanded their services during this period and have shown that it is possible to scale up innovative anti-poverty experiments into nationwide programs. Notable innovations that were expanded include delivering credit to the previously "unbendable" poor, developing a non-formal education programmer for poor children, particularly girls, and using thousands of village-based community health workers to provide doorstep services. The fact that poor women constitute a large proportion of the beneficiaries of the socio-economic activities of NGOs, despite the persistence of strong patriarchal norms, also testifies to institutional innovation. The unique role of Bangladesh's NGOs is not confined to the delivery of social services and pro-poor advocacy; NGOs have developed commercial ventures in order to link poor producers with input and output markets, as well as to develop a source of internally generated revenue for the organizations. One of the most notable diversification attempts has been taken by Brac. The recent diversification into pre-primary education by BRAC, could lead other NGOs to follow suit. This diversification is being actively encouraged by the government and presents an opportunity for improved collaboration in the future. However, the rapid growth and diversification of the NGO sector has also given rise to questions and concerns. These include the viability of a regulatory framework developed when the size and

scope of the NGOs was far more limited, the appropriate political and commercial spaces for NGO activities, trade-offs between NGO sustainability and pro-poor orientation, and the implications of different government-NGO partnerships. There has been little systematic review of the public policy implications of the changing character of NGOs in Bangladesh. Finally, many development NGOs have gained further power by expanding the scope of their financial transactions and taking over various profit-making economic enterprises.5 this growing economic power of NGOs makes them relatively autonomous and independent of financial controls exercised by the government. By 1995, the cumulative disbursement of rural credit by NGOs reached nearly 65 percent of the total rural credit disbursed per year (including credit disbursed by the public sector and national banks) in Bangladesh (World Bank, 1996b: 12). By 1999, the annual budget of BRAC reached US$106 million, and the total loans made by Grameen Bank amounted to US$380 million (Barber, 1999; GBSG, 2000). Moreover, in line with the global trend of NGOs working as contractors for private firms and international organizations (Robinson, 1997: 59), many Bangladeshi NGOs are now involved in such business contracts and profitmaking enterprises. For example, BRAC has ventured into printing presses, cold storage, garment manufacturing, retail outlets, and milk products (Daily Star, 1999; World Bank, 1996a). Similarly, Grameen Bank and Proshika are now into businesses such as banking, garments, shopping complexes, telephone systems, transport services, cold storage, fisheries projects, fertilizers, deep-tube wells, and biotechnology (GBSG, 2000; Islam, 1999). Such extensive business ventures undertaken by these NGOs not only make them financially independent of the government, but also enable them to influence government policies in the relevant economic sectors.

Complementary Strategic Analysis

Strategic Alliances
In order to achieve their social missions, NGOs are increasingly thinking more strategically about partnering with businesses to create shared value.

It used to be that a typical meeting between a business and NGO resulted in one of two outcomes: confrontation or a donation. But times are changing. Riding the wave of public-private partnerships and the idea of shared value, NGOs are rethinking their relationship with the private sector to better meet their social missions. For example, CARE has helped Unilever and six other companies increase the reach of their products in Bangladesh through a rural sales network. In the process, almost 3,000 women now have jobs. Save the Children has helped Proctor & Gamble develop new markets for its sanitary products in developing countries. While Proctor & Gamble benefits from Save the Children's awareness-building and demand generation, Save the Children views the partnership as a way to stop dropout rates among young girls in resource constrained settings. Increasingly, NGOs recognize that the people they are trying to serve are also companies' customers and suppliers or live in the communities where businesses operate. This mutual interest, fueled by the private sector's assets, skills, and investment potential, can help scale NGO impact in sustainable ways. Some of the major partnership types in Bangladesh are laid out below: Alliances with the government A key concern is that the coordination between the government and NGO in most programs is weak. There is little official recognition of NGO programs (such as education programs), which continue to depend largely on external grants. One obstacle in increasing NGO-government collaboration is that contracting arrangements have had a long history of being problematic. Alliances with donors There are a number of ways in which donors provide direct financing to NGOs in Bangladesh. The most common is funding for specific projects. Where financing needs are large, donor funds may be pooled and a donor-liaison function introduced to coordinate support and reduce transaction costs for the NGOs. In some instances, donors have financed the whole range of NGO activities, and in a few of these cases the institution develops into a different legal entity by the end of the funding period. In recent years, the recognition that partnerships with smaller

