Network of Asia-Pacific Schools and Institutes

of Public Administration and Governance (NAPSIPAG) Annual Conference 2006

University of Sydney, Australia

Theme: “Innovation, Policy Transfer and Governance: How can they best contribute to
social and human development?”

Network of Asia-Pacific Schools and Institutes of Public Administration and

Governance (NAPSIPAG) Annual CONFERENCE
Sydney, University of Sydney, 4-5 December, 2006

Challenges Of Civil Society Governanance In Nepal

Dr. Tek Nath Dhakal

Visiting Associate Professor
National Museum of Ethnology, Osaka, Japan

December 4-5, 2006

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 CHALLENGES OF CIVIL SOCIETY GOVERNANANCE IN NEPAL
Dr. Tek Nath Dhakal

Key words: civil society governance, NGOs as development partners, legal instruments,
Nepal
================= ===============================
1. Background

Civil society organizations like non-governmental organizations (NGOs) have

overwhelmingly been increasing in Nepal since the early 1990s. Given a situation of
faster growing number of such organizations, they could evolve in the course of time and
space to play important role for establishing good governance. A favorable policy
pursued by the government of Nepal has increasingly been linked to simplifying the legal
instruments for making them responsible and discipline along the principles of good
governance. However, their involvement in the developmental process has also been
considered certain problems due to their own governance problem. In this context, this
study assess to answer “does the present civil society governance is able to play their
established roles effectively in Nepal”. This study critically reviews the available
literatures to examine the civil society governance, and the challenges for governing civil
society organizations such as NGOs for making them more effective as the development
actor. Reform initiatives on NGO governance spearheaded by the government have been
gone thoroughly. For collecting primary data, two NGOs – ‘Danfe Youth Club’ (DYC)
working in Jajarkot of the Mid-western hilly district and ‘Village Women Welfare
Committee’ (VWWC) working in Siraha of the Eastern Tarai were selected purposively.
Discussion was held with purposively selected 18 NGO workers, two local government
officials and 22 beneficiaries. In addition, 16 key informants were interviewed for
supplementing the necessary information.

2. Civil Society Governance: A Conceptual Shift

The ‘government failure’ situation during the 1970s demanded a new debate on
governance stating the collaborative role of various actors such as public-sector
organizations, private organizations, and the civil society organizations (Warren and
Weschler, 1999, p. 119). As a result, there has been a faster rise of civil society
organizations and the increased partnership relations between public, nonprofit and the
profit organizations. This results an emergence of a new order in global governance
which has changed the entire institutional landscape practically, more or less, everywhere
in the world. NGOs have being developed at the cutting point of market, the state, and
the civil society, their role has become an area of interest among the different
stakeholders. They also have been considered important institutional actor for mobilizing
community assets, motivating people, and implementing social welfare programs
effectively (Shah, Indra Bikram et al., 1986: 5). Due to their very nature of grassroots
attachment their roles for the delivery of services at the door steps and strengthening
democracy could be critical. They can initiate interactions among the citizens and with
other actors to influence and participate in policy-making and related processes and
thereby contributing democratic governance. However, the governance of NGOs also

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appears as an issue. Accountability of such organizations is crucial for the effective
governance, which increases organizational efficiency. In the absence of accountability
organizations could lead to “organized anarchy or ad-hocracy” for which management
capacity becomes the crucial factor (Backer, 1998: 97). Similarly the sustainability of
NGOs is also equally important for good governance which is influenced from various
factors such as management capacity, commitment, and the financial technical,
environmental, and the political including socio-cultural factors (Hossain, 1998). In
addition to this, NGOs should also develop their own self-rule and follow the code of
conduct to make them discipline and work effectively (Dhakal, 2006). As NGOs are
accountable to the people and run by the people’s trust and contribution, the self-
governance becomes critical to make it success or not.

3. NGOs as Fast Growing Entities in Nepal

The history of social welfare service in Nepal is as old as the society itself. The
traditional social entities such as Guthi1 (trust), parma (labour exchange system), dhikur
(saving/credit), etc. can be taken as important social institutions created even before the
unification of Nepal in 1769 (Subedi, 1984: 69-81; Dahal, 1986: 254, Chand 1991, Lama,
et. al., 1992: 85; Bhattachan, 2000:74). The number of such entities is believed as many
as 200,000 in Nepal. Due to miniscule in nature and scattered in an uncoordinated way
their roles have not been explored much. However, these social institutions were
governed by the philosophy of religious values which became a part of the daily life of
the people. Therefore the philosophy of administration both at the government level and
social institutions was based on dharma shashtra (religious principle) (Tiwari, nd).

