Code of Ethics and Conduct for NGOs
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1 Code of Ethics and Conduct for NGOs Taj Hamad Frederick A. Swarts, Ph.D. World Association of Non-Governmental Organizations (WANGO) Presented at the Third NGO Forum, Cairo, Egypt on May 11, 2009 The past century was a time of breathtaking change. The technological revolution saw such advances as the development of widespread electrical lighting, air and space travel, television, global telecommunications, and personal computers. The scientific and medical revolutions of the past century included such breakthroughs as eradication of smallpox, development of the polio vaccine, elucidation of the structure of DNA and deciphering of the human genome, and the creation of artificial hearts. In the economic arena, we have seen the formation of such international economic alliances as NAFTA and OPEC, as well as people and products traveling the world at unprecedented speed and scale and 400 million people traveling across international borders each year. There also have been social and political revolutions, such as the civil rights movement and the founding of major international political alliances such as the United Nations and the European Union, and it has been an age of international conferences. Despite these advances, serious challenges remain. Over one-quarter of the world s population are estimated to live in poverty, including one billion living on less than 1 US dollar a day. There has been a decline in fresh water, widespread economic inequality, and as many as two million women and children trafficked each year. Addressing these serious problems is a new revolution, the NGO Revolution. NGO Revolution For the past half-century, non-governmental organizations, or NGOs, have been dramatically increasing in number, diversity, and importance. NGOs, also variously known as civil society organizations, charities, and non-profit organizations, are now impacting policies and advancing initiatives that once were nearly exclusively the domain of governments and for-profit corporations. In many cases, NGOs have proven more adept than government in responding to particular needs.
2 An NGO is considered to be a not-for-profit, non-governmental organization. The term not-forprofit, or nonprofit, is used in the sense of not-profit-distributing, in that any profits are invested back into the public mission of the organization and are not distributed for the benefit of the board, staff or shareholders thus distinguishing the NGO sector from the business sector. The term non-governmental is used in the sense that the organization is independent of government it is not controlled by a governmental entity nor is it established by an intergovernmental agreement. Included in the definition are large, international organizations and small, one-person operations, those that are secular as well as those that are faith-based, and both membership and non-membership groups. 25,000 20,000 Total number of NGOs 15,000 10,000 5, Source: Union of International Associations. Year Increase in numbers of NGOs. The increase in the number of NGOs as part of the NGO Revolution is a worldwide phenomena. For example, half of all European NGOs were founded in the past decade, and in the former Eastern bloc countries, more than 100,000 nonprofit groups alone were set up since There has been a thirty-fold increase in the number of international NGOs (those working in at least three countries) since 1956, from 985 to 30,000 international NGOs. The exponential increase in NGOs in the United States and India has led to an estimated two million NGOs currently active in the United States and more than one million groups in India. Both industrialized and developing countries, including in Africa and Latin America, have seen an extraordinary increase in the number and diversity of NGOs. Increase in importance of NGOs. In addition to a great increase in numbers of NGOs, their importance has also increased. In Bangladesh, children are more likely to read with the assistance of an NGO than through a state organization. In Kenya, over half of the health care services are provided by NGOs. In Zimbabwe, in 1997 and 1988, NGOs supplied the emergency drought relief services that the government was unable to provide. In the United States, the nonprofit sector accounts for over half of the hospital beds, most of the social services, and almost all of the cultural activity. Worldwide, NGOs deliver more development assistance than the entire United Nations System (excluding the World Bank and the IMF). 2
3 Strengths of the NGO Sector This powerful third sector, existing between the realms of government and business, is bringing an unprecedented vitality and ability to bear on critical issues related to service and world peace. NGOs flexibility and connections to grassroots communities aid them in mobilizing resources quickly to affected areas. Their often single-minded commitment and strong motivation affords them a civic power that other institutions may lack. They also tend to be cost-effective and are willing to address threats that other groups may overlook, and they typically are characterized by an ability to work beyond borders and build partnerships. As institutions that do not place profit as their number one goal, non-governmental organizations (NGOs) also tend to be among the most trusted institutions in society. In the 2009 Edelman Survey on Trust, the tenth annual survey of opinion leaders by Edelman, the NGO sector ranged higher in trust than business, media, and government in all regions surveyed (North America, Latin America, Europe) except Asia Pacific. Even in the Asia Pacific region, the level of trust of NGOs has greatly increased in recent years. (See Edelman Trust Barometer 2009, This survey sampled 4,475 opinion leaders in 20 countries during November and December of 2008.) In Europe, where this trend of trusting NGOs has been pronounced for a decade, six of the eight countries surveyed indicated greater trust in NGOs to do what is right than they professed for business, government or media. In an earlier (June 2000) Edelman survey of U.S./European/Asian elites, the respondents demonstrated that for environmental, human rights and health issues, their trust in NGOs more than doubled their trust in government, corporations, or media. Edelman Trust Barometer, 2006 ( 3