NGOs carry high transaction costs has increased reliance on wholesale vehicles, in which an agency manages a pool of money for which smaller NGOs compete. Alliances with bilateral agencies Many bilateral agencies from developed nationsincluding the British Overseas Development Administration, Canadian International Development Agency, and Norwegian Agency for Development Cooperation, Swedish International Development Agency, Netherlands Organization for International Development Corporation, and Danish Agency for Development Assistanceare increasingly in favor of working with local NGOs in developing countries. In Bangladesh, many of these influential bilateral agencies, which used to have direct relationships with the government, are now in favor of pursuing their objectives through local NGOs in sectors such as primary education, adult literacy, health care, rural banking, family planning, capacity building, gender issues, human rights, and the environment (CIDA, 1999; USAID, 1997; Wood, 1994). Alliances with IT businesses A good example could be the partnership between Cisco and Grameen Solution. Cisco partnered with Grameen Solutions to establish business centers in rural Bangladesh that serve as distribution points for a variety of services, such as birth and death certificates, healthcare, distance learning, and retail sales of such necessities as hybrid seeds. In its endeavor to promote ICT entrepreneurship and innovation in emerging markets, Cisco pledged help to launch a rural business center pilot program and provide funding for three pilot business centers in Bangladesh. Grameen determines the mix of services and recruits qualified entrepreneurs to run the centers, while a Cisco grant supports a project team and helps establish test centers for a pilot. Because there are many thousands of rural communities in Bangladesh, this program has vast potential for improving livelihoods throughout the country. The initiative helps finance and train qualified entrepreneurs to set up and run business centers in rural Bangladesh. It is part of the ICT related micro-financing initiatives within the global ICT Empowerment Network. In the future, NGOs will need to think more strategically about their partnerships with business. NGOs can be much more proactive and analyses their operational assets against the needs of

corporations and market their offerings for mutual gain. Organizations that are committed to shared value have undertaken a top-to-bottom review of their capabilities and focused in on a few areas such as financial inclusion for smallholder farmers. Such dedication may not usher in the sums of funds from government donors but do offer an alternate and powerful pathway to sustained impact at scale. NGOs will have to balance their resources when confronted with bilateral contracts and grants to ensure sufficient resources and management attention are allocated to share value initiatives and indeed to explore ways through which to create a confluence between these sectors.

Outsourcing non-core activities

Bangladesh is still an evolving market in the IT/BPO sector and has tremendous potential especially with competitive lower wage rates, higher supply of labor, also knowledge transfer for skilled workers with training and development is relatively cheaper. In today's cost-conscious, results-driven business world, NGOs, like most companies are staying agile by turning to BPO as a tool to save time and costs, while assuring revenue growth. A few of the major BPO operators working with NGOs in Bangladesh are listed below: Xplorer Bangladesh Imagine BD Graphic People Limited Therap (BD) Limited

Costs AND Quality/expertise advantages demonstrated by BPOs In this area there have a number of technical procedures in place to safe guard their clients data read only capability of the operators serves, paper less floors, quality monitoring, recording of all calls, on demand walk in site visits for the clients etc. BPO operators look for opportunity to raise their profile as they seek to attract additional funding. Outsourcing functions like customer care, supply management, contributions

management to an operator who will provide them with a world class solution raise their profile. Factors that should be included in a service level agreement in this area of activity. In this area NGOs often raise concerns that in many cases the way BPO handles the resources lent by NGOs can breach confidentiality. So a number of mitigating factors should be in place in the SLA as well as their basic operations to prevent a breach of confidentiality. As mentioned previously the area of costs and quality. The areas of concern to NGOs that can be included in the SLA and in some cases are specified in SLAs in other markets and industries are: Staff turnover & compensation Investment in & incentives for staff Electronic & physical security of the account Software systems utilized for the account Network security Equipment assigned specifically to the account Structured exposure of staff to sensitive client data Creating an enabling environment for account staff Penalties and clients recourse when breach of contract occurs

