MANAGEMENT CASE

describes a real-life situation faced, a decision or action taken by an individual manager or by an organization at the strategic, functional or operational level

ARAVALI
Pradeep Kumar Mishra

DECISION SITUATION

he senior management of the Association for Rural Advancement through Voluntary Action and Local Involvement (ARAVALI), a not-for-profit organization, initiated by the Government of Rajasthan, was in the process of finalizing its five-year perspective plan. For the last eight years, the organization had been involved in promoting collaboration between government organizations (GO) and non-government organizations (NGOs) in the implementation of rural development programmes in the state. This period had witnessed a tremendous growth in the number of NGOs working in the state; the organization itself had also grown significantly. The profile of NGOs with which the organization had worked so far had undergone a sea change. With this, the expectations of partner organizations from ARAVALI had changed. A few months ago, the Founding Director of the organization had left. At this juncture, the new Executive Director (ED) took the responsibility of finalizing the perspective plan for the next five years. There had already been some discussions in this regard. Taking a stock of that, the ED convened a meeting of the senior functionaries for reviewing the situation. From the records of the past meetings, a few things were clear to the ED. ARAVALI was financially sound as the funding agencies had committed funds for another five years. It had developed a team of experienced professionals over the eight years of its working; and it had already established a reputation in the development sector. Driven by its excellent performance in the support role, some of its key stakeholders had approached the organization to take up additional responsibilities of direct implementation and funding. But it was apprehended that the new responsibilities would completely change its role. The scheduled meeting had the agenda of taking a decision on these issues and was hence crucial. Keeping the changing need and expectations of various stakeholders, the ED and the senior management of ARAVALI would have to chart out a strategic path for the organization. At the same time, the organization would also require to maintain its performance and reputation; otherwise it may turn to a declining phase.

KEY WORDS Governance Collaboration Funding Agency Voluntary Organization Support Agency

ORGANIZATIONAL BACKGROUND Evolution of ARAVALI

The establishment of ARAVALI was based on the idea of involving voluntary organizations1 in the government-sponsored rural development programmes. This

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type of collaboration had increased significantly in the last two decades in all parts of the country, including Rajasthan. Even before the onset of collaborative programmes, the state of Rajasthan had a robust voluntary sector and a long tradition of voluntarism. The early development agencies grew out of the Sarvoday movement as early as in 1930s when the Vidya Bhawan Society started operating. The modern voluntary organizations in Rajasthan came up in 1960s and 1970s when organizations such as Seva Mandir and Social Work Research Centre (SWRC, Tilonia) were established. The 1980s and 1990s witnessed a remarkable increase in the number, coverage, and visibility of NGOs in the state. Well-known organizations such as PRADAN, Urmul Trust, Astha, PEDO, ASSEFFA, and Sahyog came up during this phase. The involvement of NGOs in government- and externally- funded projects also increased in various fields like primary education, adult education, healthcare, environmental protection, micro-credit, micro enterprise, etc. A number of innovative programmes (e.g., SWACH, PAHAL, Lok Jumbish, Shikshakarmi, and DPIP) were initiated by the state government with support from international agencies, where the NGOs had a number of innovations to their credit in design as well as delivery. The GO-NGO collaboration was considered as a solution for many problems. The NGOs had expertise in community mobilization; the government agencies were strong in technical expertise and had a reach even to the remote areas. Involvement of NGOs in implementation of government-sponsored projects was pushed also by international funding agencies. As a result many collaborative projects were designed and implemented. But achieving GO-NGO collaboration, in practice, came out to be a formidable challenge. A study by PRADAN and SRIJAN conducted for the Government of Rajasthan in mid-1990s found that collaborative efforts had mixed results. The study analysed several collaborative projects across different sectors in the state and observed that GO-NGO collaboration could lead to: generation of innovation to solve the problems of development efforts and their replication improvement of service delivery inducing system or institutional reforms addressing the objectives of peoples participation and empowerment in government programmes.

