Overview of NGO Ethics

As institutions that do not place profit as their number one goal, NGOs also tend to be among the most trusted institutions in society. In the Fourth Edelman Survey on Trust and Credibility (2003), both US and European leaders indicated greater trust in NGOs to do what is right than they professed for business, government or media. In an earlier (June 2000) Edelman survey of 500 US elites and 100 European/Asian elites, the respondents demonstrated that for environmental, human rights and health issues, their trust in NGOs more than doubled their trust in government, corporations, or media.

While most NGOs strive ethically and responsibly to promote the public good, there are also many actors in the NGO community that do not follow acceptable standards of conduct, whether in fundraising, governance, or use of public funds. There are also many NGOs that have been set up for unethical ends, such as “Briefcase NGOs” who function mainly to try to attract grants or donations to enrich their owner. Unethical NGOs such as these exploit people’s giving nature and weaken the trust of the public and donors in the NGO sector. Ethical and responsible NGOs are tainted in the process.

Notably, in most cases, there is only minimal regulation of NGOs by state authorities – often only enough regulation to see that the NGO has been legally formed or meets its requirements for tax exemption or other concessions. Funding organizations and the public may have little understanding of which NGOs are reputable and which are fraudulent. Nor is it easy to ascertain which NGO are utilizing public money responsibly and efficiently to carry out their activities, and which are spending most of their resources on their staff and board. Compounding the problem is that less than desirable organizations may assume names that are quite similar to those of reputable organizations, or may assume “attractive sounding names” while carrying out little or no activities for the purposes claimed. Foundation grants tend to go to organizations with which the foundation is familiar, rather than risk giving to an NGO that may prove not to use the funds responsibly.

Identifying Responsible NGOs

Evaluation of NGOs has generally been seen as the role of NGO associations themselves, not of government. As Pablo Eisenberg (The Chronicle of Philanthropy, August 5, 2004) notes, “It is time for nonprofit groups to take responsibility for cleaning up their own shortcomings. . . It is not its [government’s] job to set detailed standards for a large variety of nonprofit organizations, a role that has traditionally been a private endeavor.” A 1994 ESCAP article also notes that “NGOs naturally oppose government oversight and monitoring. To reduce governments’ perceptions of the need for such control, the NGOs could reach their own consensus on an NGO code of conduct and self-regulatory mechanism… To activate such collective self-accountability, apex organization to fulfill those functions and provide a forum for the NGOs themselves would be necessary.”

There are seven basic methods for enhancing the accountability of NGOs and for assessing their legitimacy. These are:

1. Voluntary Codes of Conduct as Guidelines. An individual organization or an Association of organizations may establish a set of standards as guidelines for the conduct of the organization or member organizations. There is no internal or external evaluation of the compliance of the organization or members with the code. For example, the WANGO Code of Ethics and Conduct for NGOs serves as a guideline for member organizations, and the guideline for the Association itself, but there is no evaluation, initial or periodic, of how well the Association or members abide by the code.
2. Self-Certification. Individual NGOs may evaluate their compliance to a set of standards and certify that they are adhering to the applicable set of standards. There should be a mechanism in place for the initial evaluation of compliance and for periodic review. In the case of Association self-certification, a member is to certify that it is adhering to a set of standards approved or established by the Association. Self-certification may or may not be required for membership in the association, and similarly there may or may not be regulatory mechanisms in place to assure compliance.
3. Certification. Certification is an independent, external review of an organization’s compliance with a given standard. Certification may be a peer review (whereby a team of other NGOs evaluate an organization’s compliance) or an accredited review (whereby independent raters evaluate an organization’s compliance).
4. Accreditation Program. An accreditations program is to certify organizations that do certification. The International Standards Organisation (ISO) defines certification and accreditation differently. It defines certification as the “issuing of written assurance (the certificate) by an independent, external body that has audited the organization’s management system and verified that it conforms to the requirements specified in the standard. ISO defines accreditation as “the formal recognition by a specialized body – an accreditation body – that a certification body is competent to carry out … certification in specialized business sectors. Accreditation is like certification of the certification body.
5. Ratings Organization Evaluation/Watchdog. In several countries, various agencies address the problem of identifying responsible NGO by evaluating the NGOs and providing ratings of the NGOs. The rating agencies establish their own standards and rating systems and measure the performance of other organizations against those standards. The organizations being rated may or not participate or have input. These programs depend heavily on the credibility of the rating agencies.
6. Award programs. The presentation of awards to NGOs offer high, public visibility to the organization. This can be costly to implement. Examples would include the Balcolm Baldrige Award and the WANGO awards.
7. Information Agencies. Some organizations provide information on NGOs without ratings or interpretations. An example would be Guidestar, which provides information on US nonprofits, including access to annual budget, number of staff, IRS forms, and so forth.