4 Unethical NGOs While most NGOs strive ethically and responsibly to promote the public good, and are deserving of such trust, there also are many actors in the NGO community that do not follow acceptable standards of conduct, whether in fundraising, governance, or use of public funds. Some NGOs have been set up for unethical ends, such as Briefcase NGOs that function mainly to try to attract grants or donations to enrich their owner. Other NGOs may have started with the highest ideals, but now tolerate practices which were previously unacceptable. A common concern is that many NGOs do not have clear standards that they should be applying to their activities and governance. Unethical NGOs tend to exploit people s giving nature and weaken the trust of the public and donors in the NGO sector. Ethical and responsible NGOs are tainted in the process. Accounts of unethical conduct of NGOs are all too familiar. Donors give money to an NGO specifically for earthquake or tsunami victims and find that the money was instead diverted to another purpose -- without the donors approval or knowledge. Disasters may be exploited by an NGO for personal gain or the donations may be used ineffectively. Exorbitant salaries and extravagant perks may be paid to executive directors of some NGOs, while donations collected for special projects may largely go to raise more money or toward salaries. In a bid to garner attention and attract money, an NGO may be found to have lied about its projects. The list goes on. A government NGO may be established to curry political favor, and a fake NGO may be listed as support for a controversial stance. An NGO set up by a business conglomerate is used to promote policies favorable to the industry, while its financial sources remain obscure. A supposedly nonpartisan NGO receives money from leaders of a political party and then puts out biased information to support one political candidate and attack opponents. A self-appointed leader of an NGO, which answers to no constituency, whose finances are murky, and whose governance and operations are shrouded in secrecy, criticizes a democratically elected government for policies inimical to those individuals the NGO represents. With such examples commonplace, it is no wonder that some view the term NGO ethics as an oxymoron a contradiction in terms, like jumbo shrimp or pretty ugly or original copy. Sometimes it seems as if the ends are being used to justify the means: if deceiving a donor, distorting one s accomplishments, and fostering a misleading impression of an issue or a competitor help the NGO to be more successful, then that is the path pursued. If, while staying in a five-star hotel, one can provide a few giveaways to a needy citizenry, and this will increase donations from an uninformed public, then you are ahead of the game. No wonder President Hamid Karzi of Afghanistan lamented that his nation has been invaded three times in recent years, first by the Soviet Union, then by the Taliban, and now by NGOs. One newspaper article lamented that there are over 1,000 fake NGOs working in frontier provinces in Afghanistan. Alan Fowler, in his book Striking a Balance, utilized a collection of NGO acronyms to identify various NGO Pretenders, such as BRINGO (Briefcase NGO), CONGO (Commercial NGO), FANGO (Fake NGO), CRINGO (Criminal NGO), GONGO (Government-owned NGO), MANGO (Mafia NGO), and PANGO (Party NGO). 4
5 Such criticisms of NGOs, while justified for select organizations, obscures the fact that most NGOs are doing exceptional work and are functioning ethically and responsibly. The reality is that NGOs, as a powerful third sector between government and business, are critically important to the health of our world and are generally effective and efficient. Identifying Responsible NGOs Notably, in most cases, there is only minimal regulation of NGOs by state authorities often only enough regulation to see that the NGO has been legally formed or meets its requirements for tax exemption or other concessions. Funding organizations and the public may have little understanding of which NGOs are reputable and which are fraudulent. Nor is it easy to ascertain which NGOs are utilizing public money responsibly and efficiently to carry out their activities, and which are spending most of their resources on their staff and board. Compounding the problem is that less than desirable organizations may assume names that are quite similar to those of reputable organizations, or may assume attractive sounding names while carrying out little or no activities for the purposes claimed. Foundation grants tend to go to organizations with which the foundation is familiar, rather than risk giving to an NGO that may prove not to use the funds responsibly. Evaluation of NGOs has generally been seen as the role of NGO associations themselves, not of government. As