The findings of the study invoked a renewed interest in the issue of collaboration between the Government and the NGOs as a basis for development. At the same time, it cautioned that while practical needs attracted the GOs and NGOs, mutual fear pulled them apart. It laid out a set of minimum conditions required for collaboration. Based on the suggestions of this study, the Government of Rajasthan formulated the concept of ARAVALI an organization that would work for promoting GO-NGO collaboration. ARAVALI was registered in 1994 as a society under the Rajasthan Societies Registration Act, 1958. In February 1997, it started its full-fledged operations drawing directions from the aforementioned study.

Mission Statement
Led by the need for promoting collaboration, ARAVALI tried to stimulate creative partnerships in vulnerable regions and critical sectors through enabling policy and fiscal support. Its mission statement read as follows: All round and large scale development of communities requires a combination of efforts and approaches which cannot be solely provided by any one agency or system. To ensure that the benefits of development reach the poor, in particular, and the people in general, it is necessary that different agencies working for development, pool their strengths and become partners. Within this context, ARAVALI intends to ensure that there are increased number of effective voluntary organizations working closely with marginalized communities in every district of Rajasthan and that an enabling environment is developed within which the government and these organizations can form effective partnerships.

Activities
The major activity of ARAVALI was capacity building of NGOs2 , which included not only conducting training programmes but also the overall institutional development of NGOs. The smaller NGOs which had high credibility but lacked capacity became the prime target group for capacity building support. Other activities included information support, training support, personnel support, consultancy and funding support, and hand-holding support to selected partner organizations. Some centralized training programmes were also conducted on generic areas like financial management, societal analysis, and project planning. Professional supARAVALI

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port to small NGOs included placing fresh pass-outs from reputed management schools at a cost-sharing basis. Some other key activities of ARAVALI were as follows: Networking with research and technical institutes like Agriculture Universities, Krishi Vigyan Kendras, Central Arid Zone Research Institute, experienced and large NGOs like BAIF, AFPRO, AKRSP, Seva Mandir, Urmul Trust, etc. Liaison with government and funding agencies. In this regard, ARAVALI regularly organized interface workshops. As the member secretary of the NGO cell established by the Government of Rajasthan, it represented the NGOs for raising issues related to the latter. ARAVALI was the member of a number of committees at the state level in which policy issues were discussed. Designing and implementing innovative programmes where there would be a need to set examples with a strong focus on possibilities of upscaling and sharing with others. Carrying out research activities for learning from grassroots, disseminating the best practices, and contributing to policy-level dialogues.

counting system, etc. The organization positioned itself as a support organization, but it had not taken the role of a funding agency. Being a non-funding support organization, it could work with all types of organizations ranging from service delivery agencies to activist organizations. With the narrow scope of a funding agency, it would not have been possible to maintain such relationships.

Financial Situation
In terms of financial performance, ARAVALI consistently moved upwards (Exhibit 2). The funding agencies had committed funds for at least another five years. Over a period of time, it had also decreased its dependence on the state government. For the first five years, ARAVALI received untied grant from the government. In 2002, questions were raised from government quarters about its functioning and it was suggested that ARAVALI should follow the Rajasthan Act for Public Services Appointment and Recruitment for the recruitment and selection of its personnel as it received grant from the government. Since adherence to government procedure would have constrained the organizational flexibility, ARAVALI returned the grant amount for that year and preferred to retain its financial autonomy and organizational flexibility. Since then, it has always raised funds from project activities and consultancy services. The main funding agencies of ARAVALI were Aga Khan Foundation (India) and Sir Ratan Tata Trust. ARAVALI also received funding support from other agencies such as National Foundation of India, Friends of Women World Banking (FWWB), United Nations Development Programme, Paul Hamlyn Foundation, District Poverty Initiative Project (DPIP), Government of Rajasthan, and Government of India. Thus the donors included all types of agenciesgovernment and private (both national and international). Exhibit 2 shows the percentage of contribution by various donors to ARAVALIs outlay over the last seven years.