In 1926, Shree Chandra Kamadhenu Charkha Mahaguthi was created which was the first
modern NGO in Nepal as a social organisation for the delivery of services other than the
government. After 20 years, Paropakar Sanstha came as second modern social
organization which was followed by other couple of NGOs in 1950. Establishment of
NGOs before 1950 was basically difficult due to the strict control of the Rana rule, i.e.,
one should get permission from the Prime Minister for establishing such organization
which was obviously not a easy job. The aftermath of the democratic movement in 1951
created a favourable environment for creating modern NGOs in Nepal. But the
introduction of Panchayat polity2 in 1961 again created obstacles for the smooth growth
of such entities. It was simply because of suspicion on the role of social organizations
contributing people’s awareness level thereby creating a probable threat for the
continuation of the autocratic nature of the then political system. However, the

1
Guthis were the social institutions created for performing funeral, wedding, and religious ceremonies
including construction and/or repairing the temples and other public infrastructures and became the
backbone of local economy (Regmi, 1978). There were other such social entities created such as bhejas
(among Magars), chumlung (among Rai & Limbu), nangkhur (among Tamangs), nogar (among the
Gurungs), bolawanegu (among the Newars) and dharma phanchayat among Thakali, etc. for in Nepal.
2
Panchayat as a party-less political system was introduced in Nepal in 1961. The constitution of the
Panchayat system did not consider any political organization and work as in the multiparty democratic
system or in a single party system.

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involvement of the royalties in some of the NGOs such as Nepal Children's Organization,
Nepal Red Cross, Nepal Disabled Association, etc. brought somehow a wave for people’s
participation in this sector. Consequently, 37 NGOs came into existence during 1951-75
periods in the area of health services, creation of awareness, imparting skill development
training, and delivery of other community services (Dhakal, 2006a). The current number
of NGOs in Nepal is around 37,000 as compared to 220 in 1990. This shows that the
number of NGOs began to proliferate only after 1990s. Normally these organizations are
registered in District Administration Office and apply for affiliation with SWC. Out of
the total registered NGOs, 18,825 are affiliated with Social Welfare Council (SWC) 3
(see Table 1).

Table 1: Patterns of NGO Growth in Nepal

Year No. of NGOs Remarks
1926 1 First modern NGO established in Nepal
1951 4 At the time of establishment of democracy in Nepal in
1951
1977 37 At the time of NGO Governing Act introduced in
Nepal in 1977
1990 220 At the time of restoration of democracy in Nepal in
1990
2006 Of which 18,825 NGOs are affiliated with SWC
mid-June
Source: Dhakal, 2002; SWC, 2006

Many of them have very few activities, simply celebrating occasional meetings, while
others have been actively working with diverse activities. On the basis of registration and
renewed records, and the progress reports submitted in SWC, the National Planning
Commission (1993) categorizes Nepalese NGOs as follows:
• community and rural development,
• empowerment of women,
• improvement of environment,
• delivery of public health,
• AIDS and drug abuse control
• Child welfare,
• educational development,
• handicapped and disabled service,
• youth activities, and
• development of moral values.

3
Social Welfare Council (SWC) is a governmental bureau for coordinating, facilitating, and controlling the
NGOs/INGOs working in Nepal.

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In addition to the national NGOs, around 200 international NGOs from the various
countries have also been working in Nepal. Of them 150 are affiliated with SWC and rest
directly with concerned governmental departments. The role of INGOs has been
increasing both in number and volume of activities such as health and community
development, child welfare activities, education, water and sanitation, agriculture
development, women empowerment, disabled services including eye care and dental
services, etc.

4. NGOs as Development partners

Looking into the catalytic role of NGOs in development, the government of Nepal
recognized them as development partners both for complimenting and supplementing the
development activities and delivery of basic services. For bringing them in the broad
spectrum of managing the country’s socio-economic resources plan documents have
given NGOs a meaningful role by recognizing them as partners in national development
for mobilizing and implementing resources at grass-roots level (NPC, 1993). To develop
such partnership between public sector organizations and non-profit organizations the
legal instruments such as ‘VDC Act 1992’, ‘Municipality Act 1992’ and ‘DDC Act 1992’
were enacted and specified the role of NGOs in local development efforts. The
partnership among these organizations would be either of the voluntary contribution of
NGO resources, or in a participatory basis between GO and NGOs, and/or work as
contracting agent of the line agencies.

