The Meaning of Regulation as Applied to the NGO Sector

For presentation at CIVICUS World Assembly LTA Workshop: Do NGO self-regulation mechanisms work? Montreal, Quebec Kernaghan Webb Associate Professor
Department of Law and Business Ted Rogers School of Management Ryerson University, Toronto September 10, 2011

Overview of Presentation
Defining regulation in NGO context Direct and indirect NGO regulation Regulation of what NGO activities Regulation by whom Self regulation examples

Defining regulation in the NGO context

Regulations are rule instruments, stipulations of objective criteria that are designed to influence or control behaviour and that allow for evaluation of whether an entity or an activity is or is not in compliance with the criteria (Webb, 2005) Regulation of NGOs can take place directly or indirectly, through a variety of mechanisms, at domestic and international level Regulation can be undertaken by the state, or by non-state entities, or both

Direct and indirect NGO regulation

Direct: e.g., only registered advocacy organizations can operate in this jurisdiction, or only certified organizations can use our logo Indirect: e.g., state provides funding to some NGOs, but not to others (thereby affecting behaviour), or info disclosure initiative re: charity performance triggers greater transparency Mechanisms: registration/certification, funding (through tax system, or through grants), litigation (e.g., defamation lawsuits), information disclosure (e.g, charity navigator)

Regulation of what activities?

Regulation can affect NGO ability to operate at all in a jurisdiction using a particular form (e.g., corporate form, or charitable form), or with a certification Registration/certification only if NGO meets certain conditions, e.g., having a charter, a board, reporting requirements, restrictions on the way things are done (e.g., advocacy, how fundraising is undertaken, how much devoted to administration, etc.) Regulation addresses NGO decision-making, action, form, governance, transparency and accountability

Self regulation of NGO sector

Non-profit self regulation schemes in some 40 countries worldwide (Naidoo, 2004) Sometimes motivated to defend against government intervention, other times to enhance public legitimacy/accountability, or to build capacity Self regulation issues: legitimacy (with public, govts, donors, NGO community); free rider problem; independence; funding; principal-agent issues, adequacy of sanctions, compliance orientation; standards (how developed, by whom, for what purpose, adequacy/effectiveness, etc.)

Example: INGO Accountability Charter

Response to pressure for increased INGO transparency codifies practices for INGOs in the areas of respect for universal principles; independence; responsible advocacy; effective programmes; nondiscrimination; transparency; good governance; ethical fundraising; and professional management. currently 24 INGOs and national affiliates

Imagine Canadas Ethical Code Program

Charities that join the Ethical Code Program have the right to use the EC trustmark, which signals to donors that they comply with the Codes fundraising and financial accountability standards. open to all registered Canadian charities More than 400 charities have joined the Ethical Code Program since it launched in January 2008.

Cdn Council for International Cooperation

CCIC Code of Ethics the basic ethical principles that CCIC and its Member Organizations must accept and promote Operational Standards the standards of practice and compliance procedures that guide organizations in implementing these principles Compliance Process purpose of the compliance process of the Code and Operational Standards is to promote ethical behaviour using comply or explain CCIC comprises about 100 Canadian voluntary sector organizations working to end global poverty

Philippine Council for NGO Certification

a private voluntary, non-stock, non-profit corporation whose main function is to certify nonprofit organizations that meet established minimum criteria for financial management and accountability in the service to underprivileged Filipinos provides a mechanism of certification for NGOs which meet established minimum criteria for greater transparency and accountability encourages private sector participation in social development through availability of incentives under the Comprehensive Tax Reform Program

Charity Navigator
Provides information on charitable performance, thereby assisting potential donors in their decision making and potentially affecting charitable organization behaviour Charity Navigator is an independent, non-profit organization that evaluates charities to advance a more efficient and responsive philanthropic marketplace by evaluating the financial health of America's largest charities (similar programs available in other countries) An evolving evaluative framework, service is free, and the site is navigable by charity name, location or type of activity, Charity Navigator accepts no advertising or donations from the organizations it evaluates

Thank you! Questions/comments welcome

Dr. Kernaghan Webb Associate Professor Department of Law and Business Ted Rogers School of Management Ryerson University, Toronto, Canada kernaghan.webb@ryerson.ca