FUNCTIONING OF ARAVALI
The programmes of the organization were implemented through four working groups: natural resource management (NRM), microfinance and livelihood (MFL), collaboration support group (CSG), and human institutional capacity enhancement group (HICE). The NRM and MFL groups catered to the respective specific subsectors while the CSG and HICE groups addressed the generic issues related to NGOs. Exhibit 1 depicts the organization structure. As mentioned earlier, ARAVALI worked primarily with the NGOs in Rajasthan. It was involved with about 40 small- and medium-sized NGOs in capacity building activities. Apart from this, it provided information support to about 150 NGOs (of all sizes) and some selected government agencies and Panchayati Raj institutions. Selection of partner NGOs was done on the basis of a set of minimum partnership requirement criteria (MPR), e.g., two years of functioning since registration, closely working with communities, having a separate office, not being a family-based organization, having proper acVIKALPA VOLUME 34 NO 4 OCTOBER - DECEMBER 2009

Human Resources
ARAVALI employed 20 people of whom about 15 were professionals engaged in programme activities, and five were engaged in support services. There were some short-term consultants who worked on task (15-30 days) basis. Its personnel and administration cost was about

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40 per cent of its financial outlay. ARAVALI drew its professional excellence from its experienced programme personnel. These people were selected on merit basis and all of them worked on fixedterm contracts (extendable) and not as permanent employees. All the programme personnel were qualified in various disciplines like rural management, social work, agriculture, engineering, etc., from reputed institutes of India. Past experience counted significantly for applicants of ARAVALI as they were supposed to support the NGOs. A Programme Officer (entry level) was required to be a post-graduate with 3-5 years of experience, and a Group Coordinator (team leader) was expected to have 10-15 years of experience.

people in ARAVALI followed the unwritten rule of modest austerity. However, the organization also made sure that the employees did not spend money from their own pocket for any organizational need. Probably this reciprocity helped in maintaining such a value system.

Performance
How did ARAVALI perform in delivering its programme? According to an executive, who coordinated such support activities for four organizations during 1999 to 2003, It played a crucial role in scaling up their programmes. The partner organizations grew in terms of financial outlay (as much as three to ten times) and they also increased coverage in terms of villages, institutions, and geographical spread. ARAVALI helped them in developing perspective plans to design the path of their growth in a systematic manner. About 30 organizations received PAVA3 support, which enhanced their professional capacity. Because of ARAVALIs support, 15 small NGOs could be involved in DPIP4 implementation. These organizations were initially rejected by DPIP because they operated in small scale and the DPIP authority considered them to be lacking organizational capacity for implementing a big-budget projects like that of DPIP. But ARAVALI undertook their organization development as a task and worked for about 1218 months with them to bring them up to the required level. In promoting collaboration, ARAVALI organized several interface workshops including some landmark events like the State-level workshop on Watershed Management in 1999, Forest Department and NGO Meet in December 2001, Micro-finance Summit in 2003. Its study on watershed management brought forth a set of recommendations that was not only highly appreciated throughout the state but was also accepted to a great extent by the government for monitoring the programme. Regarding the contribution of ARAVALI to the development sector and the growth of the organization, a senior official said: We have regularly raised issues concerning NGOs in different forums and have always tried to make a case for NGO involvement in development programmes. In the year 2003, ARAVALI took up the role of member secretary of the NGO cell of the state government. The initiation of this cell itself is a sign of acceptance of the NGOs role by the government. As an
ARAVALI

Operational Flexibility
The organizational system in ARAVALI was well-developed. There was a periodic review system which included monthly meetings, annual meet, etc. External evaluations were also conducted from time to time. Decisions were taken in a fairly democratic manner; all major issues were discussed either in committees or in monthly meetings. While governing bodies directed the policy, the ED had the discretion to make all operational decisions. But even at junior level, officials had a fair level of autonomy. Overall, the organization had a flexible system which ensured fast decision-making.

Strategy Formulation
In the year 1999, ARAVALI formulated a five-year perspective plan (1999-2004) in consultation with all the stakeholders. External facilitators were also involved in strategy formulation process. The plan acted as a guideline for organization management and project selection. The perspective plan for the next five years (2005-10) was under the process of formulation.