During the beginning of Ninth Plan (1997-2002) a 20-year long-term planning concept
was also developed and targeted to increase GDP growth rate and to alleviate poverty and
unemployment/underemployment within the stipulated time. The plan has also
considered NGOs as development partners particularly with local development
organizations4 by committing to mobilize NGOs in a way to make important contribution
in the socio-economic development. Accordingly, NGOs were encouraged to work in
backward communities particularly in underdeveloped and remote regions. They had
been motivated to work as facilitators vis-à-vis local institutions including District
Development Committee (DDC) and Village Development Committee (VDC),
municipalities, educational institutions, and various community organizations and
consumers (NPC, 1998). To facilitate for the partnership, the government brought Local
Self-Governance Act 1999 and Local Self-Governance Regulations 2000 which broadens
the scope of NGOs’ involvement both in plan formulation and implementation process
(Law Management Society, 1999).

Similarly, the current Tenth Plan (2002-07) also addresses the role of NGOs with the
broader concept of civil society for helping women/girls education and their
4
As per the Local Self-governance Act 1999, Nepalese local development organizations have two tiers -
VDC (in rural area) and Municipality (in urban areas) as grassroots organizations, and District
Development Committees (DDC) at district level. Previously created DDC Act, 1992, VDC Act 1992, and
Municipality Act 1992 were submerged in Local Self-governance Act 1999. Altogether there are 3,913
VDC, 58 municipalities, and 75 DDC in Nepal.

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empowerment, mainstreaming person with disabilities, dalits and the minorities of the
ethnic communities, protection of helpless people, management of population, income
generation, and the conservation of environment. The policy intends to achieve the
objective of poverty alleviation and employment generation through social mobilization,
promoting NGOs/CBOs to the remote places, seeking more partnership between
NGO/INGO and Pvt/NGO, etc. This provision broadens the working space of NGOs
particularly at the local level and in seeking a meaningful partnership both at the plan
formulation and also at implementation level.

5. Governance of NGOs in Nepal: Legalizing the NGO Sector

In Nepal, traditional social organizations were not registered, as most of them were
created after building consensus and understanding among the community members. The
legalization of NGOs began only after the establishment of democracy in 1951. Some of
the early created legal instruments were as follows:
• Societies Registration Act, 1959
• National Directives Act 1962,
• Foreign Currency Exchange Act 1962,
• Muluki Ain 1962 (Civil Laws), and
• Company Act and Regulations 1965

However, these legal provisions were not adequate to regulate/facilitate NGOs. Realizing
the difficulty to govern NGOs from various legal provisions, a one-window policy for the
operation of social organizations was felt necessary. It was assumed that the new legal
provision would be helpful for maintaining accountability and developing a system of
flow of financial aid, maintaining their accounts and code of conduct in a regular basis. It
was also been realized that due to the lack of uniformity in rules and regulations
regarding NGO operation in Nepal it was difficult to co-ordinate, facilitate, and
administer the NGOs communities maintaining uniformity. In addition, it was also felt
necessary to bring new law for administering the NGOs/INGOs in a new situation caused
by a change in funding policy of the international development agencies and/or the donor
agencies including the Western government. Such possibilities also demanded an
effective legal arrangement which was lacking in Nepal during the late 1970s (Chand,
1998: 49-50; 1991:33-34; Maskay, 1998: 77-78). In this context, the government enacted
two important legal provisions - Sangh Sangstha Ain 2034 B.S. (Organization and
Association Act 1977) and Social Service National Co-ordination Council Act 1977
(SSNCC Act) which were the important endeavours for governing NGOs in Nepal.

