Assignment of NGo Emergence

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The term 'NGO' encompasses a broad array of organizations, varying in their specific purpose, philosophy, sect oral expertise and scope of activities. In two important ways the NGOs in Bangladesh stand out from the traditional private voluntary organizations (PVOs). First, NGOs engage in activities, which had traditionally been in the domain of the government agencies, and it is the failure of the latter, which prompted donors to route funds through these organisations.1 Second, NGOs are largely participatory in their approach - at least, during the early phase of their development, which enables them to deliver the services to targeted groups of population better than the hierarchically structured government agencies. Normally, NGOs are required to register with the department of social welfare, for the purpose of claiming to be a non-profit organization. Beside some, NGOs have sought registration with the directorate of women's affairs, and yet others have registered as a cooperative society. In some exceptional cases, an NGO may register itself with the registrar of joint stock companies as a not- for-profit organization. Since the formation of the NGO Affairs Bureau (NAB) in 1990, the NGOs have to register with the bureau in order to avail of foreign funds.


Chapter-1 Background of NGOs Emergence or Intervention in Bangladesh: During most of the 1970s, the NGOs were providing services in social sectors, e g, education, health and sanitation, family planning, etc. There were also some local movements for self- reliance, culminating into the formation of Swanirvar Bangladesh. Pilot experiments into the provision of micro credit to small groups were made only towards the end of the 1970s. With the success of the Grameen Bank, the 1980s experienced a gradual acceptance of micro credit activities by NGOs. 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. 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 women members, which underlie most NGO activities. Most NGOs also engage in providing financial services. The formation of the Palli Karma Shahyak Foundation (PKSF) in 1990, which acts as credit whole seller to the MFIs, drastically changed the NGO activity space. The operations of PKSF also encouraged many new MFIsto surface within smaller geographical territories, and all such organizations are commonly included under the umbrella of NGOs. It is estimated that the NGO sector disbursed around taka 23.11 billion during 1998, and the Grameen Bank (GB) disbursed another taka 19.89 billion during the fiscal year 1997-98.8 The two together far surpassed the public sector agricultural credit of taka 16.43 billion during FY 1998 and an additional micro- credit disbursement of taka 1.46 billion through various government agencies. During the early years, microcredit was perceived as replacing the moneylenders, who are alleged to have charged exorbitant interest rates and often tied lending to land grabbing. The Bangladesh experience however shows that while interest rates on informal lending may have declined, the shares of money- lenders, business advances and other interest-bearing informal lending have increased due to the increased commercialization of rural economies.


Chapter-2 Different Laws and Ordinance Applicable for NGOs operations in Bangladesh: Bangladesh, as a country, is characterized by a political and institutional environment that has the potential to foster an effective and smooth development process by NGOs who are politically and socially accepted as necessary partners. Specially, a range of statutory and administrative regulations exists in Bangladesh for registration, prior review, project approval and utilization of foreign funds by NGOs, that is the real sources of NGO functioning. The legal framework has two major dimensions: one is laws for incorporation and providing legal entity to NGOs; and another is laws governing the relationship of NGOs with the Government. A number of laws exist under which NGOs can secure a legal identity with a recognized Government structure e.g. Societies Registration Act 1861, Trust Act 1882, Cooperative Societies Act 1925, and Companies Act of 1913 (amended in 1994). The laws and ordinances under which NGOs are required to register with Government agencies have substantial implications on the GovernmentNGO relationship. The NGO Affairs Bureau (NGOAB) was established in 1990 with the authority to register and regulate all NGOs operating with foreign funds in Bangladesh.

2.0 LEGAL AND REGULATORY FRAMEWORK OF NGOS IN BANGLADESH: The following laws provide a framework for a voluntary organization to exist under a legal identity with a recognized governance structure, are discussed briefly:

2.0.1 The Societies Registration Act, 1861: This law was introduced by the administrators of the Indian Empire. The law sets out ways in which an organization should be set up, managed, and maintains control of its accounts. Some of the oldest NGOs in Bangladesh reregistered under this Act by the Registrar of Societies within the Ministry of Commerce. The Act is still valid in Bangladesh, although many NGOs report that the Registrar has discontinued registering of NGOs under it. In short, The Societies Registration Act, 1861 is:  Registrar of Joint Stock Companies, Ministry of Commerce  For any “literary, science, or charitable purpose,” including literature, fine arts, education, libraries, museums, etc.  Environment, human rights, and historic preservation qualify only under a modern, progressive concept of “charitable”  No provision made for social or sporting clubs, self-help groups, contemplative societies, etc.