Pablo Eisenberg (The Chronicle of Philanthropy, August 5, 2004) notes, It is time for nonprofit groups to take responsibility for cleaning up their own shortcomings... It is not its [government s] job to set detailed standards for a large variety of nonprofit organizations, a role that has traditionally been a private endeavor. A 1994 ESCAP article also notes that NGOs naturally oppose government oversight and monitoring. To reduce governments perceptions of the need for such control, the NGOs could reach their own consensus on an NGO code of conduct and self-regulatory mechanism To activate such collective self-accountability, apex organization to fulfill those functions and provide a forum for the NGOs themselves would be necessary. Evaluations have been produced for particular types of NGOs, such as the ratings produced by the Canadian Council of Christian Charities and the Accrediting Bureau for Fundraising Organizations (U.K). Evaluations have also been produced for NGOs in particular geographical regions, such as being done by the Maryland Association of Nonprofit Organizations (MANPO), the Pennsylvania Association of Nonprofit Organizations (USA) and Philippines Council for NGO Certification. Other notable evaluating agencies are the Comite de la Charte (France) and the Deutsches Zentralinstitut fur soziale Fragen (Germany). The BBB Wise Giving Alliance evaluates national charities in the USA. MinistryWatch provides a 5-star rating system for charitable ministries. The National Charities Information Bureau is a watchdog that monitors charities in the United States. The ZEWO Foundation is a Swiss association that provides a seal of approval for charitable organizations in that nation. Société Générale de Surveillance (SGS), a global leader in inspection, testing and certification services, launched an NGO Benchmarking product to provide an independent assessment of an NGO s performance. Surveys have shown that an overwhelming majority of donors would like to have independent and reliable information on NGOs and to know if they have received a seal of approval. 5
6 Burkhard Wilke of the International Committee on Fundraising Organizations has noted that, 73% of respondents said they would be more likely to give to a charity if they had independent information about charity performance A German survey showed seal-of-approval issued by the Deutsches Zentralinstitut für soziale Fragen (DZI) is regarded six times more important by donors than testimonials from VIOS. An Austrian survey indicated in 2000 that 58% of the respondents would prefer a charity which has been awarded a seal-of-approval (Monitoring Charitable Organizations, Contribution to OECD/DAC Workshop, 3/25/2003). Seven methods for assessing NGO legitimacy There are seven common methods for enhancing the accountability of NGOs and for assessing their legitimacy. These are: 1. Self-Certification. Individual NGOs may evaluate their compliance to a set of standards and certify that they are adhering to the applicable set of standards. There should be a mechanism in place for the initial evaluation of compliance and for periodic review. In the case of a membership association, the member of the association is to self-certify that it is adhering to a set of standards approved or established by the association. Self-certification may or may not be required for membership in the association, and similarly there may or may not be regulatory mechanisms in place to assure compliance. 2. Certification. Certification is an independent, external review of an organization s compliance with a given set of standards. Certification may be a peer review (whereby a team of other NGOs evaluate an organization s compliance) or an accredited review (whereby independent raters evaluate an organization s compliance). 3. Accreditation Program. An accreditations program is to certify organizations that do certification. While the terms accreditation and certification sometimes are used interchangeably, the International Standards Organisation (ISO) views certification and accreditation as distinct. It defines certification as the issuing of written assurance (the certificate) by an independent, external body that has audited the organization s management system and verified that it conforms to the requirements specified in the standard. ISO defines accreditation as the formal recognition by a specialized body an accreditation body that a certification body is competent to carry out certification in specialized business sectors. Accreditation is like certification of the certification body. 4. Ratings Organization Evaluation/Watchdog. In several countries, various agencies address the problem of identifying responsible NGO by evaluating the NGOs and providing ratings of the NGOs or a type of seal of approval. The rating agencies establish their own standards and rating systems and measure the performance of other organizations against those standards. The organizations being rated may or not participate or have input. These programs depend heavily on the credibility of the rating agencies. 6