The Organization and Association Act, 1977 enables registration of all kind of voluntary
organizations other than governmental or private organizations. The act also clearly states
that the proposed organization should be non-profit and the non-political. According to
this act at least seven Nepali citizens can collectively apply at district administration
office attaching a statute of the proposed organization stating name, objectives, address,
organizational and management provision, authority, responsibilities, and code of

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conduct of the executive committees, and financial sources including the modus of
operandi, etc. The act also made a provision of renewal system for which each
organization should submit progress report, income and expenditure report and the audit
report annually to the District Administration Office (DAO) for working for another
term. The act entrusted the DAO office for monitoring and evaluation and to take action
against the wrong doer NGOs other than the legal provision.
The SSNCC act was entrusted to avoid duplication in the activities by bringing
uniformity among the national and international NGOs. According to the SSNCC act
Social Service National Coordination Council (SSNCC) was created which was
responsible to work as an umbrella organization for the promotion, facilitation, co-
ordination, monitoring, and evaluation of the NGO activities. SSNCC created six
different committees to coordinate and facilitate various NGOs. Chand writes
“mechanism that was conceived through the formation of these committees was largely
directed to maintain co-ordination right from the grassroots till the national level. The
programs being undertaken by each individual NGO were made to be transparent, largely
because there was linkage through the committee and their programs were frequently
supervised and monitored both by the co-ordination committees and also by the Council”
(Chand, 1999: 161). The committee mechanism of NGO management had somehow
helped the then-SSNCC to operate and co-ordinate NGO functions.
After the restoration of multiparty system in 1990, there was a big cry from the
NGO/INGO communities for the enactment of a new act particularly addressing the new
role of the then SSNCC for governing NGOs. The first elected government after 1990
also showed its firm commitment to bring a change in NGO dynamism by liberalizing the
NGO-led legal instruments. As a result Social Welfare Act 1992 was brought submerging
the then SSNCC Act 1977. According to this act the Social Welfare Council (SWC) was
constituted as a governmental bureau to look after the NGO affairs in Nepal. The present
SWC Act eliminated the practice of pre-approval of SSNCC for the registration of NGOs
in District Administration Office. This obviously helped for interested people to create
new NGOs and work accordingly. As a result there has been rapid growth of NGO
community in Nepal.

6. Institutional Arrangement for Governing NGOs in Nepal

Two organizations – District Administration Office and the Social Welfare Council are
the important governing institutions of the NGOs in Nepal. However, there are numerous
organizations which are related to govern NGOs in Nepal
District Administration Office5: As said earlier, the Association and Organization Act
entrusted CDO office as the implementer of this act. This office is responsible for
following three functions:

5
District administration office (Chief District Officer’s Office), which is popularly called CDO office is the
district level governmental Line Agency under Ministry of Home. According to the Local Administration
Act 2030 B.S, the government creates CDO office in each of the districts which has also been entrusted to
implement the Association and Organization Act 1977.

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 •Registration of new NGO(s) – after verifying the statute with regard to existing
legal provisions
• Renew of NGOs – usually renew the working NGOs, checking of annual progress
reports, income and expenditure reports, and audit report, and
• Monitor NGOs - usually could make surprise check for those which may/may not
violate existing laws, misappropriation, misconduct, etc.
However, the Association and Organization Act, silent regarding NGOs’ role in
development.
Social Welfare Council: The other important institution for governing NGOs in Nepal is
Social Welfare Council, which is responsible for promotion, facilitation, co-ordination,
monitoring, and evaluation of the activities of the NGOs and INGOs in Nepal (See Box
1). In addition, it also provides advice to the government in the matters of developing the
NGO sector policies and programs. Apart from these, the council also delivers training to
the NGO workers and provides small grants and back-up supports to those NGOs
affiliated with SWC. It also creates necessary environment to link the local NGOs with
INGOs and assists to develop partnership between them for the implementation of their
activities.

Box 1 Role and Functions of SWC

• Promote, facilitate, co-ordinate, monitor, supervise and evaluate NGO activities;
• Provide possible assistance for the establishment, promotion, extension and
strengthening of NGO activities;
• Function as a coordinating body between HMG and NGOs;
• Advise and suggest to the government in the formulation of plans, policies, and
programs related to social welfare and service sector;
• Establish trusts or funds for social welfare activities and encourage others to do the
same;
• Conduct training, undertake studies and research on social welfare subjects;
• Do the physical verification of NGO assets;
• Undertake necessary measures for the execution of the aims and objectives of the
act;
• To avoid duplication and maintain co-ordination among various social
organizations;
• Enter into agreement or contract with foreign and international agencies; and
• Make an effort in procuring national and international assistance and use it
judiciously.
Source: Social Welfare Council Act 1992, Article 9

