Development processes and the development industry: the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders

NGOs

World Bank Definition – “a Non-governmental Organization (NGO) is a private organization that pursues activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development”.

These are organisations within the civil society that work on the “not-for-profit” approach.

These work in the space which exists between the family (household), market and state. It is made up of several types of formal voluntary organisations, where people based on

community, neighbourhood, workplace and other connections form their association to participate in actions for their own collective interests or for larger social good.

Those NGOs which are working at the global arena, across several countries are termed as international NGOs.

They are founded on the principles of equality, altruism and voluntary work spirit to promote human development (including environment and biodiversity) and nation building

The primary objective of NGOs is to provide social justice, development and human rights.

They have emerged as a new force contributing to social upliftment and economic development.

They play a vital role in the shaping and implementation of participatory democracy, and their credibility lies in the responsible and constructive role they play in society.

They work at grassroots level in the remotest of areas and their reach is much wider. India is estimated to have 3.3 million registered NGOs.

History of NGO Activity in India

India has a long history of civil society based on the concepts of daana (giving) and seva (service)

They were active in cultural promotion, education, health, and natural disaster relief as early as the medieval era.

They proliferated during British rule, working to improve social welfare and literacy and pursuing relief projects.

Numerous organizations were established during this period, including the o Friend-in-Need Society (1858),o Prathana Samaj (1864), o Satya Shodhan Samaj (1873), o Arya Samaj (1875), o National Council for Women in India (1875),

o Indian National Conference (1887).

The Central Social Welfare Board was established in 1953 to promote social welfare activities and support people’s participation programs through NGOs

International NGOs entered India to provide drought relief during two consecutive agricultural seasons, 1965–1966 and 1966–1967.

Legislation on NGO activity

NGOs are not legal entities under national or international law. NGOs are not required to register with the government. However, registration allows an NGO to deduct expenses from income for tax

purposes, receive foreign contributions, and be considered for government grant-in-aid schemes.

Registration also facilitates domestic fundraising, as the income tax act permits donors to deduct contributions made to register NGOs

NGOs are subject to the Societies Registration Act of 1860 and the Income Tax Act of 1961

Foreign contributions to non-profits are governed by Foreign Contribution Regulation Act (FCRA, 1976).

Categories of NGOs defined by World bank

Category Purpose

Operational NGOs Design and implementation of development oriented projects.

Advocacy NGOs Influence the policies and practices of international organizations.

Benefits of NGOs

It is difficult for the government to take care of all the development activities NGOs develop and work on various projects that help people in changing their life

styles. Local NGOs help the development of the region better as they are flexible in adapting

to local situations and responding to local needs and therefore able to develop integrated projects.

They enjoy good rapport with people and can render assistance to very poor people especially in rural India.

They are able to recruit both experts and highly motivated staff with fewer restrictions than the government.

The leadership quality is also developed by the active interference of NGOs in social activities.

Promote sustainable development througho innovation—identifying new approaches and models for specific development

activities and drawing upon their close knowledge of local communitieso accountability—helping ensure that project components are implemented as

envisaged and planned

o responsiveness—encouraging the implementation of projects to respond to local needs

o participation—serving as bridges between project authorities and affected communities, and providing structures for citizen participation

o Sustainability—nurturing continuity in project work, especially when the implementing agencies lack capacity or when staffing changes.

National Policy on the Voluntary Sector

Approved in may 2007 first step in a process to evolve a new working relationship between the government

and volunteer organizations The policy identifies four objectives:

o Create an enabling environment for volunteer organizations that stimulates their enterprise and effectiveness, and safeguards their autonomy.

o Enable volunteer organizations to legitimately mobilize necessary local and foreign financial resources.

o Identify systems by which the government may work together with volunteer organizations, based on the principles of mutual trust and respect, and with shared responsibility.

o Encourage volunteer organizations to adopt transparent, accountable systems of governance and management

NGO Coordinating and Support Bodies

Following are three of the leading apex organizations in India1. Association for Voluntary Agencies for Rural Development (AVARD)

AVARD has worked as a consultant for projects financed by the Asian Development Bank (ADB) and the Food and Agriculture Organization.

It has established links with most national organizations connected with voluntary action and rural development in India. It is a member of the Asian NGO Coalition for Agrarian Reform and Rural Development.

