NGOs and the challenge of good management

By Chris W. Green

JAKARTA (JP): "If you don't know where you're going, you'll probably end up somewhere else." That was the title of a book given to me many years ago by my boss. Perhaps he was trying to tell me something?

But this advice was only a small part of the management guidance and training that every member of the supervisory staff of our company received. Like most successful commercial enterprises, the company spent a significant proportion of turnover on management development. It viewed this as an essential investment in the future.

Since I retired and became involved in social activities, I have found that the non-profit world views the situation very differently. Managing a non-governmental organization (NGO, often known as a non-profit in the U.S.) in fact requires a higher level of management skills than a commercial enterprise.

For a start, management of volunteers is much more difficult than managing salaried "human resources" within a company. The hierarchy of wages, bonuses, promotions and benefits that a company uses to motivate employees do not apply to volunteers. Other ways must be found to reward their contribution, and people skills become vastly more important. And rarely is there a "human resources department" to handle the difficult bits.

Even for salaried staff, NGOs rarely have funds to compete with the commercial world. They must find alternative ways to attract and retain professional staff. But perhaps one of the greatest challenges is that there is no "bottom line" against which to assess performance, and no shareholders who require a return on investment. Stakeholders are often unempowered, and grateful for anything the NGO provides, but rarely have consumer choice to look elsewhere for the service offered by the NGO.

Worse, in Indonesia most NGOs are funded by international donors rather than the community. Even the best donors have their own agenda, which may differ from that of the community, and their evaluation of NGO performance may focus on different goals. Because of this dependence upon donors, NGOs tend to compete unhealthily for funding. They also tailor their plans to attract the often short-term funding, rarely focusing on longer-term sustainability. To counter this, NGOs need to develop greatly their fund-raising skills, to diversify their funding sources and enhance community involvement.

Yet, despite all of these challenges, few if any NGOs invest in even basic management or supervisory training. "Capacity building" or "organizational development" activities, often carried out by the funders, tend to focus on technical capability, rather than management. Few NGOs (or even donors) have clear objectives or strategic plans. Most really "don't know where they're going."

Commercial demand has caused the development of a wide variety of business schools in Indonesia, both within universities and as specialized institutes. Yet, as far as I know, none of these offers management courses tailored to non-profits. Why? In response to inquiries, several have shown an interest but have reported no demand for such courses.

Clearly, individual NGOs cannot alone generate the demand that will stimulate a response by the business schools. Even if all the NGOs focusing on, says, AIDS were combined, it is unlikely that they would be enough. What is required is a cross-sectoral approach, which taps the need from all the non-profit organizations in Indonesia. But generating such a coalition is almost impossible.

Here, the fact that the funding of most NGO activities comes from a handful of major funders suggests an alternative approach. It would be to the benefit of all of these donors if the organizations that receive their funding were better managed. They should combine together to fund a business school to set up a chair of non-profit management and to develop courses. To support this, the business school should also be funded to carry out research -- although case studies are available from other parts of the world, most would agree that specific studies from Indonesia would greatly enhance both training and NGO responses.

Such a program could become self-sustaining if all donors then agreed to fund "their" NGOs to make use of these courses and facilities.

All international donors have a stake in the improvement of management of NGOs in Indonesia -- we have all read the stories of mismanagement resulting in inefficient use of funds -- or worse! Getting all to work together to support such a plan may not be easy, but perhaps this is a task for the United Nations Development Program, who have perhaps the greatest stake in this.

The government has clearly indicated a role for community- based organizations in national development, particularly in the field of health and social welfare. In many cases, the response from the community has been less than effective. Improving NGO management is one way to improve this and ensure that the community is capable to accept this important challenge.

The writer is an AIDS activist in Jakarta. He was previously a director of the Indonesian subsidiary of a large multinational company.