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Non-government organizations (NGOs) are not above scrutiny of
the sort being levied on for-profit corporations and businesses
as reported elsewhere in this publication and many others. The
Nature Conservancy is a case in point. A series of articles in
the May 4 to 6, 2003 editions of The Washington Post raised doubts
about the organization’s judgment and integrity. The charges
included troubling governance issues, questionable insider transactions
and accusations of exchanging contributions for favors. While refuting
some of the facts in the Post articles, to its credit the Conservancy
has responded by naming the steps it is taking to make changes
where they are justified. It did so in a timely and direct way,
in contrast to other organizations that retreat into defensiveness
and denial when faced with exposure of their misdeeds.
This candidness is refreshing, especially in the wave of accounting
and corporate governance scandals as well as boards of directors’ misbehaviors
that have recently been called into question. Organizations such
as the Coalition for Environmentally Responsible Economies (CERES),
the United Kingdom-based Association of Chartered Certified Accountants
(ACCA) and the Global Reporting Initiative (GRI) have made great
strides in benchmarking corporate responsibility standards and
providing guidelines for responsible business behavior.
It is, therefore, timely that NGOs are also being examined. Taking
the lead is SustainAbility, an international business strategy
and sustainable development consultancy group, with its recent
release of a report titled The 21st Century NGO: In the Market
for Change. Undertaken in partnership with the United Nations as
well as several other organizations and corporations, the study
reveals that many NGOs are shifting from their traditional confrontational
roles to more collaborative interactions with governments and businesses,
which raises some questions about their independence and integrity.
This key conclusion has been drawn from a study of more than 200
NGOs from 22 countries. It looks at NGOs as business as well as
NGOs and business. The report further highlights the extraordinary
rise of the NGO’s scale and influence, explores the different
ways NGOs are leveraging change and identifies the challenges in
accountability, financing and partnerships that they are facing
today and in the coming years.
SustainAbility chair John Elkington, speaking at the public launch
of the report last May in Washington, DC, said, “The good
news for NGOs is that they are emerging as vital ingredients in
the health and vitality of markets.” However, while NGOs
enjoy extraordinary high levels of trust, they are now moving into
a new area of vulnerability for a number of reasons. As they move
from being insiders versus outsiders with their focus on finding
solutions rather than just identifying problems, and as their agendas
become multi-dimensional, these new style 21st century organizations
will need to redefine themselves.
The challenges in doing so are considerable, and Elkington outlined
what he called “the triple whammy.” First, donations
may not come in quite so easily as stock market problems have impacted
on foundations quite heavily. Next, NGOs are facing competition
from for-profit companies using NGO-style language and from social
entrepreneurs who are developing projects or activities which directly
address issues that NGOs have co-opted in the past. Finally, they
are dealing with the same sort of accountability and transparency
challenges that businesses face.
The report offers recommendations to NGOs on how to intelligently
address their principal concerns. It warns that “the greatest
threat to the not-for-profit sector is the betrayal of public trust” and
higher levels of transparency and disclosure will be crucial in
retaining their current, but endangered, positions of trust. The
legitimacy provided by such openness will enable both membership-based
and constituency-based NGOs to operate at their maximum and best
levels without jeopardizing their missions and goals. Second, by
establishing themselves as good investments they will combat any
financial pressures brought about by a weak economy and competition
from others who are competing for the same dollars. They are also
encouraged to work in partnership with businesses and governments
toward the development of market-based solutions and to promote
trust. Many look to NGOs to play a watchdog role especially in
the area of regulation since the current U.S. administration has
aligned itself so closely with business interests.
Barbara Fiorito, the chair of the board of Oxfam America and Oxfam
International, speaking at the report launch from the NGO perspective,
acknowledges that the governance landscape for NGOs has changed
dramatically and that they are facing new and very difficult opportunities
and challenges. As an influential advocacy group representing 12
independent NGOs in 100 countries with an operating budget approaching
$500 million, Oxfam’s work has grown in scope and complexity.
She also recognizes the growing risks, citing campaigns that are
being initiated by the opposition. The American Enterprise Institute,
for example, has launched a NGO-watch Web site to challenge the
credibility and accountability of NGOs. SustainAbility’s
report, she believes, provides insightful data analysis about the
not-for-profit sector and also offers new ways to evaluate and
position their resources.
The extensive research that went into the report was made possible
through the assistance of SustainAbility’s strategic partners,
the UN Global Compact and the UN Environment Programme, as well
as financial support from other sponsors. Aldo Morell from one,
DuPont, admits to the initial reluctance of his company to engage
with NGOs on the development of bio-based materials, for example,
but has come to see that by doing so it can grow its business faster
and more effectively by developing products that are consistent
with what the public wants and what society needs. Conversely,
he believes that it behooves the NGO to connect with business so
it can be part of the solution. Few businesses are as willing as
DuPont to see the value in engagement, but many are beginning to
realize that alliances can lead to faster, more desirable change.
The NGO sector is the eighth largest economy in the world—worth
over $1 trillion a year globally. Although by no means universally
popular, governments and businesses cannot afford to ignore or
discount them. The report ably spells out who they are and their
strengths, weaknesses, opportunities and threats. Seb Beloe, its
chief author, says it was intended “as a provocation, as
an encouragement to NGOs to challenge their own thinking, sense
of mission and strategies.” NGOs, like for-profits, are experiencing
a paradigm shift; globalization and anti-globalization protests,
the failures of multilateralism, political schisms, faltering trade
talks, protectionism and even the SARS outbreak have contributed
to worldwide changes that are undermining confidence and security.
Many of our most intractable problems are requiring multi-sector
responses and it is the hope that this report and the issues it
tackles will lead to better understanding and communications and,
ultimately, better cooperation.
The 21st Century NGO: In the Market for Change is available for
purchase on-line at www.sustainability.com/pressurefront. |