Values
The flexible system and the leadership in the organization always nurtured a value system reinforcing integrity and honesty. A consultant involved in ARAVALIs perspective plan development commented: Despite being a semi-government organization, it has been able to maintain its identity of an NGO because of these values and principles. The norms and ethics of a development professional could be easily observed in the organization. For example, regarding use of resources,

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organization, it raises 100 per cent of its financial resources on its own. Amongst the NGOs, it is also recognized for its transparency and efficient operations. The government as well as many funding agencies have approached ARAVALI to take more and more programmes. They also suggest it to implement projects at field level.

GOVERNANCE STRUCTURE
Being a membership-based organization, the governance structure of ARAVALI comprised five categories of members registered voluntary organizations/trusts/ institutions, ex-officio representatives from the Government of Rajasthan, individuals, donor members, and founder members. The institutional members could be life member or (annual) direct member. There were three levels of bodies in the structure of governance: general body, governing council, and the executive committee. The general body constituted ex-officio members (eight secretaries/commissioners of Government of Rajasthan), 10 life members (nine reputed NGOs and a public sector bank), and 11 direct members. The direct members were drawn primarily from its partner organizations. According to the memorandum of association, it should have an annual general meeting to: give overall policy guidance and direction for efficient functioning of the Association receive the annual reports of the association elect members of governing council other than the nominated/co-opted members co-opt the members from certain well-known institutions that are related with the functions of the association. Such members would participate in the meetings of general body but would not have voting rights. The governing council was the most important body in ARAVALIs governance structure. It comprised the Chairperson (presently the Minister of Rural development, Government of Rajasthan), two Vice-Chairpersons (Development Commissioner and one NGO representative nominated by the Government)5 , six ex-officio Secretaries of Government of Rajasthan, seven representatives from NGOs, and the member secretary, i.e., the ED. The governing council had the power to frame, amend, or repeal the bye-laws of ARAVALI subject to approval by the Government of Rajasthan.
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The executive committee took the operational policy decisions. It was supposed to meet as often as necessary and in any event at least once in each quarter of the year. Its main functions were to prepare and execute detailed plans and programmes for the fulfilment of the objectives of the organization. The executive committee had the absolute right to accept or reject any application for membership. It could also remove an existing member without assigning any reason. The executive committee comprised ex-officio President (Chairman of ARAVALI), Vice-President (Principal Secretary of Government of Rajasthan in the Department of Rural Development and Panchayati Raj6 ), ED, two government representatives nominated by the Government of Rajasthan, and two NGO representatives nominated by the governing council. The government nominated the Chairman of governing council who also acted as the President of the executive committee. The government further nominated the two Vice-Chairpersons, one of whom was the Development Commissioner. The second Vice-Chairperson should be from voluntary agencies, but even that position was held by an ex-officio member. A Secretary was the ex-officio Vice-President of the executive committee. The President appointed the ED and the Treasurer with the approval of the state government.

DRIVE FOR CHANGE AND CHALLENGES

In the preliminary discussions for preparing perspective plan, it was recognized that the organization was passing through a transition phase. The main suggestions from these discussions were to: (1) increase its coverage of partner organizations, and (2) make its operations more open and client-based. Was ARAVALI ready for such changes? As an established organization, it also needed to maintain its credibility and efficiency. The question that could be raised here was: Should the organization grow? If yes, what should be the expansion path? In the backdrop of suggestions to take up funding and implementation activities, questions were also raised on its role as a support organization. In the past, it had taken up grant management7 role for a few projects, but as a funding agency, its role would be different. An external evaluation conducted in 2002 recommended that: ARAVALI should not get directly involved in funding