2. Council for Advancement of People’s Action and Rural Technology (CAPART)

CAPART was formed by mandate of the 7th Five-Year Plan in 1986 As a nodal agency for catalyzing and coordinating the emerging partnership

between voluntary organizations and the government for sustainable development of rural areas.

3. Voluntary Action Network India Voluntary Action Network India (VANI) is a national apex body of NGOs in

India

Indian NGOs Scenario

NGOs have created thematic, social group and geographical priorities such as poverty alleviation, community health, education, housing, human rights, child rights, women’s rights, natural resource management, water and sanitation.

Their focus has been on the search for alternatives to development thinking and practice; achieved through participatory research, community capacity building and creation of demonstrable models.

Many NGOs have worked hard to include children with disability in schools, end caste-based stigma and discrimination, prevent child labour and promote gender equality resulting in women receiving equal wages for the same work compared to men.

During natural calamities they have played an active role in relief and rehabilitation efforts, in particular, providing psycho-social care and support to the disaster affected children, women and men.

NGOs have been instrumental in the formation and capacity building of farmers and producers’ cooperatives and women’s self-help groups.

The leprosy eradication programme was spearheaded by NGOs and today only residual leprosy remains in our country

NGOs have implemented the Jeevan Dhara programme for creation of wells for safe drinking water; promoted community toilets for total sanitation, and supported the public health programs on immunisation and for eliminating tuberculosis and malaria.

NREGA, ICDS, ICPS, Nirmal gram, and Swasthya bima of the government have their roots in the work of many NGOs.

NGOs have influenced the development of laws and policies on several important social and developmental issues such as the right to information, juvenile justice, ending corporal punishment in schools, anti-trafficking, forests and environment, wildlife conservation, women, elderly people, people with disability, rehabilitation and resettlement of development induced displaced people to name a few.

Some examples of renowned NGOs

1. Pratham

One of the largest NGO working to provide quality education to the underprivileged children.

It has been doing commendable work in providing the assessment of elementary education in the country.

It annually publishes report (ASER) on assessment of elementary education in India.

ASER (meaning impact in Hindi) is the largest household survey undertaken in India by people outside the government.

It measures the enrolment as well as the reading and arithmetic levels of children in the age group of 6-14 years.

In one such report in Jan 2013, report said “Five out of 10 school students of class V in rural India cannot solve simple arithmetic problems”

2. Prayas another leading NGO of the country has been doing excellent work in the

power sector, with its two main themes (1) Energy Regulation & Governance and (2) Energy Policy for Sustainable Development

3. Sulabh International Provides vocational training to vrindavan widows. Widows celebrated Diwali for the first time and went for durga pooja in

kolkata

Key governance challenges

Some local and national NGOs have been found involved in malpractices and acting irresponsibly

Transparency and accountability are key ingredients of Governance in the NGO Sector as these determine operational efficiencies and risk mitigation.

There is a huge flow of funds into the non government organization sector and this requires prudence and good practices to maintain accountability and transparency to the benefit of all stakeholders

Although, NGOs do internal auditing but for more accountability and transparency, it is advisable to go through external auditing also, especially where public funds are involved.

Hence, issues of internal control mechanisms, professionalism, accountability, transparency and financial management must be given impetus.

The general lack of transparency in the functioning of a large proportion of NGOs leads to aversion in donating funds for charitable causes

Recently, this Union Home Ministry has identified some NGOs as security threat to the country. E.g. – Some NGOs funding for resistance to atomic energy.

SHG – Self Help Groups

SHG has its origin in Bangladesh SHG is a small voluntary association of poor people, preferably from the same socio-

economic background. They come together for the purpose of solving their common problems through self-

help and mutual help. The SHG promotes small savings among its members. The savings are kept with a bank. This common fund is in the name of the SHG. Usually, the number of members in one SHG does not exceed twenty. They use the pooled resource to make small interest bearing loans to their members. The process helps them imbibe the essentials of financial intermediation including

prioritization of needs, setting terms and conditions and accounts keeping. This gradually builds financial discipline and credit history for themselves, as the

money involved in the lending operations is their own hard earned money saved over time with great difficulty.

Once the groups show their mature financial behaviour, banks are encouraged to make loans to them in certain multiples of the accumulated saving of the SHG.