Ministry of Women, Children and Social Welfare (MoWCSW): The government had
created Department of Labour and Social Welfare in 1972 and later upgraded it into
Ministry of Labour and Social Welfare (MLSW) in 1981 to regulate social welfare
functions in Nepal. Basically the MLSW had to work for making plans, formulate and
implement policies and strategies, and monitoring and evaluating of the social welfare
functions. Later in 1995 the government created a separate ministry level organization
“Ministry of Women and Social Welfare” (MoWSW) to work for the women and social

8
welfare related matters. Again in 2000 the scope of this ministry was further added with
the child component and renamed this ministry’s name as Ministry of Women, Children
and Social Welfare (MoWCSW). This ministry has to perform the enactment process of
NGO/INGO and the SWC. The minister of MoWCSW assumes as the chairperson of the
governing body of SWC. This ministry has also the responsibility for the approval of
annual plan, programs and budget of SWC, approval of the general agreement carried
out between SWC and the INGO, monitoring and evaluation of SWC functions.
Normally the MoWCSW implements its activities through Women Development
Departments, District Women Development Offices, SWC, and selected NGOs. In
addition, Child Development Centre (CDC) created under this ministry in each of the 75
districts take care of the child-related issues in Nepal.
Central Level Other Organizations: There are other numerous governmental
organizations which can directly or indirectly play their roles for controlling or
facilitating the functioning of NGOs in the country (See Table 2).

Table 2: Central-Level Organisations for governing NGOs in Nepal

Name of Organization NGO related Function Operational Channel
Ministry of Finance Facilitation & control, duty-free - Through SWC
(MoF) status, and tax exemption
Ministry of Education Facilitation for education related - Through District Education
(MoE) (non formal education) NGOs Office,
- Through selected NGOs
Ministry of Health Facilitation for health-related - Through SWC,
(MoH) NGOs - Through selected NGOs
Ministry of Labour Facilitation and controlling - Through SWC
(MoL) working visa for expatriate
Ministry of Local Facilitation and co-ordination to - Through DDC, VDC,
Development (MoLD) local development/community municipality,
development related NGOs
- Through selected NGOs
Ministry of Population Facilitation to social - Through selected NGOs
and Environment mobilization and environment
(MoPE) awareness creating NGOs
Ministry of Home Registration/renewal of all - Through CDO Office,
(MoH) NGOs,
- Through selected NGOs
Facilitation to drugs-related
NGOs
Ministry of Foreign Facilitation and control of formal - Through SWC
Affairs (MoFA) visa
National Planning Approval & co-ordination of - Through SWC
Commission (NPC) NGO activities with the national
development plan/ programs

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Source: Dhakal, 2006
NGO Federations: Different NGO federations such as NGO Federation of Nepal
(NFN), National Federations of Nepali NGOs (NFNN), NGO Coalition/Nepal,
Association of the Development Agency of Nepal (ADAN), and Child related NGO
network, including Federation of Dalit related NGOs, were created after 1991. These
federations are supposed to develop networking among national/international NGOs and
with the government for mutual co-operation. In addition they also have to develop NGO
ethics in order to bring them in right order. Some of the major functions of the federation
are as follows (NFN 1992 in Dhakal, 2006):
• to develop and enforce “NGO Code of Conduct” among member NGOs to make
them more accountable, transparent, and trustworthy so as to foster the positive
image of Nepali NGO sector; and
• to promote and develop capacity-building activities for empowerment of the
member organizations in management field, which will help them to have a clear
vision on their program/project goals, objectives, planning, designing, and
implementation).
• to act as an advocacy and pressure group organization for its members;
• to develop and conduct management-related capacity-building activities for its
members; and
• to initiate, follow-up, and enforce self-regulating activities for its members

7. Governance situation of the sample NGOs

This studies deals with the
empirical studies of two NGOs – Box A: Village Women Welfare Committee, Siraha
Village Women Welfare Legal Status: Registered in 1996
Committee (VWWC) and Danfe General Member of VWWC: 100 (all female)
Youth Club (DYC) - working in Executive Committee: 11 (all female)
Project title: Legal literacy and Human Right Awareness
two different geographical Total Program cost: NRs. 1,054,970/
locations in Nepal. VWWC Project area: 4 VDCs - Dhangadi, Bishnupur, Bastipur, and
works in Siraha district which Govindapur of Siraha district
lies in the eastern Tarai in Target Group: 1000 Poor and underprivileged women
Eastern Development Region Project Objectives: establishing a creative society by
sensitizing the poor and underprivileged women about their
(EDR) and DYC in Jajarkot legal right; and helping the village women for self-reliant,
district of the Mid-hills of the independent, and progressive.
Mid-Western Development Source: VWWC office, Siraha
Regions (MWDR) in Nepal (See
Box A and Box B).