Services outsourcing operators are offering in the Financial Sector Operators in the financial sector provide one or more of the following services: Contact Centre services Data Entry for banks and insurance companies Image Processing

Credit Reference bureau Participants also noted that there was a need for Misplaced Asset Registry Aggregator of Insurance Services Cost and quality/expertise advantages that can be demonstrated employing BPO agents Efficiency Allowing companies to focus on core competencies Lower personnel costs Provide employees with a vertical career paths Distribution of Funds A number of global NGOs have funds available but have difficulty in the disbursement due to the multitude of reporting conditions given by the donors.

Financial Management Smaller NGOs quickly out grow their capacity to track funds and provide proper accounts. These NGOs would benefit from an organization providing on demand/web based accounting services.

Legal Issues in NGO Sector

The legal framework for NGOs in Bangladesh set the code for operation for all the organizations. These standards can be divided into two distinctive parts, Regulatory framework Fiscal framework

Regulatory framework
Previous situation: The regulatory framework for NGOs in Bangladesh was old-fashioned and in need of complete revision. Previously foreign NGOs and NGOs receiving foreign funds, working in Bangladesh had to apply to different government agencies for registration and various approval and permissions. Clearance from committees at various stages and inter-ministerial bureaucratic procedures not only increased paper work for the NGOs, but also resulted in the loss of substantial funds due to delays in the process. The 1980s witnessed a huge accumulation of projects pending government approval (World Bank, 1996). Due to insufficient manpower and lack of a central body, government could not monitor the NGO activities properly which resulted in wastage of resources and brought the NGO activity under criticism in general. There was significant lacking on setting high standards for accountability and transparency on the vast majority of NGOs that receive no foreign funds but that do affect the public interest. The frame work was attentive toward relatively unimportant issues more prominently. Until 1990,

NGOs had to follow a complex set of rules and procedures. They had to apply to different government ministries and departments for registration, project approval and permission to obtain foreign funds. Every NGO needed to follow different legal acts for different purposes. Establishment: NGOs in Bangladesh formed or established under the following pieces of legislation: 1. Societies Registration Act of 1860 2. Trusts Act of 1882 3. Companies Act of 1913 (amended 1994) Registration: In addition, NGOs must have been registered under the following laws, in certain circumstances: 1. The Voluntary Social Welfare Agencies (Registration and Control Ordinance), 1961 (SWO) 2. Foreign Donations (Voluntary Activities) Regulation Ordinance of 1977 (amended 1982)(known as FDR) Internal Governance and External Accountability: The rules for internal governance and external accountability for NGOs in Bangladesh are fairly basic, unless they are registered with NGOAB. The laws for establishment do very little to impose a workable internal governance regime or external accountability standards. 1. Societies Act requirement of annual meeting but no requirement of annual accounts 2. Trusts Act clear accounts must be maintained; beneficiary may obtain on request (charitable trusts rules unclear)

Creation of NGO Affairs Bureau (NGOAB): In 1990, the government created the NGOAB within the Ministry of Establishment to coordinate and regulates the activities of NGOs operating with foreign funding. NGOs of foreign

origin also come under the preview of the NGOAB. The necessary approval for working with foreign donations, known as the FD Registration, is obtained from the NGOAB by the NGOs concerned. Separate approval for all projects is required from the NGOAB. The NGOAB was therefore created to serve its primary objective of providing a one-stop service for the NGOs. It is now located within the prime Ministers office and is responsible for all contact with NGOs under the Foreign Donations (Voluntary Activities) Regulation Ordinance, 1978. The NGOAB`s establishment has positively changed the enabling environment for NGOs. It helps them obtain registration, approval and permission with respect to program implementation and receiving money from abroad, with a short period. The NGO Affairs Bureau (NGOAB) is headed by a Director General (DG) and assisted by three Directors. The bureau has 67 employees including 18 officers and 48 staffs. (See appendix: A1 for the Organogram of NGOAB) The NGO Affairs Bureau has the following responsibilities:

Providing one stop service to NGOs in respect of registration & processing of project proposals.

