NGOs must face up to challenges to win back credibility

By Zaim Saidi

JAKARTA (JP): The non-governmental organizations (NGOs) in Indonesia have grown as a response to the technocratic, top-down development approach taken by the government.

Today these groups, known literally as self-reliant community institutions (LSM), have become a sizable and highly dynamic component of society. Yet no one can figure out how many groups exist today or explain precisely their central features. In terms of its basic approach, however, there are three types of civil societies.

First, the most traditional ones, which adopt the paradigm of charity, bringing goods and services directly to the people. Second, are those which promote self-reliance projects in mostly economic activities -- the "developmentalist NGOs". The third are the NGOs which largely emerged in the 1980s and 1990s and which seek to create a political space. These "political NGOs", along with students and other prominent reform groups, were among key forces that led to the demise of the New Order in 1998.

A closer look both within NGOS and in their relation to the private and state sectors will show complex and ambiguous interactions. It is doubtful that NGOs are unique entities as the "nonprofit" sector; we now see diverse social groups struggling in search of identity.

At least there are five fundamental questions to be answered in this regard, the first being political legitimacy.

The New Order (1966-1998) was characterized by authoritarianism, co-optation and corporatism: the latter meaning that all representational bodies, from different social sectors, were forced to form single and officially designated organizations for each functional group. Public participation and control toward the governing system were very limited.

Yet the NGOs managed to maintain relative independence from the state, given the government's ambivalence to NGOs. This was because of its repressiveness, which weakened its apparatus and opened up the need for public participation.

In the last three years, discourse on civil society has intensified. Since early 2001, decentralization has led the issue of partnership between the local government and the civil society to become an important policy agenda. People's initiative and political skills have improved, all kinds of advocacy on formerly taboo issues is now possible, ranging from legislative and presidential watchdogs, corruption watch to constitutional reform and those related to civil-military relations.

Many groups identify themselves as ornop, a translation of the English term NGO, replacing the euphemistic "LSM". Yet, there has been not been a clear legal framework on the role of civil society in public policy, neither has there been an official participatory policy making procedure. It has also never been clear whom this groups are representing, hence civil society's role in public policy has always been marginalized.

The second question is legal accountability.

Here a social group can be legally formed and operated as a private, not-for-profit organization set up by a small group of citizens. Under the New Order, business activities and individual income in a nonprofit organization were not clearly specified.

This resulted in much abuse, especially among semiofficial foundations -- many of which were headed by then president Soeharto. Thousands of other smaller foundations still run "social businesses" such as schools and hospitals.

With pressure from various parties, including the International Monetary Fund (IMF), the government passed the Foundations Act to minimize these abuses. Despite protest from NGOs, the act was passed with many clauses that would increase government control over the nonprofit sector, both in terms of finance and its internal governing mechanism.

Such control was considered to bring about more harm than good. The challenge for the nonprofit sector now is to make their social missions clear, but they may also need to seek a different legal entity. The confusion is partly caused by what observer Lester Salamon calls the "duality" phenomenon in Latin America -- the existence of two separate nonprofit sectors. This refers to the more traditional charitable organizations and other agencies linked to the elites, and ones associated with various forms of grassroots organizations and NGOs.

The third question is financial sustainability.

How a nonprofit sector can remain financially sustainable has been an issue of debate for years. Comprehensive data on sources of social funds in Indonesia are not yet available. An illustration of the composition of fund sources shows that 65 percent of revenues of the nonprofit sector comes from international sources and 35 percent from domestic sources, and individual contributions account for less than 15 percent. However, if religious groups were included in the survey, the figures would be higher.

Several religion-based organizations have revealed that they were not only able to fully operate with the domestic funding, but were also able to raise more than 90 percent of funds from the public.

Rules on taxation now include dispensation for charitable bodies or individuals engaged in charity. However the law does not mention contributions apart from zakat, the compulsory contribution from a Muslim's income.

One option for the nonprofit sector to generate funds is by running "social enterprises". However, this means confronting the tension between its mission-driven and market-driven approaches and strategies.

A fourth question is professional competency.

The voluntary nature of the nonprofit sector and the belief that committing oneself to social service has "long-lasting rewards" poses problems. In many social groups, if not most of them, both activists and the technical personnel are a mix between those driven by personal mission and those who have no choice. The nonprofit sector is the easiest access to a decent job because largely it does not apply professional standards.

This has led to the low quality of most of this sector's products, and hence its decreased credibility. The crux of the problem lies in the tension between volunteerism and professionalism on one hand, and the way the sector relates to its supporters i.e. donors, on the other. Most donors talk about projects when they deal with the recipients and forget that these groups need institutional support beyond their activities.

A fifth issue is clearly social credibility. If this sector has a problem with its political legitimacy, legal accountability, professional competency and financial sustainability, how can it build credibility?

True, the role and interest of the private sector and individuals have not been well-developed. However, with the ongoing economic crisis this interest has been increasing. Yet those aspiring to engage in such activities have difficulty in seeking the right parties to work with; precisely because of the reputation of its accountability and professionalism. Neither is this sector free from the very problems it deals with -- such as corruption.

Unless it seriously deals with the above fundamental questions, the true nonprofit sector will never exist -- it will end up being, as critics say, a mere exercise of "meaningless social craftsmanship".

The writer is an activist with PIRAC, an independent research and advocacy center focusing on empowering both consumers and the nonprofit sector in Indonesia (http://www.pirac.or.id).