 A society is not a true legal person; it must sue or be sued in name of officers, but judgments lie only against property of society  7 or more individuals or legal persons  Most NGOs are formed under this Act

2.0.2 The Trust Act 1882: This law was created to accommodate private trusts without disturbing or modifying the already existing Muslim and Hindu laws for religious trusts. It allowed for the creation of an organization where a person or persons had some property that they wanted to entrust to a second party to be used on behalf of a third party. This Act also remains valid in Bangladesh and is occasionally used by development NGOs. In short, The Trust Act 1882 is:      

Trust can be “for any lawful purpose,” private or public Can be created by any person competent to form a contract. No government registration required Trustee is legal owner of property Trust is not a legal person Trustee must deal with the trust property “as carefully as a man of ordinary prudence would if it were his own.” S/he is personally liable for breach of trust  Some NGOs are formed as trusts (e.g., PRIP Trust)  No special provisions for charitable trusts

2.0.3 Cooperative Societies Act, 1925: This law was created specifically for this specialized form of commercial entity. It is not used by development NGOs although some voluntary associations consider their operations as falling within this category.

2.0.4 The Companies Act of 1913 (amended in 1994): This legislation was enacted to make a legal form and status available to private trading companies. This Act provides a very strong legal identity. There are clear directives for annual reports and annual accounts to be produced. The registration authority is the Registrar of Joint Stock Companies under the Ministry of Commerce. In short, Companies Act of 1913 (amended 1994)  Permits joint stock companies, companies limited by guaranty, nonprofit companies (sections 26& 27), and unlimited companies  Nonprofit company must be “formed for promoting commerce, art, science, religion, charity, or any other useful object”  7 or more persons, or 2 or more if a private company  Registrar of Joint Stock Companies, Ministry of Companies  Full legal personality plus limited liability  Increasingly popular for NGOs and other not-for-profits


2.0.5 Other laws concerned with legal and regulatory framework of NGOs:  Waqf Ordinance of 1962  Hindu Religious Welfare Trust Ordinance of 1983  Christian Religious Welfare Trust Ordinance of 1983  Buddhist Religious Welfare Trust Ordinance of 1983


Chapter-3 Legal and Regulatory Institutions for NGOs Intervention in Bangladesh:

The Voluntary Social Welfare Agencies (Regulation and Control) (VSW) Ordinance, 1961: This ordinance was promulgated by Pakistan’s martial law regime to control the rapid growth of voluntary associations through mandatory registration. It is applicable to all NGOs, including those which receive foreign funds. A large number of NGOs are registered under this ordinance. The 1961 Ordinance allows the Government to interfere with the governance structure of the NGO in the following two ways. The Department of Social Welfare (DSW) as the registering body is authorized to suspend the governing body of an NGO without any right of appeal. On contrary, the governing body of an NGO cannot dissolve the NGO without the approval of the DSW. In short, The Voluntary Social Welfare Agencies (Registration and Control Ordinance), 1961 (SWO):  Mandatory registration for any formal or informal organization formed to render welfare services for children, youth, women, family, physically or mentally handicapped, family planning, recreation, civic responsibility, released prisoners, juvenile delinquents, socially handicapped, beggars and the destitute, patients, the aged or infirm, social work, or co-ordination of social welfare agencies.  Not applicable to, or available for, art, science, culture, environment, etc.  Administered by Social Welfare Department of the Ministry of Social Welfare and Human Development  Broad discretion and control  Right to suspend or dissolve  judicial appeal stated permitted under the Act  Most NGOs are registered under this Ordinance.

The Foreign Donations (Voluntary Activities) Regulation (FDR) Ordinance 1978 (amended in 1982): During the period of following Bangladesh’s independence, a sizable number of political parties were reported to have received foreign funding. During the same period a large number of voluntary organizations emerged to offer relief and reconstruction assistance, apparently also supported by foreign donors. The martial law Government of the time passed this Ordinance possibly to control the flow of foreign funds to the voluntary organizations. In short, Foreign Donations (Voluntary Activities) Regulation Ordinance of 1978 (amended 1982) (known as FDR):  “Voluntary activity” means agricultural, relief, missionary, educational, cultural, vocational, social welfare, development, and any other activity specified by the Government


