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green@work : Magazine : Back Issues : July/Aug 2003 : Frontlines

FRONTLINES

The 21st Century NGO:
Poised for Change?

NGOs must be ready to undergo the same kinds of scrutiny about their independence and integrity as do the for-profit partners with whom they are increasingly collaborating.

By Penny Bonda


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.

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