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Tuesday, October 05, 2010


Today people need and demand to be informed about and influence the process that would impact their lives. However, the challenge remains in providing authentic, relevant and comprehensible information to them

Contemporary world has become more integrated than ever before. Societal processes (political, economic & social) have emerged to be a reciprocal interplay across regions and sectors. In fact, the circularity of this interplay has broken the barrier of physical distance and hierarchy of impact. The new age institutions are now under pressure to be transparent to a wider range of stakeholders.

Around the world, NGOs have emerged as protagonists of transparency. While NGOs have exerted enormous pressure on governments, businesses and international institutions to disclose their intent, process and performance, they too have demonstrated great transparency. However, transparency in NGO sector at large has been incentivised either by funding opportunities or by regulatory coercions. The challenge remains in providing authentic, relevant and comprehensible information to the people whom the NGOs are primarily accountable to – the beneficiaries, participants, recipients, or the community members at large.

In Indian context, all registered NGOs need to furnish their annual activity and financial reports to the registration authorities and to the Ministry of Home Affairs in case of foreign funding. They are also required to submit their annual financial reports to the income tax authority for exemption of tax on the donation or grants they receive from different sources. Further, different funding agencies prescribe their own reporting requirements to the recipient NGOs. However, Indian NGOs now need to rise beyond the induced disclosure to voluntary disclosure to establish greater credibility and confidence among diverse stakeholders. For this they should undertake following measures:

Utilise annual report as a tool to demonstrate transparency: NGOs need to provide pertinent programmatic, organisational and financial information in their annual reports. The programmatic section should inform about the initiatives, target groups, major achievements, difficulties and setbacks and future plans. The organisation section should introduce the organisation, its vision and mission, board members, governance process, et al. In addition, the financial section should present the audited statement of accounts and an abridged version of financial details. Effective depiction is as important as the content. The annual report should be comprehensible and relevant for the diverse stakeholders.

Undertake social audit: Social audit denotes people’s scrutiny of an agency’s mandate, plan, action and performance based on information disclosed by the particular NGO about its various projective initiatives. In the last decade social audit has emerged as the most effective tool to empower stakeholders with transparent information and authority to scrutinise the duty bearers. While Indian NGOs have proactively advocated for social audit to ensure state accountability, many of them have not incorporated the same practice in their own domain to demonstrate their ethical standards.

Use technology to make information accessible to wider audience: In order to achieve transparency at mass level, it is very important that all stakeholders, including NGOs, corporates, donors, policy makers, researchers, et al, have the opportunity to access and exchange quality information. In this context, online options are more promising as it breaks geographic barriers to disseminate information in a more cost effective manner

Most often, NGOs, unlike other democratic institutions determine their mandate of representing and serving on behalf of people. By virtue of this self-chosen representation, voluntary disclosure becomes an ethical imperative. However, in contrary to general fallacy, transparency by itself cannot break the power structure unless a conscious devolution takes place.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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