Both of the NGOs got project funding from United National Development Program’s
(UNDP) program “Support for Peace and Development Initiatives”. The general purpose
of the program was to build peace through the development program. It was a new
experiment to solve the problems crated by violence situation. It aimed to hammer the
root cause of the problems created by the existing socio-economic and political factors.
The violence situation in Nepal was came out after mid 1990s which has been believed

10
due to the discriminatory social
values, rampant poverty at the Box B: Danfe Youth Club (DYC), Jajarkot district
grassroots, and centralization Legal Status: registered in 2044 (1987)
General Member of DYC: 75 (Male 72 & Female 3)
political power, etc. Executive Committee : 13 (11 male, 2 female)
Project title: Awareness & Income Generating Program
So far both of the organization among the Victims of Conflict.
had been working in a conflict Total Program cost: NRs. 2,044,520.00
areas where many governmental Project area: Jajarkot District
Target Group: Victims of conflict.
line agencies especially the Project Objectives: Support to 100 household victims of
security wings had to been conflict through IG program; Education support to 100
feeling difficulty to work and student; Health Clinic; Peace Rally and distribution of 5000
synchronized to more safer areas Pamphlet on peace; and Skill Training
and/or at the district Source: DYC office, Jajarkot
headquarters. Working in violent
areas indeed would be difficult. Both of these NGOs has been working in the Maoists
affected areas and working for the victims of Maoists and socially discriminated section
of the society. Working in such situation obviously needs special care and requires to
follow strict financial discipline. This study reveals that their efforts were found to meet
their objectives. Some of the positive results observed during field visit were:

• help to break wall between so called higher and lower caste and also helped to
solve the caste related social disputes which often occurred in Nepalese rural
society;
• help to create women groups, to solve their socio/economic problems, and
exchange their idea to one-another also help to understand them on their legal
rights, roles and the social status in society;
• able to mobilizing children and the youths in peace building process;
• get success to create a peace environment;
• provide skill training to generate employments;
• deliver supports to the poorest of the poor people; and
• help to solve problem on human rights through radio listeners' club, public
hearing program

With regard to the governance status of these NGOs following strengths and weaknesses
were identified during the field visit:

Strengths
• Involvement of executive members were found involved which make transparent
at lest to the members of the organization,
• Selection of projects was made as per the decision taken by the executive
committee,
• Utilization of funds (around 90%) in the project activities found,
• Project has submitted quarterly progress report to the concerned agencies,
• Progress reports submitted to the donor agency,

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 • Obey of existing NGO governance laws was found as both of the NGOs were on
the way to process by submitting the annual progress reports, financial/program
reports to the CDO office and to SWC for renewal process,
• Operation of bank account was found as per the NGOs’ statute, etc.

Weakness
• Target groups were not aware about the financial activities
• Financial guidelines not prepared which is important to keep the
members/employees under financial discipline.
• Lack of introducing internal controlling system, e.g., maintenance of separate
bank account, store register, bank reconciliation, making expenditures as per the
accounting rule,
• Lack of adoption of ‘code of conduct’ for self-ruling among the NGO
workers/executive members, etc.
• Lack of knowledge on existing governmental rules which applies NGOs as well,
• Severe lack of creating monitoring and evaluation from the donor and/or the concerned
governmental agencies,
• Lack of creating M/E mechanism by the NGOs,
• Lack of effective coordination between NGOs and the local development
authorities such as DDC and the CDO office who are also responsible to govern
NGOs.

8. Discussion on the NGO Governance

The government has been looking NGOs/INGOs as development partners and trying to
find out their meaningful role for mobilizing local resources and implementing their
programs at the grass-roots level. For this, government enacted various NGOs governing
legal instruments such as Organization and Association Act, 1977, SWC Act, 1992, VDC
Act, 1992, DDC Act, 1992, Municipality Act, 1992 and again Local Self-governance Act,
1999 and subsequent regulations. These legal provisions help the NGOs to increase in
numbers and work in the country according to their choice of areas and the programs.
The Local Governance Act also provides NGOs to participate in the local planning
process and implement their own programs and also local bodies’ programs. In the mean
time, the SWC act 1992 also directs the INGOs to work in Nepal only partnering with
local NGOs. These all helps more people to create NGOs in Nepal. So it can be claimed
that the expansion of the NGO community in Nepal are due to government’s favourable
policies.

