Accountability - a development perspective - challenges for

NGOs
Rosemary Viswanath
I would in this brief paper wish to share some trends and some reflections on the
development sector, and the challenges that face it more as a backdrop to the
other more pointed and specific issues this group will address. I believe this
backdrop is important in terms of the task of evolving regulatory frameworks and
standard practices. Non-profits have basically built on the spirit of service,
participation, dialogue and privileged civil societys role in building just and
sustainable societies. egulations are most effective when they aim to strengthen
and not merely to control. In that sense understanding the ethos, realities and spirit
of the non-profits is essential to any debate on their accounting and their
accountability.

he canvas of non-pro!ts
!hen addressing the issue of accountability and accounting standards it is important
that we understand the nature of the non-profit sector in India, the challenges it
faces and the wide variety of spaces it inhabits and roles it attempts to perform

"ome key facts about the spread and nature of the nonprofit sector in India comes
up with somewhat startling revelations#
India has $.$% million N&'s # ()* in rural areas, +,* in urban
'f the -. million persons involved, %(* are volunteers, rest are paid staff
,).+ * of these have less than one paid staff, %.(* have above $. paid staff
-/.) * are religious groups
0here are two factors that I would like to highlight here if a large number of
organi1ations are in rural areas, and given the spread of our vast country, one has a
huge challenge in terms of communication, access to trained resources and capacity
building. 2lso added to that is the reality of number of full time staff. 3aluing the cost
of voluntary contribution in economic terms has for long been a unresolved debate.
2ny attempt at guidelines and standards that are mandatory must take these
realities into account. 0his by no means implies that accountability both as a value or
as criteria is inapplicable to nonprofits.