 Forbids any voluntary activity using foreign donations unless the organization is registered with the NGO Affairs Bureau (NGOAB), which is established within the Prime Minister’s Office  Each foreign grant must be approved and monitored by the NGOAB  Foreign Contributions (Regulation) Ordinance of 1982 (known as FCR)  Amendment to 1977 law to expand scope to cover every kind of contribution from abroad

The following penalties are provided for in this legislation:  For a “reason to be recorded in writing,” NGOAB can inspect or, acting under the Code of Criminal Procedure, seize accounts and other documents  After providing a reasonable opportunity to be heard, NGOAB can cancel registration of an organization or stop any activities for a failure to submit required declarations, willful submission of false declarations, or any other contravention of the Ordinance  Anyone who receives or uses a foreign donation in contravention of the Ordinance or any rules there under is liable for a fine of double the amount of the donation or imprisonment for up to three years.

The Foreign Contributions (Regulation) Ordinance 1982: The FDR Ordinance 1978 was amended by the military government in 1982 to become the Foreign Contributions (Regulation) Ordinance. This ordinance redefined the meaning of foreign contributions as “any donation, grant assistance, whether in cash or in kind, including a ticket for a journey abroad” and imposed greater restrictions on NGOs. The rules pertaining to this ordinance required NGOs to seek prior government approval each time they received a foreign contribution.

Regulatory Agencies related with Legal and Regulatory framework of NGOs in Bangladesh: The Non-Government Affairs Bureau (NGOAB): The Non-Government Affairs Bureau (NGOAB) was established in 1990 with the authority to register and regulate all NGOs that seek or receive foreign funds. The 1978 Ordinance, amended in 1982, is the basis for the registration.

Role of NGOAB: This agency was established in 1990 to oversee the FDR and FCR Ordinances. NGOAB was set up in the Prime Minister’s Office in 1990. According to the World Bank’s 1996 study, the rationale for setting up NGOAB was the “huge backlog of projects pending Government approval” under the then-existing system, which required multiple levels of government review. All sources refer to NGOAB as being set up to be a “one-stop shop” for NGOs seeking and administering foreign funds. The Government assigned NGOAB all responsibilities under the FDR and the FCR, but it was, of course, never the only “stop” an NGO would need to make on its way to carrying out its activities in Bangladesh. All NGOs seeking to be legal entities would also have to establish themselves under the Societies Act or the Companies Act. And NGOs engaged


in activities defined by the Social Welfare Ordinance would still have to register with the Social Welfare Department. Nevertheless, NGOAB became a focus of oversight for many NGOs because many of them were at the time largely supported by foreign funds. Its functions include the following:       

NGO registration; Approval of project proposals and releasing funds for them; Approval of expatriate consultants; Scrutiny and evaluation of statements and reports on projects; Monitoring and evaluating NGO projects; Receiving information on foreign travel by NGO personnel; and All other matters relating to NGOs receiving foreign funds.

To register with NGOAB, an NGO must be approved by Home Ministry and at least one line ministry; it must submit a 5-year plan along with its application. For each grant, an NGO must submit project proposal and letter of intent from donor. All foreign funds must go through specific bank account; the bank in which the NGO has its account must provide full reports to central bank, which reports to NGOAB. NGOs must submit annual audits done by auditors who are approved by NGOAB.

Department of Social Welfare (DSW): The principal work of the Directorate of this Department is to register and to deal with those NGOs whose purpose in to render welfare service in the fields listed above; the DSW also dispenses public funds under a program of government assistance to social welfare NGOs. When an applicant applies for registration to the DSW for registration, the officers, departmental clerks, who are the best-informed people with respect to the process, give the applicant both oral and written guidelines. If the application form meets the guidelines, the inspector and the field officer of DSW process the application and inspect the NGO’s offices. On the basis of their report and site inspection, the decision on registration is taken. If there is some problem or objection to registration or in the application form, the DSW says that it works with the NGO to correct and or amend its application. The DSW also works with NGOs to develop their constitutions, though there is no indication that any formal recommendations are made with respect to internal governance standards. All registered NGOs must file annual reports and audited accounts at the end of every year. The DSW was the power to inspect the books of accounts and other records of the agency, the securities, cash and other properties held by the agency and all related documents. NGOs cite frequent delays and problems with registration, including rent-seeking by DSW officials. NGOs and others report that the DSW has only infrequently conducted audits of registered NGOs and that it does not have adequate capacity to do its work properly.

Department of Women and children Affairs: In addition to the NGOAB and the Department of Social Welfare, the Department of Women and Children Affairs takes an active interest in NGO activities in Bangladesh, especially those affecting women. The department maintains a register of NGOs and provides assistance in coordination and providing resources and skills. It also channels Bank project funds to NGOs for operating micro-credit to the rural poor.


