Streamline NGOs

Even as social entrepreneurship and the social sector bloom in the country with some commendable work in the field, the recent blacklisting of 600 non-government organisations (NGOs) and the lodging of first information reports (FIRs) against 21 others highlight a seamier side to the working of NGOs. It is now clear that with the boom in the social sector, there is also large-scale corruption in the system. The latest action by the government comes in the backdrop of serious question marks over the functioning of the Council for Advancement of People's Action and Rural Technology (CAPART), an agency responsible for disbursement of funds to NGOs in this field. The current scam is about the connivance between NGOs and CAPART officials who allegedly take up to 25-30 per cent commission on every funding transaction to NGOs, and about NGOs that, on their part, did less work than they were supposed to, or did no work at all. In short, many of them did not even exist.

Five years back, the government set up a Commission under the former chief secretary of Jammu and Kashmir Ashok Jaitley with Sayeda Hameed and Mihir Shah as members, to look into the activities of CAPART. The report recommending the revamping of CAPART was sent to the Prime Minister's Office recently even as it came to light that 4,000 files concerning unaccounted funds were missing.

But beyond the immediate issue, all these activities also put the spotlight on the deep-rooted malaise in the system. Part of the reason is that there is very little control or regulation of non-profit organisations' activities and transactions. There are significant tax advantages to NGOs that do such work and hence there is a potential for misuse. Moreover, the government, every year, has access to crores of rupees lying to be disbursed. A large part of this money is that which comes from overseas. Increasingly, Indian companies are taking corporate social responsibility more seriously and therefore there is more money available. Finally, it is clear that there is bureaucratic and political nexus in many of the financial transactions and disbursement of funds from the government. One result of all this is that a significant portion of the money does not reach the intended beneficiaries.

How can the mess be cleaned up? First, there is need to have a regulatory or an accreditation body that will bring in a certain level of standards into the functioning of non-profit organisations. Second, stipulations can be brought in whereby government funds can be disbursed only to those organisations that have a proven track record of good activities for a specified minimum period. Third, auditing can be made more stringent and rotation of auditors can be brought in. In fact, it could even be suggested that the large accounting firms should take up some of the auditing of such NGOs on a concessional basis. There is also need for a policy that will help create an enabling environment for NGOs while promoting transparency and accountability of their activities. Further, money is going out to NGOs through multiple government channels both at central and state levels. It would be useful to have a centralised agency that could do much of such transactions. Unless all these are done, the good work by many NGOs will also receive a bad name.