The bank loans are given without any collateral and at market interest rates. Banks find it easier to lend money to the groups as the members have developed a

Credit history Presently, there are over 16 lakh SHGs operating all over the country, of them 90

percent being women SHGs

Evolution of the SHG Movement in India

First organised initiative was taken in Gujarat in 1954 when the Textile Labour Association (TLA) of Ahmedabad formed its women’s wing to organise the women belonging to households of mill workers in order to train them in primary skills like sewing, knitting embroidery, typesetting and stenography etc.

In 1972, Self Employed Women’s Association (SEWA) was formed as a Trade Union under the leadership of Ela Bhatt.

In the 1980s, MYRADA – a Karnataka based NGO, promoted several locally formed groups to enable the members to secure credit collectively and use it along with their own savings for activities which could provide them economically gainful employment

Dr. C. Rangarajan committee’s report on ‘Financial Inclusion in the Country’ suggested empowerment of Self-Help Groups with their linkages with financial institutions

Objectives of SHG

They act as the forum for the members to provide space and support to each other. It also enables the members to learn to cooperate and work in a group environment. The SHGs provide savings mechanism, which suits the needs of the members. It also provides a cost effective delivery mechanism for small credit to its members.

The SHGs significantly contribute to the empowerment of poor women.

Who helps in their formation

NGOs Social Workers, health workers, village level workers, etc Informal Associations of local people Development oriented government

departments, Banks, Bank personnel, Mahila Mandals, Yuvak Mandals, Facilitators Farmers' Clubs under the Vikas Volunteer Vahini ( VVV ) Programme of NABARD Other development institutions.

Agencies involved in SHG development

NABARD SIDBI (Small Industries Development Bank of India) Rashtriya Mahila Kosh (RMK) Housing and Urban Development Corporation (HUDCO)

Indicators of good SHG

Homogeneous membership o Homogeneity in membership results in absence of conflicting interests among

members. No discrimination

o There should not be any discrimination among members based on caste, religion or political affiliations.

Small membership o Ideally, the group size may be between 15 and 20, so that the members are

participative in all activities of the SHG. o In a smaller group, members get opportunity to speak openly and freely.

Regular Attendance o Total participation in regular group meetings lends strength to the

effectiveness of SHGs. Transparency in functioning

o It is important that all financial and non-financial transactions are transparent in an SHG.

o This promotes trust, mutual faith and confidence among its members. o Maintenance of books of accounts as also other records like the minutes book,

attendance register, etc., are important. Thrift – Small Savings

o The habit of thrift (small savings) is fundamental to the SHG and helps in building up a strong common fund.

Utilising savings for loaning o Once an SHG has accumulated sizeable amount in the form of savings say for

a period of about 3-6 months, the members may be allowed to avail loans against their savings for emergent consumption and supplementary income generating credit needs.

WSHGs—A solid means of women empowerment

It is through SHGs that the women get an exposure to outside world. The resources and organisations which were unseen earlier become accessible. Weekly meetings, weekly savings, internal lending, repayment of loans on regular

basis, not only promote thrift among the members, but also encourage oneness among the group members.

It is seen that for updating the records, the members very often take the help of their literate daughters or sisters and it is a good sign that some members learn the art of book keeping from them.

It indirectly promotes literacy among the illiterate women

Impact of SHG Group members and particularly women became more vocal and assertive on social

and family issues. It provides a platform to the community where the members can discuss and resolve

important issues of mutual concern It creates a local team of resource persons convenient vehicle for credit delivery in rural areas improvement in the socio-economic condition and enhancement of self-esteem of

women SHG programme has contributed to a reduced dependency on informal money lenders

and other non-institutional sources enabled the participating households to spend more on education than non-client

households has led to reduced child mortality, improved maternal health and the ability of the poor to combat disease through better nutrition, housing and health – especially among women and children

2 nd ARC Recommendations

Govt. should create a supportive environment for SHG movement. major thrust on the expansion of the SHG movement in N-E and Central-Eastern

areas should be facilitated presence of NABARD should be more in these places SHG movement needs to be extended to urban and peri-urban areas Rural credit is often viewed as a potential Non Performing Asset – Need to change the

viewSocieties

The Societies Registration Act was enacted in India in 1860 Modelled on the English Literary and Scientific Institutions Act, 1854, It provides for formation of a Society for any literary, scientific, or charitable purpose After independence, societies came under state list. State govt. have made amendments to the list of purposes for which Societies could

be formed and the scope of State intervention in the affairs of the Societies.

