the legal framework of non governmental ors (

8/6/2019 The Legal Framework of Non Governmental Ors (

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LEGAL FRAMEWORKLEGAL FRAMEWORK

OF NONOF NONGOVERNMENTALGOVERNMENTAL

ORGANIZATIONSORGANIZATIONS(NGOs)(NGOs)

IN NIGERIAIN NIGERIA

TO1


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Slide 1

TO1 TONY OBANYA, 3/17/2010


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INTRODUCTIONINTRODUCTION

NGO is not a legal term, but it isNGO is not a legal term, but it isused widely as such because it is theused widely as such because it is the

term almost universally used by theterm almost universally used by theWorld Bank, the United Nations, andWorld Bank, the United Nations, andother national or multinational bodiesother national or multinational bodieswhen referring to nonwhen referring to non--governmental,governmental,

notnot-- forfor--profit entities that areprofit entities that areengaged in development or advocacyengaged in development or advocacyactivities.activities.


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DEFINITIONDEFINITION

NGO can be defined as:NGO can be defined as: Non governmental organizations (NGO)Non governmental organizations (NGO)

refers to an association, society,refers to an association, society,foundation, charitable trust, nonfoundation, charitable trust, non--profitprofit

corporation, or other juridical person thatcorporation, or other juridical person thatis not regarded under the particular legalis not regarded under the particular legalsystem as part of the governmental sectorsystem as part of the governmental sectorand that is not operated for profitand that is not operated for profit viz., ifviz., ifany profits are earned, they are not andany profits are earned, they are not andcannot be distributed as such.cannot be distributed as such.

It does not include trade unions, politicalIt does not include trade unions, politicalparties, profitparties, profit--distributing cooperatives, ordistributing cooperatives, orchurches.churches.


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TYPES OF NGOsTYPES OF NGOs

Operational NGOs encouragesOperational NGOs encouragesdirectly large scale change bydirectly large scale change by

influencing political system indirectly.influencing political system indirectly. Advocacy NGOs operates on aAdvocacy NGOs operates on a

smaller scalesmaller scale


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REASONS FOR NGO LAWSREASONS FOR NGO LAWS There are at least six reasons why anyThere are at least six reasons why any

society should consider adopting laws thatsociety should consider adopting laws thatsupport a vigorous and independent NGOsupport a vigorous and independent NGOsector:sector:

(a) implementing the freedoms of(a) implementing the freedoms ofassociation and speech,association and speech,

(b) encouraging pluralism and tolerance,(b) encouraging pluralism and tolerance,

(c) promoting social stability and the rule of(c) promoting social stability and the rule oflaw,law,

(d) efficiency,(d) efficiency,

(e) public sector market failure, and(e) public sector market failure, and

(f) providing support for a market economy(f) providing support for a market economy


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Freedom of AssociationFreedom of Association

Laws permitting NGOs to beLaws permitting NGOs to beestablished as legal persons play aestablished as legal persons play a

crucially important role in making thecrucially important role in making thefreedom of association, protected byfreedom of association, protected byinternational and constitutional law,international and constitutional law,real and meaningful.real and meaningful.

Freedom of association is one of theFreedom of association is one of theleast developed of the fundamentalleast developed of the fundamentalprinciples of international humanprinciples of international human

rights lawsrights laws


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Pluralism and TolerancePluralism and Tolerance

There are many differences among theThere are many differences among themembers of any society, andmembers of any society, andindividuals and groups have diverseindividuals and groups have diverse

interests and needs.interests and needs. Laws permitting NGOs allow individualsLaws permitting NGOs allow individuals

and groups to pursue their individualand groups to pursue their individualinterests (e.g., sport, folk music,interests (e.g., sport, folk music,preservation of a particular language orpreservation of a particular language or

culture) and thus support theculture) and thus support thedevelopment of pluralism and tolerancedevelopment of pluralism and tolerancewithin society.within society.


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SocialStability and the Rule of LawSocialStability and the Rule of Law

A principal and appropriate role for lawsA principal and appropriate role for lawsfor the NGO sector is to permit andfor the NGO sector is to permit andencourage the existence of suchencourage the existence of such

organizations and to afford them legalorganizations and to afford them legalprotection while at the same timeprotection while at the same timeproviding the public with protectionproviding the public with protectionagainst misconduct and abuse byagainst misconduct and abuse byrequiring appropriate transparency andrequiring appropriate transparency and

accountability, especially regarding theaccountability, especially regarding theuse of public funds or funds donated byuse of public funds or funds donated bythe general public, and by encouragingthe general public, and by encouragingselfself--regulation within the NGO sector.regulation within the NGO sector.