Approval of NGO projects, fund releases, permission for appointment of foreign expatriate consultants and fixation of their tenure.

Examination and evaluation of reports/returns submitted by the NGOs. Coordination, monitoring, evaluation and inspection of NGO activities. Collection of fees/service charges levied by the government. Inspection of field level NGO activities and examining their accounts. Liaison with the donors and the NGOs. Formulation of reports on NGO activities and take appropriate measures. Enlistment of Chartered Accounting Firms for auditing of Accounts of the NGO. Approval of proposals for one-time grants.

Other matters relating to NGO Affairs.

Since the establishment of the NGOAB, bureaucratic requirements have slowly reduced and some unnecessary paper work has been eliminated. But the prevailing problems still remain to some extent as NGOAB does not have enough expertise to successfully carry out this long list of responsibility and also at present the funding is shifting toward domestic funds but all the frame work is still focused on foreign and foreign assisted NGOs which seems improper at this point in time. Establishment of the government NGO consultative council In order to provide a forum for open dialogue between the Government and the NGOs, government has established the Government NGO Consultative Council (GNCC) by a Gazette notification, dated 17th October, 1996.The objectives of the establishing the GNCC are: 1. To increase mutual understanding and cooperation between GOB and the NGOs for the overall development of the country. 2. To identify and discuss issues which impede GO-NGO cooperation and develop an improved policy and institutional environment for GO-NGO Cooperation. 3. To suggest modalities for greater involvement of NGOs in national development. 4. To propose measure to simplify and improve the regulatory system for creating an enabling environment for governing NGO activities. 5. To suggest measure to strengthen the monitoring and evaluation capacity of the NGOAB partner NGOs with a view to ensuring accountability and transparency for development assistance funds. The council has a maximum of 23 members, which include six representatives nominated by the government from concerned Ministry/Division and eight highest level appropriate NGO representatives nominated by the ADAB. The chairman of the council is appointed by the government. The Director-General of the NGOAB is the ex-offico member-secretary to this council. The remaining seven positions are to be filled in according to the advice of the council.

Representatives are appointed for two years and no individual can serve more than two consecutive terms.

Fiscal framework
The fiscal framework for NGOs in Bangladesh is not supportive enough of the sector. While income tax exemption is available, there are virtually no provisions for deduction of corporate or individual contributions to NGOs. This is inconsistent with good international practice. In addition, the taxability of income generating activities needs clarification, and the law should then be consistently applied to all NGOs. According to the way the law is written, NGOs in Bangladesh should not be called upon to pay tax on any income, including income from income-generating activities. There are also clear indications that the Finance Acts of 1998 and 1999 made NGOs subject to tax on their income, even if the Income Tax Manual does not reflect these changes. NGOs and the Government are both subject to VAT on their purchases. Some NGOs are exempt from import VAT and customs duties on imports of goods used for relief and rehabilitation purposes.

Supporting institution
Important institutional body which facilitate the regulatory framework and also operation of NGOs in Bangladesh in a significant way. Emergence of FNB Federation of NGOs in Bangladesh (FNB) was formed replacing the National NGO Coordination Committee through holding the 2nd National Convention of the NGOs on 23 February 2003 in presence of officials/executives representing 1,850 NGOs from across the country. Disruption of the core body from its core objective of protection of the interests of the NGO sector and harassments on the NGOs by different Government agencies caused an acute sense of uncertainty and concern among the NGOs. In this context Federation of NGOs in

Bangladesh was established and registered on 4 May 2003 from the Registrar of Joint Stock Companies under the Societies Registration Act, XXI of 1860. FNBs vision is to facilitate and contribute in organizing the processes of poverty alleviation, overall socio economic development of the country as well as building a just, equitable and enlightened society free from all sorts of deprivations particularly for the disadvantaged and marginalized sections. In order to achieve this, uphold, protect and promote the interests of the NGO sector, ensure effective coordination among its members and stakeholders inspiring the practices of democratic and secular values in programs and activities. The objectives of the Federation are:

Protect and secure the lawful interests of the NGO community at all levels; Promote and support the programs of member NGOs in Bangladesh by creating an enabling environment for them.

