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Nonprofit Governance and FundraisingA four country comparison

Peter ZehrenFebruary 16th, 2013

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Similarities Boards

Registration

Government Regulation

Increased Accountability

Talk about further policy

Differences Types of nonprofits (NGOs)

Restriction of foreign funds

Fundraising skills

Self Regulation

The Culture of Giving

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Government: Republic

Chief of State: President Muhammad MURSI

Head of Government: Prime Minister Hisham QANDIL

Population: 83,688,164

GDP: $229.53 billion

Nonprofits: 24,500

Egypt

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Egypt: Governance Associations, Foundations, and Not-for-Profit Companies

Mandatory Registration (Associations Law 84 2002)

Vague Denial of Registration “threaten unity”

International NGO’s face challenges

Post 2011 Revolution, lower house focus NGO reform

Reform on freedom of association and assembly (Article 131)

New NGO laws anticipated 2013 (lower house April)

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Egypt: Law 84 Passed quickly w/o CSO input (civil society

organization)

Ministry of Social Affairs oversight, interfere in operations or call a board meeting.

Required Board of Directors between 5-15 (Associations)

Provide list of board members w/in 1day of nomination and 60 days of election

Questionable constitutionality, NGO’s suffer from security forces investigating and harassing organizations

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“Media reports (allege) judicial officials in Egypt intend to forward a number of cases involving U.S.-funded NGOs to the Cairo criminal court.

We are deeply concerned by these reports and are seeking clarification from the government of Egypt.”

U.S. State Department Deputy Spokesperson Mark Toner

+NGOs fight for freedom in Egypt

Amendments to Civil Institutions Act1. 20 founding members, 250,000 EGP in

capital (from 10,000)

2. Foreign funds and donations would be regulated

3. Committee of stakeholders oversee foreign funding issues

4. No foreign NGOs with government funding or promote political policies

5. Prohibited from practices threatening national unity or public order

6. Prohibited from any political or union-related activities

7. Cannot conduct surveys, polls or do field research without prior approval

After the diplomatic push, Egyptian authorities let the Americans leave, but the Egyptians are still on trial.

The charges: Because the NGOs were not properly registered to work in Egypt, the employees were essentially receiving illegal funds – in the form of their salaries.

US funds support military and economic aid including: health, education, economic development and democracy promotion.

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Egypt: Fundraising

Prohibited receiving foreign funds w/o Ministry of Social Affairs advance approval (article 17)

Associations need advance approval for seeking funds from Egyptian individuals (human rights organizations)

Charities (non-associations) may accept funds w/o approval

Associations must submit financial reports to the Accounting Auditors Register including funding sources

High potential for corruption: UN human rights report shows many deficiencies with transparency

+ United Nations Report Shows NGO Deficiencies Lack of democracy (reflected in the

slow circulation of power)

Inadequate representation of youth and women on boards of directors

The personalization of these institutions, organizations

Lack of clear administrative processes & decision making rules

Weak accountability and transparency

The 2002 UNDP Human Rights Development ReportI’m proud I'm an Egyptian…

…but how should I show it?

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Government: Constitutional Monarchy and Commonwealth

Chief of State: Queen ELIZABETH II

Head of Government: Prime Minister David CAMERON

Population: 63,047,162

GDP: $2.4 trillion

Nonprofits: 185,000

United Kingdom

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United Kingdom: Governance

Define “Charity” more by what they do: 1)trusts for poverty relief; 2) for educational advancement; 3) religious advancement; and 4) other purposes beneficial to the community

Overseen by the Charities Commission and must operate for the public benefit and may not act in a political manner

Trustees are responsible for finances and running of charity

Must have a Governing Document which can be a trust deed, constitution, memorandum or articles of association

The Statement of Recommended Practice (SORP) provides recommendations for charity accounting and reporting

Include a risk management statement in Trustees' Annual Reports to address financial and other potential risks

+ 2011 Code for Voluntary and Community Sector

1. Understand their role

2. Ensure delivery of their organizational purpose

3. Work effectively both as individuals and a team

4. Exercise effective control

5. Behave with integrity

6. Be open and accountableCharity Commission Code

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United Kingdom: Fundraising

Fundraising is largely “self regulated,” although government regulation keeps infringing

All Party Parliament Group (APPG) comprised of 300 members of parliament is looking into future regulation and recession impact

The Institute of Fundraising (self regulating org.) has 29 codes governing all types of fundraising, such as telephone, direct mail, electronic media, challenge events and cash collections

Face-to-Face Activity Code of Fundraising Practice monitored by PFRA – recommends a solicitation statement (disclosure)

(Public Fundraising Regulatory Association)

License needed for street team and door-to-door cash donations from local authority (usually)

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“It is important that charities maintain high standards of fundraising in order to maintain their income…

including using best practice supported by the Institute of Fundraising’s Code of Fundraising Practice and resources.”

Peter Lewis CEO of the Institute of Fundraising

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“Charities rely on generous public support to carry out their charitable work.

The Fundraising Standards Board enables the public to donate to charities that are a member with confidence .”