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EfficiencyEfficiency

Private, voluntary organizations can oftenPrivate, voluntary organizations can oftenbe efficient partners for governments inbe efficient partners for governments inthe provision of public goods and services.the provision of public goods and services.

In other words, in many cases they canIn other words, in many cases they canprovide such services with higher qualityprovide such services with higher qualityand lower cost than can the government.and lower cost than can the government.

Accordingly, the traditional tendency toAccordingly, the traditional tendency to

see NGOs and governments as occupyingsee NGOs and governments as occupyingseparate sectors and being naturalseparate sectors and being naturalantagonists does not reflect realityantagonists does not reflect reality


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PublicSector Market FailurePublicSector Market Failure

Laws that permit individuals andLaws that permit individuals andgroups to come together to meet thegroups to come together to meet thegaps created by market failure in thegaps created by market failure in thepublic sector play a vital role inpublic sector play a vital role inenriching society and assuring thatenriching society and assuring thatthose public goods and services tothose public goods and services to

which individuals are willing towhich individuals are willing todevote their own resources will bedevote their own resources will beprovided.provided.


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Support for a MarketSupport for a Market

Economy

Economy

The third economic justification forThe third economic justification forNGO laws is that they provideNGO laws is that they provideindirect support for the success andindirect support for the success and

growth of market economies. Theregrowth of market economies. Thereis some evidence that marketis some evidence that marketeconomies flourish best where socialeconomies flourish best where socialstability, public trust of institutions,stability, public trust of institutions,and respect for the rule of law exist.and respect for the rule of law exist.

These societal values are fostered byThese societal values are fostered bylaws for the NGO sector.laws for the NGO sector.


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LEGAL EXISTENCE OF NGOSLEGAL EXISTENCE OF NGOS

Given the benefits of the notGiven the benefits of the not--forfor--profit sector, the question arises onprofit sector, the question arises onhow best to support its growth.how best to support its growth.

Establishing a sensible legalEstablishing a sensible legalframework for the foundation andframework for the foundation andfunction of these organizations is afunction of these organizations is a

necessary first step.necessary first step. The manner a country will use toThe manner a country will use to

regulate the nonregulate the non--profit sector willprofit sector willdepend to a great extent upon thedepend to a great extent upon the

legal structure already in place.legal structure already in place.


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Legal frameworks for nonLegal frameworks for non--profitprofitorganizations generally addressorganizations generally addressseveral particular issues.several particular issues.

These include the way anThese include the way anorganization comes into existence,organization comes into existence,the regulations of their existence,the regulations of their existence,

taxation, and the particular activitiestaxation, and the particular activitiesof these organizations.of these organizations.

LEGAL EXISTENCE OF NGOSLEGAL EXISTENCE OF NGOS

CONTCONT


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CONSTITUTING AN NGO BOARDCONSTITUTING AN NGO BOARD

Boards should be strengthened andBoards should be strengthened andbroadened with between ten tobroadened with between ten tofifteen membersfifteen members

Board members should have sharedBoard members should have sharedinterest.interest.

Ensure that target is familiar with theEnsure that target is familiar with the

activities of the NGOactivities of the NGO There should be a specified tenureThere should be a specified tenure

for membersfor members


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BOARD FUNCTIONSBOARD FUNCTIONS

Sets policies and strategies for theSets policies and strategies for theNGO.NGO.

Sets operational guidelines, workSets operational guidelines, workplans and budget.plans and budget.

Make funding decisions.Make funding decisions.

Sets criteria for membership.

Sets criteria for membership.

It represents the views of the NGO.It represents the views of the NGO.

It mobilizes resources andIt mobilizes resources and

coordinates with other agenciescoordinates with other agencies


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Establishment (Registration orEstablishment (Registration or

Incorporation)Incorporation)

To be recognized in law, that is, toTo be recognized in law, that is, toenjoy juridical personality with itsenjoy juridical personality with itsaccompanying rights and obligations,accompanying rights and obligations,

nonnon--profit organizations must first of allprofit organizations must first of allbe organizations.be organizations.

In other words, some act must beIn other words, some act must beundertaken that transforms the groupundertaken that transforms the group

of individuals into a formallyof individuals into a formallyconstituted, legal or juridical person,constituted, legal or juridical person,distinct from those individuals.distinct from those individuals.

However, the exact type of entity andHowever, the exact type of entity and

the means of formally creating it canthe means of formally creating it can


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Responsible GovernmentalResponsible Governmental

AgencyAgency

There is a considerable variety amongThere is a considerable variety amonglegal systems in the kind of agency thatlegal systems in the kind of agency thatis empowered to establish NGOs.is empowered to establish NGOs.

In some countries NGOs cannot beIn some countries NGOs cannot beestablished until they receive theestablished until they receive theapproval of the ministry withapproval of the ministry with

jurisdiction over the subject matter ofjurisdiction over the subject matter of

their proposed activity.their proposed activity. For example, health NGOs must be preFor example, health NGOs must be pre--

approved by the Ministry of Health;approved by the Ministry of Health;cultural NGOs by the ministry of culturecultural NGOs by the ministry of culture

and so on.and so on.


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Amendments to EstablishedAmendments to Established

StatusStatus

Under the laws of some countries it isUnder the laws of some countries it isnecessary to completely renecessary to completely re--establish anestablish anorganization if any amendment is madeorganization if any amendment is made

in its name, its purposes, the locationin its name, its purposes, the locationof its home office, and so forth.of its home office, and so forth.

It should be possible for an NGO toIt should be possible for an NGO to

amend its governing documents toamend its governing documents tochange its activities or purposes, andchange its activities or purposes, andthe same approval processes that applythe same approval processes that applyto the initial establishment should beto the initial establishment should be

required to be followed.required to be followed.


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Finally, to assure that assets thatFinally, to assure that assets thathave been derived as a result of taxhave been derived as a result of taxprivileges or donations by the publicprivileges or donations by the public

are not converted to private use, anare not converted to private use, anNGO should generally not be allowedNGO should generally not be allowedto convert to forto convert to for--profit status.profit status.

T

he NGO should be required toT

he NGO should be required toterminate, with its assets distributedterminate, with its assets distributedaccording to lawaccording to law

The individuals can then establish aThe individuals can then establish a

new fornew for--profit entity.profit entity.

Amendments to EstablishedStatusAmendments to EstablishedStatus

ContCont


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Termination, Liquidation, andTermination, Liquidation, and

DissolutionDissolution

Although an NGO should be allowed toAlthough an NGO should be allowed todecide whether to continue in existence ordecide whether to continue in existence ornot, in some countries an NGO cannotnot, in some countries an NGO cannotterminate without the permission of theterminate without the permission of the

government (government (e.g.,e.g., Bangladesh, Ecuador,Bangladesh, Ecuador,Pakistan, Sri Lanka) (Salamon, 1997).Pakistan, Sri Lanka) (Salamon, 1997).

In the case of NGOs that have receivedIn the case of NGOs that have receivedgovernment funds, public donations, orgovernment funds, public donations, orsignificant tax preferences, it is appropriatesignificant tax preferences, it is appropriate

for the law to provide that upon terminationfor the law to provide that upon terminationand dissolution. The remaining assets of theand dissolution. The remaining assets of theorganization must go to another NGO with aorganization must go to another NGO with asimilar purpose or to the government, andsimilar purpose or to the government, andthat those assets may not revert to thethat those assets may not revert to the

founders, officers or directors.founders, officers or directors.


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If one or more ministries or agencies of theIf one or more ministries or agencies of thegovernment is given discretion to terminategovernment is given discretion to terminatean NGO, seize its assets, or take over itsan NGO, seize its assets, or take over itsoperations, the possibility of that happeningoperations, the possibility of that happeninghas a chilling effect on the independence ofhas a chilling effect on the independence ofthe NGOs.the NGOs.

In order to assure a vigorous andIn order to assure a vigorous andindependent NGO sector, the law shouldindependent NGO sector, the law should

provide for warnings before sanctions areprovide for warnings before sanctions areimposed and for intermediate sanctionsimposed and for intermediate sanctions(e.g., fines, suspension of government(e.g., fines, suspension of governmentgrants or contracts) for various types ofgrants or contracts) for various types of

violations, as well as the ultimate sanctionviolations, as well as the ultimate sanctionof terminationof termination

Termination, Liquidation, andTermination, Liquidation, and

Dissolution ContDissolution Cont


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Activities and Operations ofActivities and Operations of

NGOsNGOs

(a)(a) Economic Activities.Economic Activities.

In addition to their nonIn addition to their non--profitprofit

activities, nonactivities, non--profit organizationsprofit organizationsalso often engage in a variety ofalso often engage in a variety ofbusiness activities in order tobusiness activities in order togenerate income.generate income.


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(b) Political Activities.(b) Political Activities. Political activity can be defined asPolitical activity can be defined as

supporting or opposing candidates forsupporting or opposing candidates foroffice, supporting particular political parties,office, supporting particular political parties,

lobbying for or against specific laws,lobbying for or against specific laws,engaging in public advocacy or pursuingengaging in public advocacy or pursuingissue oriented litigation.issue oriented litigation.

The primary basis for divergent treatmentThe primary basis for divergent treatmentof political activities of NGOs appear to beof political activities of NGOs appear to beclassification in common law countries onclassification in common law countries onthe basis of charitable or public benefitthe basis of charitable or public benefitpurposes, in contrast with the civil lawpurposes, in contrast with the civil lawclassification focusing on the nature of theclassification focusing on the nature of thelegal personality.legal personality.

Activities and Operations of NGOsActivities and Operations of NGOs

Cont..Cont..


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TaxationTaxation

Most tax laws focus on the functions orMost tax laws focus on the functions orpurposes of an organization in determiningpurposes of an organization in determiningwhether it is entitled to tax preferences.whether it is entitled to tax preferences.

For example, the tax laws of a particularFor example, the tax laws of a particularcountry might extend the privilege ofcountry might extend the privilege of

receiving taxreceiving tax--deductible contributions ordeductible contributions orproperty tax exemptions only toproperty tax exemptions only toorganizations formed for the primaryorganizations formed for the primarypurpose of advancing education, health,purpose of advancing education, health,science, culture, or the relief of poverty.science, culture, or the relief of poverty.

Tax preferences are one of the principalTax preferences are one of the principalbenefits extended to NGOs, and in mostbenefits extended to NGOs, and in mostlegal systems they are extendedlegal systems they are extendedpreferentially or even exclusively to publicpreferentially or even exclusively to publicbenefit organizationsbenefit organizations


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Structure and GovernanceStructure and Governance

In framing laws on the internalIn framing laws on the internalgovernance of nongovernance of non--profitprofitorganizations, policy makers mustorganizations, policy makers mustbalance two competing values: first,balance two competing values: first,the value of autonomy and nonthe value of autonomy and non--interference by the state in theinterference by the state in the

internal affairs of the organization;internal affairs of the organization;and second, the need for theseand second, the need for theseorganizations to haveorganizations to have

understandable decisionunderstandable decision-- makingmaking


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Laws often address issues concerningLaws often address issues concerningthe size and terms of office ofthe size and terms of office ofgoverning board of nongoverning board of non--profitprofitorganizations. Further, laws mayorganizations. Further, laws maystipulate the officers that arestipulate the officers that arerequired and the power of each, orrequired and the power of each, or

leave this to be spelled out in theleave this to be spelled out in theorganizations bylaws.organizations bylaws.

Structure and GovernanceStructure and Governance

ContCont


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ConclusionConclusion

Legal standards are ones that are normative and canLegal standards are ones that are normative and canbe generalized, but law is necessarily a locallybe generalized, but law is necessarily a locallydeveloped framework.developed framework.

On a global level, we can say that the overridingOn a global level, we can say that the overridingassumption of this presentation is that a good legalassumption of this presentation is that a good legalframework is a necessary but not a sufficientframework is a necessary but not a sufficient

condition to enable NGOs and to further theircondition to enable NGOs and to further theircapacity.capacity. Laws create only the basic minimum of conditions thatLaws create only the basic minimum of conditions that

promote and further the development of a civilpromote and further the development of a civilsociety.society.

Civil society cannot grow and thrive without a socialCivil society cannot grow and thrive without a social

and political environment that encourages it. Thus,and political environment that encourages it. Thus,although laws are important they do no more thanalthough laws are important they do no more thanestablish a fertile soil in which the seeds of civilestablish a fertile soil in which the seeds of civilsociety can be planted.society can be planted.

With that global perspective as a guide, local lawsWith that global perspective as a guide, local lawsaffecting NGOs must be examined to ascertain theaffecting NGOs must be examined to ascertain the

ways in which they accomplish the results of enablingways in which they accomplish the results of enabling


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SETTING UP AN NGO BYSETTING UP AN NGO BY--

LAWSLAWS

BY OBANYA ANTHONYBY OBANYA ANTHONY


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ByBy--laws or Byelaws or Bye--laws?laws?

Come up with an understanding ofCome up with an understanding ofthe abovethe above-- mentionedmentioned


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NGO BYNGO BY--LAWSLAWS

ByBy--laws are internal documents, alaws are internal documents, aset of rules that enables eachset of rules that enables eachorganization to conduct itsorganization to conduct itsaffairs.They are generally theaffairs.They are generally thesupremesupreme

It is important they be written clearlyIt is important they be written clearly

and in language that is easilyand in language that is easilyunderstood by all organizationunderstood by all organizationstakeholders. This document isstakeholders. This document is

frequently necessary for thefrequently necessary for the


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NOMOMECPANOMOMECPA

NameName

ObjectObject

MembersMembers OfficersOfficers

MeetingsMeetings

Executive boardsExecutive boards

CommitteesCommittees

Parliamentary AuthorityParliamentary Authority


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ITEMS OF AN NGO BYITEMS OF AN NGO BY--LAWSLAWS

Typical items addressed in the bylawsTypical items addressed in the bylawsare:are:

Name and purpose of the NGOName and purpose of the NGO --The Purpose is usually a restatement ofThe Purpose is usually a restatement ofthe NGO's Mission Statement, but canthe NGO's Mission Statement, but cancontain additional detailscontain additional details

The frequency, notice, and quorumThe frequency, notice, and quorumrequirements for organizationalrequirements for organizationalmeetingsmeetings -- These can be internal orThese can be internal orregular meeting of the NGO, or externalregular meeting of the NGO, or external

meetings such as those for the generalmeetings such as those for the general


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Voting qualifications, proxies, andVoting qualifications, proxies, andprocedures for approval of boards. Thisprocedures for approval of boards. Thisis related to the governance structureis related to the governance structure

of the NGO's board.of the NGO's board. The number and term for members ofThe number and term for members of

the board, scope of authority, methodthe board, scope of authority, methodof nomination and election to theof nomination and election to the

board, and provision for fillingboard, and provision for fillingvacancies.vacancies.

List of board officers, method ofList of board officers, method ofnomination and election, terms ofnomination and election, terms of

office, powers, duties, and succession.office, powers, duties, and succession.


CONTCONT


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Membership and authority ofMembership and authority ofcommittees or working groupscommittees or working groups--Many of an NGOs' work is doneMany of an NGOs' work is done

through subthrough sub--committees or groups,committees or groups,and provisions need to be made forand provisions need to be made forsuch committees.such committees.

Title and scope of authority for theTitle and scope of authority for theexecutive director and other staffexecutive director and other staffmembers who are responsible for themembers who are responsible for theday to day functioning of the NGO.day to day functioning of the NGO.


CONTCONT


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RecordRecord--keeping and financialkeeping and financialreporting responsibilitiesreporting responsibilities-- InInmany countries this is necessary formany countries this is necessary forthe maintenance of the taxthe maintenance of the tax--exemptexemptstatus of an NGO.status of an NGO.


CONTCONT


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Amendment procedures for theAmendment procedures for thebylaws and provisions forbylaws and provisions fordissolution of the organization.dissolution of the organization.

Writing and gaining approval for aWriting and gaining approval for aset of bylaws takes thought, time,set of bylaws takes thought, time,and the involvement of theand the involvement of the

organizations constituents.organizations constituents.

Bylaws should be written with anBylaws should be written with anemphasis on fair Strategy andemphasis on fair Strategy and

transparent governance.transparent governance.


CONTCONT


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ASSIGNMENTASSIGNMENT

Establish a quintessential paradigmEstablish a quintessential paradigmof an NGO reflecting its type and byof an NGO reflecting its type and by--laws.laws.

Come up with two learning pointsCome up with two learning pointseach from our discourseeach from our discourse


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CONCLUSIONCONCLUSION

Having a clear set of byHaving a clear set of by--laws notlaws notonly provides clarity to an NGOsonly provides clarity to an NGOsstructure, it also provides a basis forstructure, it also provides a basis fortrustworthy relationships.trustworthy relationships.

THANK YOU!THANK YOU!

the legal framework of non governmental ors (

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