Chapter- 4 Evolution and Department of Legal Frame for NGOs in Bangladesh:

The Evolution of NGOs in Bangladesh: Historically, the non-government organizations (NGOs) started shortly after the 1971 war of liberation, initially providing relief services and rehabilitation assistance to war- ravaged victims. These NGOs then shifted their development programs and strategies towards community development, giving special preference to the poor and to the powerless segments of Bangladeshi society. Dr. David Korten analyzes the evolution of the NGO sector in Bangladesh within the framework of the Four Generations of NGOs, to wit:  

First generation: NGOs put emphasis on relief and rehabilitation work (1971-72); Second generation: developmental efforts of NGOs are aimed towards community development (1973-75) with a number of sectoral activities (e.g., agrarian reform, health, cooperatives, etc); Third generation: also known as "sustainable systems development" where the NGOs extend the breadth of their programs, ensuring sustainability through undertaking largescale programs, complementing the national development systems and involving various organizations and institutions (1976-to date); and, Fourth generation: which entirely depends on the development phase of NGOs in realizing their vision of society characterized by strong People’s Movements?

Over the past two decades, since 1971, the NGOs have made significant progress and contributions to a country which is still struggling to survive and to rise as a truly independent nation. Through their various development programs and projects such as health, agriculture, agrarian reform, irrigation, credit assistance, among others, these NGOs have served as catalysts, making their development interventions strongly felt in the urban and rural areas. Despite the government's ambivalent attitude towards NGOs, there is still "windows of opportunity" for building meaningful dialogue and mutual collaboration between the government and the NGOs in the promotion of sustainable agriculture and rural development.

Changing of laws and regulations:  All existing laws and regulations are needed to be harmonized to remove inconsistencies. They are also needed to be updated to reflect the development activities of contemporary NGOs. The government should set up a legal taskforce, including representatives of ADAB, for this purpose. Both large and small NGOs need to be consulted on areas needing revisions during the process of harmonization.


 The legal framework should stipulate the right of legal appeal by NGOs against sanctions imposed by the government. A clearer definition of circumstances in which the government has the authority to intervene in the internal affairs of an NGO should be put in the place. The Home Ministry should be required to state clearly and publicly the grounds for refusing clearance or imposing sanctions, and the affected NGO should be allowed a proper hearing as well as the right of appeal.  Functioning of NGOs could be more flexible and smooth, if necessary initiatives are taken by the government and legal and regulatory framework of NGOs will be more strengthen, are discussed below:  By stopping the tradition of advice and opinion about the activities of NGOs  By enacting rules and regulations by the leading representative of the NGO’s (ADAB, FNB) and Govt.  By making a networking body of the NGO’s  By stopping the influence of politics  Role of NGO’s should be supportive; controlling mechanics of monitoring should be reviewed so that NGO’s can work with their own value and identity.  The public representative of Govt. should be elected from experienced person of NGO’s  Every NGO has self regulating body who will monitor the activities of NGO’s regularity  By introducing one stop service system.  By submitting the supervisory report to social welfare department after registration to prevent cheating.  By introducing code of conduct and the system of legal action should be taken through independent court and Apex body.  Activities should be implemented per Govt. National plan.  The current legal framework for NGOs in Bangladesh is outdated, confusing, and in need of complete revision. Not only does it tend to focus attention and money on issues that are relatively unimportant – the foreign funding of a few NGOs by legitimate multilaterals and bilateral donors – it also does not impose high enough standards of accountability and transparency on the vast majority of NGOs that receive no foreign funds but that do affect the public interest. With the apparent shift toward more domestic funding for Bangladeshi NGOs, the current regulatory system seems improperly focused.  The fiscal framework for NGOs in Bangladesh is not supportive enough of the sector. While income tax exemption is available, there are virtually no provisions for deduction of corporate or individual contributions to NGOs. This is inconsistent with good international practice. In addition, the taxability of income-generating activities needs clarification, and the law should then be consistently applied to all NGOs.  There are currently no provisions in law clearly dealing with the issue of political activities by NGOs. This needs to be remedied by adopting rules that clearly forbid public benefit NGOs (PBOs) from engaging in partisan political activities. On the other hand, the rules on political activities should also clearly permit PBOs to engage in a wide range of democratic development activities, such as voter registration, issue advocacy, etc.  As a part of the legal and fiscal reform efforts, the information technology (IT) capacity of government agencies charged with NGO oversight (including the proposed PBO Commission) should be strengthened and modernized.