Enhance the capacity of small member organizations through training. Inculcate amongst members the spirit of development free from partisan politics and sectarianism of all kinds.

Encourage gender proactive policies and programs, and programs in the best interest of the poor, the ethnic minority and various marginalized groups including the aged and the disabled.

Promote friendly relationship and broad consensus of purpose amongst all NGOs at all levels.

Initiate and lead direct and indirect organized action in the best interest of the NGO community in the country.

Collect and disseminate statistical and other information and make efforts for the spread of technical, economic and management knowledge to strengthen NGO activities in the country.

Promote good practices, secular values and ethical standards amongst member NGOs to ensure transparency and fairness in the NGO sector.

Promote and establish a Code of Conduct based on honor, equity, good governance, human rights and gender pro-activity amongst members.

Establish a Human Resources Development Center for staff development of the NGOs

Ethical Issues in NGO Sector

Ethics is a very important issue in any business industry or sector in any country. Significant ethical standard give the sector an edge and trustworthiness to some extent among the stakeholders, and NGO sector in Bangladesh in no exception. Ethical issues in NGO sectors can be divided into three important sub parts, o Accountability o Transparency o Intention

Accountability
NGO accountability is a complex issue. Organizations need to be accountable to many different sets of stakeholders, such as, Institutional donors provide funding; Governments provide legal and regulatory frameworks; Supporters provide their money and time; Beneficiaries provide the basis for an organization's purpose and moral legitimacy.

Each of these sets of stakeholders has a very different level of leverage and power over an NGO. As a result, the strength and clarity of their different accountability relationships vary greatly. Effectively balancing the needs of these different stakeholders is the bottom line of being accountable. The problem for most self-regulation initiatives is that the standards they set are not strengthening and clarifying the relationships with these different sets of stakeholders equally. Achieving accountability to beneficiaries is crucial both to fulfilling an organizations mission and to maintaining its legitimacy. For this reason the issue of beneficiary accountability needs to have a more central position in the standards set through self-regulation initiatives. Some selfregulation initiatives do address this concern, and provide a more detailed description of what increased downward accountability should mean in practice.

Transparency
Transparency in the sector is essential as the NGO sector is certainly a most important sector in the country. They play a supportive role to the government in almost every area. The programs of some NGOs of Bangladesh have even been recognized as international models today. With the NGOs playing such a significant role, the matter of their transparency is certainly an important question. An organization asking good governance must support transparency in every step to find the moral footing in the sector. Many of the inherent problems of the government sector and private sector in Bangladesh also exist in the NGO sector. The main problem is that as this sector is outside the government sphere and has a system of its own, there is less opportunity for check and balance. Those in the top management of the NGO sector, with exceptions of course, hold all the power. This many times create situation of inequity in the organization and the sector overall. The board of directors or committees is often a sort of syndicate and often compromise with the unethical activities of the chief executives. The failure to define the relationship between the board and the management has result in a scenario in which no one takes responsibility of any corruption or misdeed and as a result general

people and beneficiaries suffer. Because of this shortcoming, in recent times we have seen an unfortunate outcome in several large organizations of the sector. In recent times the country has seen the disaster of Proshika, Samata and Jubok but still chief executives of these organizations are not significantly penalized and also got ample shelter from civil society. In several articles a lack of transparency in the management, financial irregularities, misuse of funds, and misappropriation of resources were found out as significant issues in this sector. Good governance and transparency are at the heart of NGO legitimacy. NGOs must work with Transparency International and other institutional partners and private donors in order to fight corruption effectively. Corruption has also entered in this sector. Several unwanted activities are in run which are actually hampering the transparency of the sector. Recruitment and promotion are found to take place on the basis of nepotism and personal relationship with the chief executive. Examples of financial transaction were also evident in some recruitment. Selection process often lacks transparency; selection board takes place to recruit a pre-selected candidate. In many cases retired government officials are employed, who allegedly use their connections for undue advantage. New position is often created for appointing people on the basis of personal relationship or recommendation. NGOs are often reluctant to disclose information especially those on finance and human resource management. Employees and service recipients are not informed about the policies. Information on accounts is not often documented properly. Project proposals, budget, audit report, evaluation report, general fund, accounts of the organization are often treated as highly confidential. There is no strong initiative from donors to make the NGOs disclose their documents. Bribes to the Bureau and other Government Offices are also very common event in this sector. Many NGOs provide speed money in order to get the fund released. Many NGOs offer bribe or gift in order to get government projects. The concerned government official is often bribed for getting different works done.