Trusts

Trust is a special form of organisation which emerges out of a will.

The will maker exclusively transfers the ownership of a property to be used for a particular purpose.

If the purpose is to benefit particular individuals, it becomes a Private Trust. If it concerns purpose of the common public or the community, it is called a Public

Trust The first law on Trusts came into force in India in 1882 known as the Indian Trusts

Act, 1882; It was for management of Private Trusts Trusts and trustees are in concurrent list

Religious Endowments and Waqfs

These are variants of Trusts which are formed for specific religious purposes e.g. for providing support functions relating to the deity, charity and religion amongst

Hindus and Muslims respectively They arise from dedication of property for religious purposes First legislation in the 19th century “The Religious Endowments Act, 1863”

o a law on private endowments which placed a property under the management of Trustee/Trustees under a will for a predefined set of beneficiaries

After independence, many state govts. created laws to prevent abuse of funds and to ensure uniform organisational framework for the management of such religious and charitable institutions

FR - Article 26 - “Subject to public order, morality and health, every religious denomination or any section thereof shall have the right:

o to establish and maintain institutions for religious and charitable purposes;o to manage its own affairs in matters of religion;o to own and acquire movable and immovable property; ando to administer such property in accordance with law.

Waqf

They are aligned with the spirit of charity endorsed by the Quran Waqfs implies the endowment of property, moveable or immovable, tangible or

intangible to God by a Muslim, under the premise that the transfer will benefit the needy

As a legal transaction, the Waqif (settler) appoints himself or another trustworthy person as Mutawalli (manager) in an endowment deed (Waqfnamah) to administer the Waqf (charitable Trust).

Waqf deed is irrevocable and perpetual. Muslim rulers dedicated property such as land and its revenue rights to Waqf created

with the purposeof maintaining mosques, tombs, orphanages (yatimkhanas), madrasas etc.

o Land could also be Waqfed for the creation of a graveyard first law came only in 1913 when the British Government enacted the Mussalman

Waqf Validating Act, 1913 Present Status

o 300000 Waqfs in India o administered under various provisions of the Waqf Act, 1995

o This Act is applicable throughout the country except for J&K and Ajmer Dargah

o The management structure - Central Waqf Council at national level and Waqf Board as an apex body in each State.

o Waqf Board is a quasi-judicial body empowered to rule over Waqf-related disputes.

Non-Profit Companies (Section 25 of the Companies Act, 1956)

Section 25 of the Companies Act, 1956 provides for a mechanism through which an Association can be registered as a Company with a limited liability.

If association is formed for promoting commerce, art, science, religion or any other useful object.

If it intends to apply its profits/income in promoting its objects.

Charitable Trust

body or trust which is for a charitable purpose that provides benefit to the public’ Purposes:

o relief of poverty; o the advancement of education; o the advancement of religion; o other purposes for the benefit of the community

Multiplicity of charity laws in India has prevented evolution and growth of a proper institutional framework.

2 nd ARC Recommendations

Union Government should draft a comprehensive model legislation covering both Trusts and Societies in lieu of the existing laws on Societies, Trusts, Endowments and Charitable Institutions etc.

New governance structure in the form of a three member Charities Commission in each State

Cut off limit with regard to the annual revenue of a Charity Set up of Inclusive Committee which will comprehensively examine the issue of

defining ‘Charity’ and ‘Charitable Purpose’

Donors and Aid

Individuals and organizations that give away funds and expertise for development. They can be

o International i.e. like the British DFID and Indian aid in Africao Agencies-like ADB and World Bank o Individual donors – philanthropists like Bill and Melinda Gates through

their foundation. o Corporate – like the Times Foundation.

Donation is untied contribution towards development.

The donor expects no benefits in return. In actual practice, it is often used for political and commercial self interests. The Gates Foundation has been accused of furthering the agenda of pushing

Microsoft in developing nations. It may even be used as a front for money laundering. So scrutiny of donations,

particularly foreign, is necessary. In India Aziz Premji is at the top, contributing 8000cr. Education is the area with max funding. CSR provisions in the Companies Bill 2013 should provide more transparent

reporting of corporate donations

References

Asian Development Bank Paper Yojana Indian Express 2nd ARC Reports NDTV

Pushpender Singh