7 5. Award programs. The presentation of awards to NGOs offer high, public visibility to the organization. Examples would include the Balcolm Baldrige Award and the WANGO awards. These awards can be costly to implement. 6. Information Agencies. Some organizations provide information on NGOs without ratings or interpretations. An example would be Guidestar, which provides information on US nonprofits, including access to annual budget, number of staff, IRS forms, and so forth. 7. Codes of Conduct as Guidelines. An individual organization or an association of organizations may establish a set of standards as guidelines for the conduct of the organization or member organizations. This category does not involve internal or external evaluation of the compliance of the organization or members with the code, but the code may serve as a foundation for such compliance or certification. As an example, the WANGO Code of Ethics and Conduct for NGOs serves as a guideline for member organizations, and the guideline for the Association itself, but there is no evaluation, initial or periodic, of how well the Association members abide by the code. Codes of Ethics and Conduct All NGOs, even the most sincere and selfless, can benefit from a code of ethics and conduct that systematically identifies ethical practices and acceptable standards. A code of conduct will guide an organization in its activities and governance, give greater credibility and authority for its programs, and defend against common criticisms of NGOs that they lack transparency or rigorous management procedures regarding funds. The adoption and internal enforcement of a clear, strong code of conduct not only provides an ethical check for an NGO; it also serves as a statement to beneficiaries, donors and the public that the NGO takes seriously the importance of maintaining high standards. Codes of conduct are available for organizations in particular countries or states, or those working within particular areas of interest (humanitarian aid, disaster relief, etc.). For example, the Maryland Association of Nonprofit Organizations has developed standards for associated nonprofits in Maryland, the BBB Wise Giving Alliance has developed standards for charity accountability, the International Red Cross has developed a code for organizations working in disaster relief, and general codes of conduct have been developed for NGOs in Ethiopia, Botswana and the Philippines, among others. 7
8 WANGO s Code of Ethics and Conduct for NGOs The World Association of Non-Governmental Organizations (WANGO) is a global membership organization for NGOs, with over 50,000 members, subscribers, and supporters, and members in over 100 countries. The Association s membership encompasses the vast spectrum of the NGO world, ranging from small non-profits focused on their local communities to major, international organizations with global agendas, from the least developed nations to the richest countries. WANGO conducts the biennial World Congress of NGOs, publishes the quarterly Beyond Boundaries newsletter and monthly NGO News, maintains a Worldwide Directory of NGOs, and has developed a wiki-style NGO Handbook. WANGO s awards program recognizes NGOs that have shown extraordinary effort, innovation, leadership, and excellence in providing service to humanity. In 2006, as part of its Emergency Relief Housing Project, WANGO oversaw the rebuilding of an entire community in Indonesia that had been devastated by an earthquake. Between 2002 and 2005, WANGO spearheaded the development of a Code of Ethics and Conduct for NGOs, a set of 6 fundamental principles, 9 operational principles, and 132 standards to guide the actions and management of non-governmental organizations. The Code was formulated by an international committee representing the wide spectrum of the non-governmental community, and included input from NGO leaders from all regions of the world. For the initial version, 44 NGO leaders from 23 nations were active in developing this code, which was first unveiled in March of Subsequently, this provisional code was sent to many NGO leaders to review, including the entire WANGO membership. Based on recommendations received, the code was further revised, and in March of 2005, this current version was completed. The committee considered numerous standards and codes of conduct and ethics from NGOs and NGO associations worldwide in formulating this code. The Code of Ethics and Conduct for NGOs is designed to be broadly applicable to the worldwide NGO community. It applies whether the organization is a mutual benefit NGO, involving an association concerned with improving the situation of its membership, or a public benefit NGO, which is working for the improvement of conditions of society as a whole or of a segment of society. The Code is applicable for organizations focused on international agendas as well as those seeking to improve local community affairs, and both Northern and Southern NGOs. The Code s standards are applicable regardless of an NGO s focus, whether it be humanitarian relief, advocacy, conflict prevention, research, education, human rights monitoring, health care, or environmental action. A 2006 survey of NGO leaders worldwide, who are affiliated with WANGO, showed strong approval of the code. In all, 94% of those surveyed endorsed the Code of Ethics and Conduct for NGOs as a general code that can be adopted or utilized by NGOs worldwide. 8
9 This document has been made publicly available in order that NGOs and NGO networks can use this code, such as by adopting it as it is, or by using it as a basis for formulating or evaluating their own set of standards and guidelines. It has now been translated into several languages. WANGO recently established a self-certification program for NGOs, based on this code. This offers an intermediate step toward establishment of a certification program, which will provide external assessments of NGOs. Unlike a certification or accreditation program, which will be high-cost and labor intensive, this self-certification program can be easily administered and for low-cost. 9
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