Boards key feature of good governance for NGOs

I Ntoday’s article, we will look into some of the primary reasons for the absence of good governance and accountability among non-governmental organisations (NGOs). This sector attracts interest from people with various objectives. Others are legitimate social investors who seek to use NGOs as a medium to bring about interventions that bring positive change to society in an array of areas. Others see this sector as a lucrative sector that has the potential to enrich them.

The latter group, from the onset, ventures into this sector, instead of private sector business and looks for opportunities to exploit the opportunities.

They do that with the mindset of financial gain in mind. From the get go, this sets the organisation on a path of dishonesty, the antithesis of integrity and good governance, which are very key in running such organisations.

It is important for it to be understood that NGOs are exactly what the name suggests. They are not money-making schemes. Those desiring to make money need to enter the world of commerce and open businesses where profit is the primary objective.

To have legal personality, the first step in the process of establishing an NGO is filing an application with the Ministry of Commerce under the Registrar of Companies. This is done through a prescribed form and is a relatively straight-forward process. After considering the application and perusing through the objectives, the registrar will then either refuse or permit the registration. If the application is successful, a certificate of incorporation is then issued and the outfit is ready to start operating. In the application, all the authorities require are the particulars of the directors. In most cases, the directors that are registered usually do not even have an interest in the organization being incorporated. They just volunteer to have their names used.

They might never even play a role in the life of the organisation after it is registered.

The next step becomes the establishment of a board which has an important supervisory function, among others.

This is a very important stage which requires the exercise of prudence and use of best practices.

Typically, the vision-bearer(s) will be the one(s) that embark on the exercise to scout for board members. Other organisations, in a quest to be transparent, advertise to members of the public to be Board members. Prospective members are then interviewed and selected. This is not very common in Eswatin though yet it has many benefits.

In most cases, the pioneers simply pick from people they know or who have been recommended to them. The latter method is prone to many shortcomings though because that is where some founders pick family members and friends who they know they can manipulate. This has the net effect of undermining principles of good governance in future in the running of the organisation. Having a functional Board is a very important element of corporate governance.

CORPORATE

Corporate governance encompasses four underlying principles. These are; accountability, transparency, fairness and responsibility.

The next issue will elucidate how all these principles play themselves out in the day-to-day running of the organisation. It is very important that to underscore that while not-for-profits organisations are not money-making entities, they need to be run like businesses in order to be successful.

As such, form an operational point of view, they borrow a lot from principles and best practices of private business.

In the founding of an organisation, it is critical for the founders to understand that when they establish it, they should know that it is an entity that is separate and distinct from them as individuals who establish them.

They must allow the organisation to be bigger than them and have the potential to outlive them. Following best practice in the establishment of a Board sets an organisation on a path of good governance and success.

ORGANISATION

The Board will help guide the organisation through policy direction and play an important supervisory role over the secretariat of the organisation.

Putting in place a credible Board, that is able to play its role without fear or favour, creates a good reputation for the organisation and puts it in good stead with stakeholders and funders, prospective and existing.

In the establishment of a Board, founders must look for people who have interests and values that resonate with what the organisations stand.

That way, they are able to keep the organisation within its mandate, thereby avoiding instances corruption and maladministration, do so without fear or favour. To achieve that, a Board must be made up of people with diverse skills of different and educational backgrounds and experiences.

For most not-for-profit organisations, Board members are typically not entitled to remuneration. They usually get modest sitting allowances for Board meetings and sometimes, other small pecks. It is very important that prospective Board members are made aware of this prior to their engagement.

That helps manage expectations and clarifies their role. If this does not happen, the lines between the funds of the organisation can get blurred and create problems for the organisation. Many organisations have been victims of misuse of organisational funds by Board members who felt entitled to them. Funds of the organisation are meant to finance programmes of the entity and pay for operational costs, as informed by budgets.

If money was not set aside in the budget for the benefit of Board members in whatever form, that money should not be touched. In the exercise of its function, some designated members of the Board, normally the chairperson and the treasurer will typically have the power to sign off on expenditure.

Depending on the size of the organisation, sometimes there will be substantial amounts of monies involved.

Without proper understanding, some Board members may not take it well to see so much money passing through their hands without having legitimate access to it.

This is when directors at the executive level get pressured to give Board members money, sometimes in the form of loans, which may never be returned. To curb this, it is important for not-for-profit organisations to invest in induction and ongoing training for Board members so that they understand their role clearly and not have unrealistic expectations. It is also helpful that an organisation puts in place a charter and/or code of conduct which set out, inter alia, the principles and values of the organisation and circumscribes the roles of Board members.