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unless it is part of a larger intervention - as it had been in the case of A project. Even where it does get involved, care should be taken to develop an open and broadbased system and avoid one-on-one brokerage system. Even the partner organizations recognized the need for change in ARAVALIs role. The head of a member organization said Earlier, our organization was very small in size and we expected ARAVALIs hand-holding support. Now our capacity has grown and we expect ARAVALI to take up issues like lobbying for a strong NGO sector in the schemes of government. Autonomy in its governance structure was also a major issue discussed widely. As described in the last section, the governing bodies were dominated by government nominees/representatives. The NGOs had a lower say in the governance affairs of ARAVALI. However, for the executives of the organizations, operational autonomy was a more serious issue. In the initial five years, the government had given full operational autonomy to ARAVALI. The founder Chairman of the organization (ex-Chief Secretary of the state) continued till early 1999. When the Government changed in 1999, he left the position and the Minister of Rural Development became the Chairman. Although the Chairman of ARAVALI was not an ex-officio position, since then, the position had been retained by the Rural Development Minister. There were mixed opinions of stakeholders and experts in this regard. In a partners consultation held in November 2000, a well-known person of the NGO sector in Rajasthan commented A senior minister as chairperson maintains proximity to Government which is necessary for promoting GO-NGO collaboration. On the other hand, speaking to external evaluators in 2002, a Secretary had suggested that an eminent civil society person would be a better choice for chairing the organization. Although the operational autonomy of the organization had not been questioned in principle, there were instances of reviewing the decisions related to salary structure and appointments. According to an ex-employee, The decisions related to salary structure were not reversed, but the reviews built indirect pressures to keep it in parity with the governmental salary structure. In comparison to the salary paid in market in similar jobs, ARAVALIs compensation package could be at best said to be a modest one. It could not pay as high as what was

paid by the international donor agencies as that would result in a steep rise in its personnel cost. Also, being in the government set-up, it could not pay significantly higher than what was paid in the government system. However, given the requirement of experienced and able professionals in the organization, it would have a tough time in recruiting and retaining people under such modest compensation package. It is to be noted that, in the last 18 months, the organization had witnessed an unprecedented turnover of senior and middle level programme executives who had played a key role in the organizations growth. The process of appointment of the ED had also passed through an uncomfortable situation. When the first ED left the organization in 2003, a senior government officer was asked to officiate in the position as an additional charge. Later on, the government put up an open advertisement for the position in a national newspaper, but none was selected for the position. People in the close circuit of ARAVALI felt that the appointment of a government officer was not the best alternative. It would lead to bureaucratization. In the long run, such decisions would affect the value system and efficiency of the organization for which it differentiates itself from the government set up. There is no dearth of examples where innovative agencies and projects initiated by government had turned to bureaucratic ones.

THE WAY AHEAD

This was the situation when the ED was going to convene the meeting for the final round of discussions regarding formulation of the next five-year perspective plan. He jotted down a few points which he thought would cover the key issues: Expansion path: What should be the direction in which the organization should move? Autonomy: Can ARAVALI ever bypass the influence of government? The issue of autonomy was not a new thing for ARAVALI. In the initial months of its establishment, every decision went to the government for approval. The then ED had asked for more autonomy from the governing council. He had made it clear that without operational autonomy, it would not be possible for him to work. After that ARAVALI was allowed to have its own set of rules for administrative purpose.
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A few fundamental questions were coming to the EDs mind. From the mission statement, the mandate of the organization was clear. But the form of the organization had not been well defined. In fact, considering the changing needs of its target groups, there could not be any static form or static strategy. The strategy must take into consideration the need of various stakeholders who looked at ARAVALI from different perspectives. The government wanted ARAVALI to take more and more responsibility, particularly in linking GOs, NGOs, and Panchayati Raj institutions. A senior official of the Forest Department had suggested that ARAVALI should also have presence at the field level for providing support to government agencies. The larger NGOs looked at ARAVALI as a well-positioned forum for lobbying with the government. The smaller NGOs continued to consider it as a fund-raiser and a big-brother supporting in need. The donor agencies and government saw it as having a potential of acting as a fund channelling agency. There were seemingly three alternatives to the problem of change in role: Continue in its present role of support organization Take up funding role Take up implementing activities.

