The Transparency of NGOs: Lessons from experience

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Anne Marie Boutin

By Anne Marie Boutin
Conseiller maître à la Cour des Comptes, Paris
This article was published in French in Transnational Associations, Issue 1/2000, 8-11. All rights reserved. Article publié dans Associations Transnationales, Issue 1/2000, 8-11. Tous droits réservés.

As president of the Union of international associations (UIA), I have a strong interest in the theme of this seminar. This issue is certainly, with the subject of protection for NGOs, one of the main challenges for the future of NGOs willing to be recognized as key actors in the civil society.

But my personal knowledge concerning this question comes from my experience in Cour des comptes, the french national audit office, where I was involved in the first public audits of "charity organisations" made in our country.

I would like to share with you the lessons of this experience and will try to propose some directions to explore on the next two days.

The extension of the competency of Cour des comptes on these organisations is very new. It was settled in 1991 by a law but really began with their accountings for 1993.

The story begins at the end of the eighty’s, when France discovered mismanagement and corruption problems in different « charities », including the « Red cross ». At that time, we realised that there were in France about 20 « charities » receiving more than 25 million euros per year from donators. As they were allowed by the fiscal law, many people were deducting half of their donation from their income tax and a lot of charities were funding important research projects led by public research centres, thus giving strong orientations to the national research policy.

For all these reasons, the quality of the management of these organisation was of great interest for everybody. But they had no legal obligations and their management was not controlled by any official body. The Cour des comptes was allowed to audit those who received public subsidies , and only for the amount of these subsidies. For example, nobody was allowed to control the ARC (Association de recherche sur le cancer), even if a lot of problems which were discovered later were suspected for years.

At the beginning of the 90s, two initiatives were undertook. The first came from the charities themselselves, which decided to organise their self discipline and mutual vigilance. The second was originated by the Parliament who decided to implement a legal frame for their organisation and control .

Organisation of self discipline and mutual vigilance.

In november 1989, a group of 18 amongst the bigest french « charities » decided to make their own policy, to define their own ethical principles and organise their self discipline and mutual vigilance.

They create the « Committee of the Charter of organisations asking for personal generosity » (known in France by its shortened name « Comité de la charte ») which rapidly decided to adopt four principles :

  • Financial transparency
  • Quality of projects and honesty of messages
  • Strict methodology for funds research
  • Internal control of the respect of commitments

They organise their mutual control under the responsability of a watching commission (in french « commission de surveillance »). Each organisation has to choose one censor , independant but approved by the commission, who has to report to the commission.

The Committee also publishes recommandations to its members, including recommandations on :

  • the presentation of their accountings ;
  • the way to collect funds ;
  • the ethics of communication policy and relations with communication agencys ;
  • the role and importance of the scientific councils when appropriate ;
  • the protection of individual information ;
  • the use of free work and « given in kind » products.

The ARC was not amongst the first members of the comittee which is not surprising and we had to wait for the law of 1991 to be able to organise an independant audit of the association with the consequences everybody knows.

A legal frame of organisation and control

According to the law of august 7th 1991, the organisations asking for funds, supplies and/or volunteers through national campaigns have to :

  • declare the existence of their campaigns, and their objectives  ;
  • establish - on a standardised model - the accountings corresponding to the use of the funds thus collected (in french : « compte d’emploi ») ;
  • give their members access to these documents and inform their donators and public in general about the use made of the money collected.

The Cour des comptes can decide to audit all these organisations. Its observations are send to the president of the board –or equivalent -  who has to answer and may ask to be heard. The general assembly –or equivalent – must be informed of these observations and of the answer of the president.

These observations concern :

  • the respect of the legal status of the organisation ;
  • the reliability of the accountings ; including the use of volunteers and given in kind supplies ;
  • the quality of management ;
  • the adequacy between the announced objectives and the way the funds are employed.

The Cour des comptes can decide to publish its observations in the french « journal officiel », in its annual report or in a separate publication.

At the same time if the audit shows corruption problems, the Cour des comptes must inform the minister of justice and send him/or she the appriopriate information. This happened with the ARC in 1995.

Lessons from this experience and proposals for the debate

1- It could be useful to organise a survey of the different situation for national and international NGOs.

The situation in european countries is heterogenous. In some of them, there is no rule at all, and in some case NGOs do not have any status and do not present any accountings. Sometimes groups of charities organise their own discipline. In other countries, independant private bodies labellise charities who respect their rules. France seems to be the only country where the supreme audit institution have a competence on these organisations.

2- Self discipline and mutual vigilance must be encouraged

Exemples of experiences like the french committee of the Charter or the german DZI could be presented with some general guidelines. A european committee could be settled.

3- From a legal point of view the principles of french law which declares that the accountings must be clear, the managements strict and the money used for the purpose it was made for could be generalised.

At least, the NGOs must :

  • have a legal status and respect all the obligations attached to this status
  • present their accountings
  • have a control of the liability of their acountings (by accounting auditors)
  • have clear and honest communication
  • inform their donators and public of : the way the money has been collected and use of the money collected

If there is a control of these organisations it seems necessary to avoid all kind of « a priori » control and give more importance to a posteriori control by an independant body, like the supreme audit institution of the country where the NGO is registered.

This control must respect the freedom of association, the authority of the executive team, and the european convention on human rights.

The conclusion of this seminar could be a kind of manifesto from NGOs themselves claiming for a culture of transparency, implemeting their mutual vigilance and asking for general adapted rules and guidelines.

The UIA could participate to this initiative mainly by dissemination of information throught its revue and website.