Minister for Civil Society, Nick Hurd

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Government: Federal Republic

Chief of State: President Pranab MUKHERJEE

Head of Government: Prime Minister Manmohan SINGH

Population: 1,205,073,612

GDP: $1.86 trillion

Nonprofits: 3.3 million

India

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India: Governance Trusts, Societies, and Not-for-Profit Companies (Section 25)

Nonprofit/public charitable organizations must register (district)

‘Charitable purpose’ must include ‘relief of the poor, education, medical relief and the advancement of any other object of general public utility’ (excludes religious)

Self governing board, council or managing committee who have a fiduciary responsibility

Foreign NGOs who want an office in India have to follow special licensing procedures

+ Regulates acceptance, utilization and accounting of foreign funds.

40,000 organizations receiving foreign contributions, only 18,000 report

Funds over 1 million rupees ($18k) have to be reported immediately

Organizations renew registration every five years (NGO status)

Prevent outside powers from dividing the country on religious basis

No funds can be accepted by a political party, candidate or organization

The Foreign Contribution Regulation Act

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“Capacity building of young fundraisers has now become a priority, which we can ignore at our own peril.

This alone can make NGOs sustainable, accountable, transparent and credible.”

Major General Surat Sandhu, Chair - South Asian Fundraising Group (Former Chief Executive of HelpAge India)

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India: Fundraising

Foreign Contribution Regulation Act (May 1, 2011) restricts funds

Need to develop fundraising, over reliance on government and foreign funds

Lack of skilled, trained professional fundraisers, estimates show only 1% of NGOs have a fundraiser on staff

(2007 SAFRG planning commission presentation by Major General)

Planned giving, volunteering, feeling an obligation to charity not part of the culture

National survey of CSR survey showed increase but inconsistent initiatives, over ¾ companies want government policy

+ India: CSR

A recent Corporate Social Responsibility survey showed areas of giving.

CSR tended to be local, seen as good business but also inconsistent.

Education; 18%

Environment; 17%

Women Empowerment, 14%

Livelihood Promotion; 13%

Sanitation; 13%

Micro Finance; 13%

HIV/AIDS; 12%

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Government: Constitution Based Federal Republic

Chief of State: President Barack H. OBAMA

Head of Government: President Barack H. OBAMA

Population: 313,847,465

GDP: $15.09 trillion

Nonprofits: 1.5 million

United States

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United States: Governance

Charity, Foundation, Trust, Association, Nonprofit Corporation or other Organization

What exactly are nonprofit organizations? (http://youtu.be/0myNj8BHt_4)

Must register as a 501(c)(3) with the IRS (1023) and file 990

Board size regulations vary by state 1-3 minimum, the average board size for nonprofits in US is16 members (BoardSource)

IRS reviews nonprofits for policies relating to: executive compensation, conflicts of interest, investments, fundraising, documenting governance decisions, document retention and destruction, and whistleblower claims

Self regulation or legislative policy? Many states nonprofit liaison

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Organized and operated exclusively for: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. (IRS)

May not operate for the benefit of private interest (net earnings)

Activity may be not attempt to influence legislation and are restricted in political and legislative activities (lobbying)

The organization’s purposes and activities may not be illegal or violate fundamental public policy

United States: 501(c)(3) requirements

+ LEGAL DUTIES

Duty of Care: exercise reasonable care in decisions as a steward of the organization

Duty of Loyalty: act in the best interest of the organization

Duty of Obedience: faithful to the mission and central goals

FURTHER DUTIES

Duty of Stewardship: oversight of resource management

Duty of Compliance: ensures legal requirements and all other obligations are met

United States: Board Governance

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United States: Fundraising

Government grants, process by which nonprofits carry out work formerly done buy government agencies (Mayor’s Initiative)

Individual gifts, events, CSR

Association of Fundraising Professionals ‘donor bill of rights’

Self regulation also led to gift acceptance policies, board packets with more explanatory materials

Transparency, accountability and integrity: “100% of your gift goes to the cause” but does it?

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Giving Trends

The Other America’s Philanthropy:1. a crisis of declining charitable giving reaching

human services or social safety net groups2. a class divide where the groups that do well in

charitable solicitations are those with connections, and social class interrelationships

Giving rose only 2.1% last year (2010), echoing a slowing recovery, donors continue to hold tight to their wallets

Even as US recovers economically it remains home to the most generous people who support nonprofits and philanthropy

Giving USA’s Forecasts Tough Years Ahead for Fund Raisers – The recession cloud may hover for years, it could be as long as 2016

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Conclusions NGOs are a large part of each countries economy, but

what role should they play?

Stronger government regulation is being explored by every country to some degree—a matter of security.

Questions are being ask about transparency, accountability and overall integrity of NGOs

Collaborations are being looked at globally…however

Global giving is plagued by fear of outside interests sway

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The World of Philanthropy Present and Future forum October 2012

Foundations (and NGO’s) today seek alignment and co-operation to play to each other's strengths.

However, concerns were raised that alliances of traditional institutional funders can morph into power blocs…

…raising questions about who is forging these alliances (visionaries or technocrats) and about accountability.

Sarah Masters and Erika Moisl

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Nonprofit Governance and FundraisingA four country comparison

Questions?