From his past experience, the ED felt that the role of funding would bring in several elements which restricted the support role. And, if ARAVALI got into implementation, it would be competing with its own partner organizations. Could there be a mid-way such as grant management which the organization has already experimented with? Similar approaches could be thought of regarding the implementation role, where it could go for piloting new ideas. Expansion would also mean increase in the coverage of organizations as well as number of people. If the organization grew, it would attract the attention of government which might tighten its control. There did not seem any problem in control over policy matters, but it could always affect the operational autonomy. As on the day, there was the apprehension that the increasing control would lead to complete bureaucratization; the government also knew very well that for building GO-NGO collaboration, ARAVALI needed to be closer to NGOs. The key concern was how to maintain the innovativeness remaining within such a system, particularly when you struggle with issues like autonomy, retention of people, and changing needs of the partner organization.

Exhibit 1: Organization Structure of ARAVALI

General Body

Governing Council

Executive Committee

Executive Director & Member Secretary

Programmes Director Treasurer

Accounts NRM Group MFL Group HICE Group CSG Group Support Staff

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Exhibit 2:
Year Corpus fund

ARAVALIs Financial Situation at a Glance (Amount in thousand rupees, rounded off)

1997-98 1,000 445 830 1,296 1 60 1998-99 2,000 960 5,938 2,397 382 Contribution 69 29 1999-00 2,000 1,425 1,000 8,820 3,087 465 32 29 4 40 1.56 2 Ratios 0.4 35 0.35 13 0.32 7 0.25 0.27 0.2 2000-01 2,000 2,073 1,410 9,638 3,169 507 53 34 2001-02 2,000 2,572 1,410 9,309 2,418 702 58 35 2002-03 2,000 2,572 1,492 12 3,4731 186 38 52 7 3 2003-04 2,000 2,572 2,023 13 2,518 69 31% 32% 29% 8%

ARAVALI building fund Reserve and surplus Annual outlay Programme balance* Outstanding expenditure and provisions Government/ CAPART/DPIP, etc. (%) Indian private donors (%) UN agencies (%) Foreign donors (%) Other** (%) Programme balance/Annual outlay

* Programme balance means unspent amount of programme receipt. ** Others include assistance charge, interest, misc. receipts and exchange difference (1997-98), and consultancy charges, interest (1999-00).

END NOTES
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The terms, voluntary organization, not-for-profit organization, and NGO have been used as synonyms in this case. The main problem in early collaborative projects was that the small NGOs could not cope with the documentation and reporting needs of government-sponsored projects. Although these agencies were good at community organization and committed to the cause of development, large projects required good accounting and other organizational system. Hence capacity building emerged as a need for collaboration. Under the programme named Professional Development to Voluntary Agencies (PAVA), young professionals from reputed management schools are sent to small grassroot level NGOs, who otherwise could not have hired these people because of shortage of resources. District Poverty Initiative Project (DPIP) is being implemented in 7 backward districts of Rajasthan. This is a

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World Bank funded project and the Government of Rajasthan is implementing it through NGOs. As per the Memorandum of Association, the Vice Chairman II should be nominated by the GOR out of the NGOs, but at the time of carrying of this study, a Government Officer was holding the position. Earlier known as Department of Special Schemes and Integrated Rural Development. The arrangement was as follows: CAPART and AKF had project proposals from smaller agencies of Rajasthan. The projects were too small and both these agencies were of the view that it would be difficult to monitor them and they were also not sure of their credibility. ARAVALI took up the grant management role by way of which the fund was channelled through it, or ARAVALI took up the role of monitoring for a service charge. The experience was found effective.

Acknowledgement. I am thankful to Mr. Sachin Sachdeva and Mr. Jai Pal Singh of ARAVALI, Prof. Haribandhu Panda, Prof. Rakesh Saxena from IRMA, Mr. Debasis Pradhan, and Mr. Rajesh Aithal for their inputs in writing the case.

Pradeep Kumar Mishra is a Faculty at The Livelihood School (BASIX Group), Eastern India Regional Centre, Kolkata. This case was written by him when he was a doctoral student at

IRMA, Anand. He is the recipient of Reserve Bank of India Fellowship. e-mail: pradeep@thelivelihoodschool.org

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ARAVALI