There is a dilemma that whether government has to direct NGOs or set free them for the
choice of activities in Nepal. Problems occur both on the part of government and the
NGOs themselves. This issue has not been properly addressed in each of the Organization
and Association Act, 1977, SWC Act 1992, and the Local Self-governance Act 1999 and
the subsequent regulations. As a result the non-compliance of Local Self-governance act
by the NGOs could be the subject of legal action. A study shows the lack of proper co-
ordination between governmental and non-governmental organizations, which may be

12
working with the same beneficiaries for the same nature of problems but co-ordination
may be established on political grounds rather than on developmental issues (Dhakal &
Ulvila, 1999: 15-17). Secondly, by virtue of NGOness the NGOs are free to work
according to their choice. If they do not do what they are supposed to do what would be
the legal measures to be applied in such case. One possible solution would be they need
their own self-rule mechanism by developing “code of conduct” but, in the absense of
such code of conduct measures, they become ‘governanceless’or ánarchic’.

It has also been realized that NGOs have often been found to make their financial
transactions secret. For this, there has been a practice that NGOs are constituted within
the family, relatives, or a few likeminded persons and such organization often led by a
single person domination. Such phenomena often became the subject of criticism of the
NGOs in Nepal. Considering such issues, the academics and the practitioners began to
discuss on the NGO credibility and their importance to enhance people’s power.
Rademacher (1995: 34-35) thinks “It is difficult, if not impossible, to get a clear picture
of the intentions and performance of every new NGO. It is also unwise to automatically
liken a larger NGO population to a surge in “people power” enthusiasm the newer NGOs
must first prove that they are genuine and effective”.

During 1977-90 period, the previous NGO governing body SSNCC was strong for
imposing compulsory reporting system, particularly of the foreign resources channels
through NGOs. It helped to make the NGOs' accounts more transparent and also to
facilitate monitoring the NGOs' activities more objectively. However, getting prior
approval from this office for their registration became the major hurdle and long process
for registration or renewal process may harass the volunteerism sprit in Nepal. Therefore
NGO workers at the grassroots and NGO sector specialists felt that there was a deliberate
attempt to restrict the growth of NGOs, as the registration required time-consuming
screening procedures (Rademacher, 1995: 14). It was also evident that in order to avoid
excessive government control, some NGOs circumvented these acts by registering as
non-profit research institutions under the 1964 Company Act (Lama et.al. 1991:3).

But the new provision in the SWC act, 1992 brought a favourable environment for
creating NGOs in Nepal as (Dhakal, 2000: 90):

• Interested people could register any type of NGO in the CDO office after completing
certain prescribed formalities - i.e., registration does not require any
recommendation or prior approval from any other institute(s).
• Due to the enactment of local bodies legal instruments (such as DDC Act the
Municipality Act and VDC Act etc.), there was sufficient 'political space' for the
NGOs to stretch their activities and to focus on development issues, which could
sensitize people to challenge their status in the social and political power structure.

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• The process of channeling foreign resources through NGOs has been simplified -
i.e., the donor INGO can transfer its resources to the local partner more
conveniently.
• The affiliation process was made easier, and it was mandatory to complete the
process within a three months' period.
• The scope of mobilizing local manpower and resources together with foreign
resources has been made easier

Despite these positive features, after enactment of SWC Act 1992 and some of the
lacunas are identified. The flexibility helped proliferation of NGOs much easier, which,
however, lacked developing a mechanism for making such entities more responsible and
accountable to the society. Some of the identified problems include (Dhakal, 2006):
• over-flexibility of legal provision provided a leeway to the NGOs not to be
transparent of their activities;
• discretionary power for their activities created a threat for NGO anarchism;
• lacking of clearly specified modus operandi in the existing legal instrument for a
better co-ordination among the NGOs and the local development agencies;
• practice of politicization for making SWC executive committee rather than
professional competencies;
• Lack of SWC capacity to govern increased number of affiliated NGOs/INGOs;
and
• lacks a clear demarcation of functional roles in the SWC Act between MoWCSW
and SWC for governing the NGOs.