Intention

To set ethical standard in the sector intentions of all relevant parties play a significant role. Every member of the sector should have moral intentions to avoid corruption and increase accountability and transparency. Participatory decision making should be part of the NGO culture so that sole decision making habit is changed and transparency is ensured. Board members should take more responsibility and accountability toward other stake holder so that they have answers to every controversial issue. Donors should encourage the NGOs to disclose their documents and be transparent about financial transactions.

Conclusion
This paper has attempted to analyze overall scenario of sector of NGOs in Bangladesh. In Bangladesh, NGOs started their activities as voluntary, nonprofit organization but they make themselves essential in every necessary circumstance. NGOs have transformed themselves by changing or incorporating new goals in order to face the challenges which they faced from the environment in which they operate. For the betterment of the destitute and the helpless, the untended population of the society, NGOs are much acknowledged. Active presences of NGOs are essential for the overall and social development of Bangladesh in every aspect. The NGOs started in a war stricken Bangladesh with relief and rehabilitation program but now they are present in Bangladeshs socio-economic, cultural, geographic, family planning, education, health etc. NGOs are more successful in some aspects of development where the government is playing a secondary role and government and NGOs work hand in hand to develop the society and country.

Recommendation
1. Some limitations was observed in the NGO effort to poverty eradication for i.e. leaving out the ultra poor, partial and sub-divided working periphery, area based differences in activities/projects, differentiating outside target people and weak relationship, participating in commercial activities, supporting political parties etc. If NGOs can overcome these limitations then it can surely be hoped that they continue playing the role of savior of poverty eradication and social development in Bangladesh and lead the country to sustainable economic growth and development. 2. There are currently no provisions in law clearly dealing with the issue of political activities by NGOs. This needs to be rectified by adopting rules that clearly forbid public benefit NGOs from engaging in devotee political activities. On the other hand, the rules on political activities should also clearly permit NGOs to engage in a wide range of democratic development activities, such as voter education, grass roots lobbying, etc. 3. There is very little in the principal registration laws (apart from the Companies Act), which deals with internal governance and external accountability for NGOs. This needs to be addressed in any legal reform effort. Also modified regulatory framework is needed to address the issue of domestic funding and to properly assist the NGOs which are collecting funds from Bangladeshi donors. 4. It is extremely important for NGOs to be required to use good accounting rules developed especially .

5. NGOs should invest in action research to identify better and most cost effective means to reach the poor. NGOs working with micro cost effective program should continue to build on lessons learnt. The critical importance of credit discipline and peer responsibilities is two examples. 6. Development NGOs should attempt to spread their work more evenly across the country and avoid overlaps resulting from concentration in only a few geographical areas and definition of target groups should reflect local realities and be adaptable to changing circumstances. 7. Government and development NGOs should on successful practices collaboration as achieved in poverty alleviation programs. The Government should involve NGOs in the design and formation of project through facilitation by ADAB and others NGO network. 8. In most cases it is found that every field officer has to cover too much beneficiaries groups and supervision and demonstration cannot satisfy the beneficiaries group members, especially in case of new groups. Thus the number of competent field workers should be increased. 9. For approval of projects, NGOs should be required to submit the names of its Board Members and/or Executive Committee and the number of staff positions in each category. Staff names, however, should not be required.

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Appendix
A1: Organogram of NGOAB