"istorical #onte$t of NGO%s in &ndia
2part from the spread and variety in the kinds of nonprofits, it would be useful to
focus also a little more on the history of the kind of nonprofits that many of us are
involved with 4 social change, human rights and advocacy5 and how these nonprofits
responded to the needs and issues of their time.
1960-70 # Rehabilitation, Rural Development, Disasters, Displacement
0his period 4in fact civil society involvement was perhaps at its peak pre-
independence and post with the nationalist movement and freedom struggle5 focused
Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18
th
200 Ne! "elhi
on very basic issues of development with the vast rural areas of India needing to be
included in the development agenda. 0he language of rights and obligations, and
in particular the obligations of the state were articulated through the choice of a
nehruvian socialist- centralist form of government. &andhian thought and practice
also inspired the N&' space.
The 1970s saw the emergency, the event responsible for the political
conscientisation of many second-generation N&' activists and leaders today. 0he
reali1ation that democrac and civil and political rights were not givens but
needed to be guarded and fought for gave birth to many non-profits working in that
broad area.
The 19!0s saw the consolidation of and convergence of several vibrant movements
the environmental movements 46hipko5, peoples movements - dalit, tribal,
narmada, fisher folk, and the "omens movement. 0he voice of the marginali1ed
claiming their space to define development and not just get their due share was the
defining theme. 0he space occupied by the rights debate e7panded to include these
concerns as rights. 2 series of N&'s also addressed these issues.
1990 on"ards saw the spotlight on the crimes of development with the
majority of the world people 4poor5 8uestioning the current forms of development
and its benefits to them. 6urrent economic models, the rules of world trade,
neocolonialism, corporate globali1ation and its proponents have come under sharp
scrutiny and attack, while issues of religious, ethnic, minority rights and identity,
locali1ation 9 local governance, diversity, sustainability and peace are being keenly
debated.
:nfortunately none of the basic issues poverty, health, basic rights, social justice
has been ;solved< to any level of satisfaction and have only been e7acerbated. 2nd
with the passage of time each of these periods has contributed a new layer of
comple7ity and more inter-linkages to e7isting debates.
he conte$t in which non pro!ts operate
The "ider political and civil societ conte#t
0here has been an aggressive market led growth of northern capital softened by a
stronger civil society concerns in the north itself
"outhern societies face the compulsions of electoral =other politics the last decade
has seen the fragile move to more democratic polities and the ousting of many
oppressive dictatorial regimes in 2sia and 2frica and in eastern >urope and the
2mericas. 0here has been rising aspiration and articulation of the under-classes and
much more evident civil society and judicial activism.
N&' are much more in the public domain in the media, in decision-making spaces
of various hues and in the alternative spaces that they create as a symbolic political
statement 4e.g in large !0' meetings or meetings of the governments or
multilateral agencies and international financial institutions of the world economic
forum etc5. 0hus being in the public glare is a reality for most and as a result
managing public perception has also become an inevitable task of the N&'.
Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18
th
200 Ne! "elhi
0he criticism and scrutiny has also increased correspondingly. N&'s are coming
increasingly under pressure to increase their transparency and accountability e.g
?62 and related regulation, and often the pressure 4targeting5 comes from right
wing, partisan organi1ations intending to 8uell civil society dissent
$aradigm shifts in development cooperation
Increase in direct aid from northern governments, bilateral, multilateral and
international aid agencies 4often bypassing northern N&'s5- leading to increased
state control over funds and a fear of being ;co-opted<.
0here has also been an increase in collaboration between N&'s and the state.
N&'s are being relied upon more than governments or commercial interests to
;deliver< development 4leading to a new breed of ;government-ngo@5 .
!hile there is a trend particularly in Indian non profits of shrinking funds as new
priorities and urgencies ;divert< funds into areas such as the least developed
countries, 2frica, and eastern post communist >urope, the reality also is that in real
terms the number of N&' and the funds they work with has almost doubled in the
last decade.
!hat is undeniable is that development funds are getting marketised. N&'s need to
be efficient and professional in accessing and managing scarce resources as there
are competing demands.
'hat are the demands on and challenges before NGO%s (
0his makes new demands on N&'s to meet stringent market criteria to access aid#
cost-effectiveness, proven organi1ational and institutional capacity to achieve and
monitor results, and have transparent systems of accountability.
Aowever, in order to respond more effectively to these comple7 issues that they deal
with, N&'s have created new forms of organi1ations networks, campaigns,
clusters, and alignments oftentimes trans-regional, transcontinental, and
sometimes virtual. 0his is a clear - a shift from the traditional geographically
bounded project or implementation mode of nonprofits . Banaging these new forms
of organi1ation itself is a significant challenge in terms of leadership, managerial and
organi1ational skills. 0he management of finances becomes a new challenge as well,
because many of the earlier assumptions about inflows and outflows and sharing of
resources simply do not hold.

2dded to this is managing the increasing legal statutory and political and policy
space 4hurdles5 as well as increasingly tight donor re8uirements.
In order to survive and remain effective, non-profits need to be able to focus on the
inside-outside simultaneously. 0his implies serious and concerted work on#
0he organi1ations vision 4and its percolation to the rest of the organi1ation5 9
practiced values
2bility to operate in a truly public space
Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18
th
200 Ne! "elhi
?inancial accountability 9 transparency
!ork culture aligned with values
Celiverables in a comple7 macro-environment
Deadership
Erofessional and management skills in a resource deficit space
Aopefully the debate on accountability will keep in mind these realities and trends
while encouraging nonprofits to be effective organs of civil society aspirations.
eferences#

%nvisible et "idespread& The 'on-$rofit (ector in %ndia
National eport on EI2Fs study on the Non Erofit sector in India, conducted as part of a global
comparative study of the Gohn Aopkins :niversity, :"2, -..$
Earadigm "hifts in Cevelopment 6ooperation N&' Cilemmas and 'ptions . Cr Gose Burickan
"G. Bohan aj, Hurian H Hattikaren Indian "ocial institute Iangalore, -...
Paper prepared for the National Consultation on Technical Guide for Accounting and
Auditing for not for profits October 17 & 18
th
200 Ne! "elhi