Change some laws and regulation effecting NGO and to make the way of function more smooth and flexible: The funds of NGO’s and all contribution of NGO’s should be exempted from tax.


                

By stopping the excess controlling power and supervision of the administration. By stopping the tradition of renew of the registration of NGOs. The ending the prior permission to implement the project. NGO’s participation in policy development should be changed. The time for receive money from the NGOAB after submitting the commitment paper of the Donor should be less lengthy. It should be 21 days instead of 45 days. The condition of giving loan by P.K.S.F. should be more relaxed and P. K. S. F. should give 01 year salary for the field worker of small NGO. There should some rules for the accountability and transparency of the NGO’s. The coordination between NGO’s Govt. and media should be increased. The registration process of NGO should be more relaxed and it must be free from political influence. The rules and regulation of NGO, PVDO, PBO, CBO, and MFI should be unique. The investigation proceeding of NSI & DSB before registration should be stopped. The authority for registration and oversight should be one, instead of different authorities, such as Social Welfare Society, Yubo Unnayan Department, Mohila/Women Department etc. The rules and regulations should be enacted with the consultation of NGOs and give priority to the opinions of the NGOs. The registration fees should be less. Fund/project of Donors which has implemented by Govt. through NGOs and if there is happened any corruption in that case it can be implemented through the NGOs directly and not by the Govt. NGOs can inform the Govt. about the plan of actions. The District administration can complain about the NGOs involvement in malpractice as per law of the Land. NGOs should submit the financial and activity report to the Local administration and to the NGOAB. GNCC (Govt., NGO, consultation Council) should be activated as a legal Entity and NGOAB should be abolished.


Recommendation: The following recommendations would improve the existing legal status of NGOs in Bangladesh, by reducing bureaucracy, removing legal contradictions and making NGOs more accountable.

Improving NGO Efficiency: It takes more than two months to prepare renewal papers for an NGO registration, which, in any event are not thoroughly scrutinized. Because the state has the authority to cancel the registration of any NGO or stop its activities and inform the donor, in any case of serious allegations, once a NGO is registered, renewal procedures should be simplified. Some of the Foreign Donation (FD) forms and procedures followed by the NAB are complex and cumbersome. The application forms and procedures should be simplified through discussion between the GOB and NGOs. With regard to registration, the Home Ministry should grant approval or disapproval within sixty days of receiving the application from the NAB. An application for the appointment of expatriates or extension of tenure should be decided within twenty-five days. The NAB should send reminders to the National Security Intelligence (NSI).

Improving the Law: According to a Circular "'No such project would be approved if it offends the feelings of the people of any religion, has adverse effects on the culture and values of the country or if the project is based on a political programme." Nearly 90% of the laws in Bangladesh are secular. Approximately 87% of the population is Muslim (BBS, 1998) and Islam is the state religion in Bangladesh. Therefore, there are legal problems in Bangladesh arising from unresolved conflicts in the law. While women's independence and empowerment programmes are against the beliefs of many strict Muslims, "gender development" is now a leading concern of western donors. So, a specific political party could firmly resist women's development and NGOs would have to end women's development programmes. This would be an unethical as well as undesirable result.



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. 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. NGOs in Bangladesh constitute a dynamic entity, which continues to table new challenges for the intellect as well as for the polity in the country. As a body of institutional arrangements, it surfaced as a result of failures in government delivery of certain social services. Eventually however the institutional dynamics and compulsions arising out of a participatory approach to grass roots development, the NGOs trespassed into many other territories. The expansion path has not always been devoid of sins; yet, the society has come to terms with their existence. The NGOs have engaged in several areas and in most of these areas, there are other actors in the field with whom performances of the NGOs may be compared. In some such activities, the society may gain by providing a larger space to the NGOs substituting for the old agents, while in others, a new form of partnership between the old agents (both government agencies and private sector) and the NGOs may be envisaged. 17 Our analysis takes into cognisance the possibility of a 'non-for-profit' Organisation transcending into one which undertakes commercial ventures, giving priority to economic efficiency; and yet continues to subsidise programmes with social objectives. It is also true that the dynamics within the NGOs, the internal incentives, the pressures of donors and the domestic government, all shape the scope and character of NGO activities in Bangladesh. Thus, policies are important instruments, which may enhance the scope of NGO contribution to the economic and social development of Bangladesh.


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