In addition to this, the CDO office also found concentrating only on registration and the
renewal process rather than assessing the NGOs' activities. One of the reasons behind this
was lack of necessary logistics such as personnel to monitor and evaluate NGO functions
in Nepal. Similarly, the field observation also revealed that financial guidelines were not
available to VWWC. But the DYC was provided a financial guidelines written in English
which became difficult to understand and follow accordingly. So financial guidelines
were not in use in both cases. In the meantime, they have also not developed
administrative/financial regulations for governing their respective NGOs. It was also
realized that the NGOs such as DYC and VWWC were lack of proper trained human
resources which often become difficult to maintain the existing regulation and implement
their programs efficiently. Both of the NGOs were not found coordinated with respective
DDCs and/or the CDO offices and lack of continuous monitoring and follow up
mechanism. One of the observed problem in the NGO governance was coordination
among the NGOs, and with other line agencies such as DDC and CDO offices. Despite
the Local Self-governance Act spells out about the coordination between concerned local
bodies and the NGOs, the Act just becomes a ‘wishful’ and lacks enforcement which is
also critical for NGO governance in Nepal. In addition, the practice of ‘self-rule’ by
making code of conduct has also been lacking among the NGO community and often
become the issue of NGO governance in Nepal. Looking into the indiscipline of NGOs
specially for financial and program transparency, the SWC introduced ‘Code of Conduct’
in 2005 but could not implemented due to severe attack from the NGOs that compel

14
SWC to withdraw the proposed code of conduct. However, it is obvious that the
“principle of self-restraint’ should work in NGO sector and apply to them. In the absence
of their own code of conduct why there was a severe criticism for that has become an
interesting issue with regard to NGO governance in Nepal. The recent management
strategies such as “beneficiaries’ audit” and “public hearing” could be helpful to enforce
the NGOs executives working within the framework of financial and/or programmatic
discipline which would be helpful for self-governing the NGOs. The field observation
and discussion with the beneficiaries made an evident that such practice has not been
adopted which could be an emerging issue for governing NGOs in Nepal.

9. Conclusion
In Nepal and elsewhere as well, the financial and program transparency with regard to
NGO functioning is often raised issues. Sometime, the INGOs have also some hidden
interests to intervene in devloping countries and do not like to disclose their purpose
explicitely (Terje 1998). Such phenomena also often makes difficult to govern the NGOs.
For this, it requires to promote NGO ethics and to put themselves under strict official and
public surveillance. One of the identified issues to govern NGOs in Nepal is lack of
monitoring and evaluation. The field studies also revealed that both of the cases were
monitored once only against a provision of four times a year. This clearly shows the lack
of NGO management capability of the government which should be enhanced. The SWC,
a governmental bureau to coordinate and monitor NGOs in Nepal has been suffering
from its own weak institutional arrangements and often intervened by the politics. Such
situation compels SWC plays a role like a “rubber stamp” to do the affiliation formalities
and unable to monitor and evaluate the total affiliated NGOs and INGOs effectively in
Nepal. To back up governmental management regarding NGOs, the NGOs themselves
should also introduce self-regulation mechanism and implement honestly. Code of
conduct could be one of the self-governance mechanisms to make the actors of
NGO/INGOs more discipline and confine them within the existing legal framework. But
in Nepal around 37 thousand NGOs and 150 INGOs have working and many NGO
networks/associations have been created. The code of conduct made by one may not be
applied to other which make difficult to use in favour of governing the NGOs sector.
Despite NGOs has high social value to work as social institutions and the social actors as
“social insurance” (Platteau, 1991) and also as “social capital” as said by Putnam (1993)
they have high value in the Nepalese society. However, lack of self discipline and weak
management capacity of the concerned NGOs and lack of capability of the concerned
governmental authorities, it has become difficult to govern NGOs in Nepal. Due to the
lack of coordination and absence of understanding among the NGO communities and the
government often creates a “problem of doubt” in Nepal. Developing understanding
among the NGOs and governmental organizations and the private citizens helps to build
NGOs credibility and also facilitates to govern the NGOs in the country. In this context,
government should review the existing NGO governing policies with participation of
civil society organizations and address problems related to enhance the NGO governance
in Nepal.

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