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14th - 16th, February, Mumbai
Theme : Promoting Good Governance - Internal and External
PROGRAMME SCHEDULE
Thursday 14th February 2002
RReport of the 2nd Annual Conference of Trusts and Foundations 14 – 16 February 2002, held at West End Hotel, Mumbai. Background Sampradaan Indian Centre for Philanthropy is a national nonprofit organization with a mission to foster a caring and sharing culture in India and to re-establish philanthropy as a way of life. In order to achieve its aims it undertakes various activities like research and documentation, dissemination of information and advocacy. As part of its dissemination work it has been conducting workshops in different parts of the country for Trusts and Foundations. At one such workshop held in April 2001 at the TERI Campus, Gurgaon, Haryana, the representatives of foundations expressed a need for an annual event providing a forum for exchange of ideas, and professional sharing and also for looking at issues calling for joint action. