“The salient characteristic of poverty alleviation in Bangladesh is the lack of coordination between government and the Non-Government Organizations (NGOs).” Assess this given statement with the state and the law of Bangladesh.
This essay will first outline the overall situation of Non-Government Organisations in Bangladesh, and then set out the legal issues in detail and at last asses the critical role of it. In the international journal of not-for-profit law by Mokbul Morshed Ahmad, assistant professor, department of geography and environment, Dhaka University stated ‘the salient characteristic of poverty alleviation in Bangladesh is the lack of coordination between government and the Non-Government Organizations (NGOs)’. According to Galpin, in other parts of the Muslim world, the states has in general been skeptical or strict towards NGOs, human rights and community groups when the government of Bangladesh tried to control the activities of NGOs, the donors put pressure on the state. The government then responded by imposing more paperwork on the NGOs, thus increasing their transaction costs. The state has failed to make NGOs more transparent, functionally or financially. So NGOs can easily violate laws because of the weakness of the state and their own strength that over time has been fortified by the donors.
2. NGOs IN BANGLADESH
Since the independence of Bangladesh in 1971, the state has largely failed to assist the poor or reduce poverty, while NGOs have grown dramatically, ostensibly to fill this gap. As in April 2007, the NGOAB has 2,156 NGOs registered with it. These NGOs have so far implemented 13,016 development programs, for which the NGOAB has approved release of approximately US$ 3,996,021,961. The Bureau suffers from many shortcomings which create opportunities for irregularities and corruption in the sector. It has an acute shortage of human resource and logistic support.
a. NGO Historical Evolution:
The ADAB directory lists 1,007 NGOs, including 376 nonmember NGOs. The NGO Affairs Bureau (NAB) of the government of Bangladesh (GOB), which has to approve all grants to NGOs working in Bangladesh, released grants worth about US$ 250 million in FY 1996-97 to 1,132 NGOs, of which 997 are local and 135 are foreign [NGO Affairs Bureau 1998]. Most people, familiar with the canvas of NGO activities, suggest that the number of active NGOs in Bangladesh, as of June 2002, tangible assets. In the process, a new approach to banking has is more than 1,200. New institutions, often with indigenous effort, emerged during the late 1980s and early 1990s, though many of the first generation NGOs continued to engage in the delivery of social services. In spite of their induced interest in credit delivery, many of the newly emerging micro-finance institutions (MFIs), which are also included in the domain of NGOs, have exclusive focus on microcredit.
In the specific context of Bangladesh, the distinction between NGOs and MFIs therefore often gets blurred. While the act of financial intermediation may require special focus, the micro credit organisations (MCOS) quite often engage as agents in the NGO sector as well. Figure below describes the broad activities undertaken by the NGOs. Most NGOs engage in group-formation and provide financial services to group members. Some also engage in providing social services – health, education, water and sanitation, training and skill development and awareness building. There are others who may also engage as economic agents, such as, through providing marketing support to the beneficiaries, or, as provider of wage employment. The currently observed mix of activities has a long history; and the NGO sector in Bangladesh has been an ever-changing sector. Broadly speaking, while the NGOs may differ in their early engagements, their commonality is derived from the network of groups, of primarily research into the paths of institutional savings and asset accumulation is yet absent, there is enough anecdotal evidence to suggest that this is underway in a significant way.
Source: Adapted from Zohir and Matin (2004).
Two other areas of engagements, often undertaken in conjunction with one or more of the four interventions listed above, are advocacy and research. Advocacy is a tool used to promote improved performance, shift priorities and highlight areas of concern. It is also an essential ingredient to social mobilization. Thus, advocacy may overlap with all the market spaces identified in the figure. The same holds for research. However, both these activities may turn out to be saleable services, which a commercially motivated NGO may decide to deliver.
b. NGO Acts:
NGOs in Bangladesh are registered under different Acts. These are (1) The Societies Registration Act, 1860; (2) The Trust Act, 1882; (3) Voluntary Social Welfare Agencies (Regulation and Control) Ordinance 1961; (4) Co-operative Societies Act, 1925 and (5) The Companies Act, 1913 (amended in 1914).
NGOs registered under these above mentioned acts are controlled in accordance with (1) The Voluntary Social Welfare Agencies (Regulation and Control) Ordinance 1961; (2) The Foreign Donation (voluntary activities) Regulation Ordinance, 1978 (amended in 1982) and (3) The Foreign Contribution (Regulation) Ordinance, 1982. The highest number of NGOs is registered under The Societies Registration Act, 1980. NGOs covered under this study are mainly those which are registered under the NGO Affairs Bureau (NGOAB) attached to the office of the Prime Minister/Chief Adviser. As in April 2007, the NGOAB has 2,156 NGOs registered with it. These NGOs have so far implemented 13,016 development programs, for which the NGOAB has approved release of approximately US$ 3,996,021,961. The Bureau suffers from many shortcomings which create opportunities for irregularities and corruption in the sector. It has an acute shortage of human resource and logistic support. It has 60 employees against 67 allocated staff, which is too insufficient to effectively play its facilitating and monitoring role.
c. Submission of Annual Reports:
NGOs are required to prepare annual reports on their activities within three months of the end of the financial year and send copies to the NAB, ERD, the relevant Ministry, Divisional Commissioner(s), Deputy Commissioners and the Bangladesh Bank.
d. Power of Inspection:
The state may, at any time inspect the accounts and other documents of NGOs. The state may require the NGO to submit a declaration as notified in the official gazette (Ordinance No. XLVI- Section 4(l): 1978). Failure to produce any accounts or other documents or failure to furnish any statement or information by the NGO is a contravention of state regulations (Ordinance XLVI: Section 4(3): 1978). The NAB has the responsibility and power to audit and inspect the accounts of NGOs (Circular: Section 10(a): 1993).The accounts of any NGO must be audited by the persons appointed by the relevant NGO or persons enlisted/approved by the NAB. Audit reports must be submitted to the NAB within two months of the end of the financial year.
From the above discussion we have a clear picture of the manner/procedure regarding the way the state of Bangladesh regulates those NGOs which finance charitable work through foreign donations. The donor agencies led by The World Bank (WB) have strongly supported the formulation of the state’s policy on NGOs, particularly in the direction of streamlining the administrative and legal framework within which NGOS operate, to increase their effectiveness.
3. CRITICAL ASSESSMENT
NGOs in Bangladesh have increasingly become subject to question and criticism from the government, political parties, intellectuals and the public in general. Recently in the Daily Inquilab newspaper report stated that there have been allegations of misuse of funds, gender discrimination, and nepotism lodged against GSS (Gano Shahajyo Sangstha), a large NGO. State and private donor investigations found that the rural level female workers of GSS were compelled to go on maternity leave without pay. They also found that GSS bought lands worth millions of Taka to build its headquarters in Dhaka. The donors stopped funding the GSS.
According to law, no person or organisation may receive or spend foreign loans/grants without prior state approval. The NAB Report submitted to the Prime Minister’s Secretariat in 2002 stated that various NGOs had disbursed 1.5 billion Taka without prior State permission in the financial year 2000 to 2001. Quite often, large amounts of money come into the country illegally. The Salvation Army received 12.5 million Taka without the state approval (Government Report, 1992). Similarly, Sheba Shongho spent 13.5 million Taka without state approval, and the Finnish Free Mission also violated state instructions.
According to a Government Inspection Report (2002), senior officials of some NGOs quite often travel abroad and, without state approval obtain foreign donations. According to the report the accounts provided by the NGOs may fail to match those provided by the Bangladesh Bank, although according to law, if any organisation wants to carry out a charitable programme, then it should receive any foreign currency through an approved bank in Bangladesh. This restriction was imposed to give the state a true picture of the total amount of foreign currency in the hands of NGOs. Yet, according to another Act, any organisation or person can bring any amount of foreign currency into Bangladesh. Therefore, as a result of this dual system, no one can know the total amount of foreign currency actually received by any NGO.
According to a nineteenth century Act, Voluntary societies cannot undertake business oriented projects. The same Act also provides that upon the dissolution of the society and payment of all its debts and liabilities, no property whatsoever shall be paid to or distributed among the members of the society but should be vested in the managing committee. In a 1961 Ordinance there is a provision for gaining profit in order to create job opportunities. Both the Act and Ordinance apply to the same cases. As a consequence, some NGOs are flourishing simultaneously as service-oriented organisations and as profit-oniented business organisations. The state is also being deprived of taxes by NGOs taking advantage of loopholes ‘in the regulations. Some senior officials of certain NGOs have used loopholes to become affluent.
As NGOs are heavily dependent on foreign resources, the flow of money from the outside, in the absence of accountability, can make the NGOs corrupt, controversial and autocratic. Despite the negative effects, ironically real in most cases, NGOs are accountable to the donor countries rather than the state of Bangladesh.
In Bangladesh, NGOs play a pivotal and pragmatic role when the state does not reach the poor and meet their needs. Despite their numbers, NGOs have brought little change in levels of poverty. Even the largest NGOs in Bangladesh when taken together cover only a fraction of the population- perhaps only 10-20 percent of landless households stated by Hasherm. This highlights the NGO need for reaching more poor and provision of services given the limitations of the state and the laws. So, alleviation of poverty of the masses should be at the top of the agenda of the NGOs, state and donors in Bangladesh.
However, the NGOs’ umbrella body (which is required to elect its executive committee) is not broad-based. Ahmad mentioned that elections to the executive committee are often not properly held and its membership is often confined to friends and relatives. This surely frustrates the potential of NGOs as democratic voluntary organisations. Nevertheless, NGOs cannot function in isolation from the mainstream of political, economic and social life in this Country. They must conform to certain standards, adhere to state regulations and have their work coordinated at the state level. NGOs can only complement the state’s activity. Under the current system, the state cannot ask NGOs to become more transparent and accountable or to cooperate more with the state due to donor pressure. The state is very weak in Bangladesh sated by Wood. Instead, the state creates undue hindrances which only increase transaction costs of NGOs without encouraging or forcing the NGOs to respond more to the needs of the poor. But still NGOs need to be transparent to their clients, donors and the state both functionally and financially if they really want to represent the interests of the poor or at least provide services to them.
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34. List of Government Ordinances/RuIes/Working Procedures:
1. The Foreign Donations (Voluntary Activities) Regulation Ordinance 1978: Ordinance No. XLVI of 1978.
2. The Foreign Donations (Voluntary Activities) Regulation Rules, 1978: No. S.R.O. 329-1/78.
3. The Foreign Contributions (Regulation) Ordinance, 1982. Ordinance No. XXXI of 1982.
35. Working Procedure of Foreign assisted Bangladeshi Non-Govermnent Voluntary Organization (NGOs) A Circular: 188.8.131.52.0.46.93-478, dated. 27-07-2003.
36. Zohir, Sajjad and I Matin (2004): ‘Wider Impacts of Microfinance Institutions: Issues and Concepts’, Journal of International Development, March, Wiley and Co, UK.
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 NGOs are the non-profit development organisations or NGDOs for this paper. Most NGOs in Bangladesh are foreign aided development organisations. Although NGO activities are described as ‘voluntary’ activity in this paper this has been due to the official documents and laws which includes all voluntary or non-profit work. Salamon and Anheier (1997) tried to define nonprofit organisation as 1. Organised, i.e., institutionalised to some extent. 2. Private, ie., institutionally separate from state. 3. Non-protit-distributing, i.e., not returning any profits generated to their owners or directors. 4. Self- governing, ie., equipped to control their own activities. 5. Voluntary, i.e., involving some meaningful degree of voluntary participation, either in the actual conduct of the agency’s activities or in the management of its affairs (Salamon and Anheier, 1997). NGOs (Non-Governmental Organisations): The World Bank usually refers to nongovernmental organisations as any group or institution that is independent from government, and that has humanitarian or co-operative, rather than commercial, objectives. Specifically, the Bank focuses on NGOs that work in the areas of development, relief or environmental protection, or that represent poor or vulnerable people (The World Bank, 1996). This definition of NGO has been used in this paper.
 The official donors are DFID (Department for International Development), NORAD (Norwegian Agency for International Development), CIDA (Canadian Agency for International Development), SIDA (Swedish Agency for International Development) other donors include Oxfam, CUSO (Canadian University Services Organisation), and ActionAid.
 ADAB stands for Association of Development Agencies in Bangladesh, and the directory refers to that of 1998.
 See CDF (2002). Of the 681 MF-NGOs reporting to CDF on June 2002 data, management of 117 were headed by women.
 See Zohir (200 1). In the literature, the latter group is identified as ‘credit only’, while the former is referred to as ‘credit-plus’ NGOs.
 These are often identified as micro-finance institutions (MFIs) in the literature when the emphasis is more on commercial aspects of delivering financial services. The two terms are treated synonymously in this paper.
 Zohir, Sajjad and I Matin (2004): ‘Wider Impacts of Microfinance Institutions: Issues and Concepts’, Journal of International Development, March, Wiley and Co, UK.
 TI -Bangladesh, op. cit.
 International Center for Civil Society Law. Legal and Regulatory Environment for NGOs in Bangladesh, Final Report, 17 April 2005 (www.iccsl.org/pubs/bangladeshfinalreportmay15.pdf).
 The Daily Inquilab. (2009). September 23, 2009 (Newspaper in Bangla),Page:4,Colum:5
 The Foreign Donation (Voluntary Activities) Regulation Ordinance 2002 Section 3(l) and Section 3(3) and the Foreign Contribution (Regulation) Ordinance 2002, Section, 4(l).
The Foreign Donation Regulation Act of 1978.
 The Exchange Control Regulation Act, 1947.
 The 1860 Societies’ Registration Act.
 The Government’s Audit Report, 2002.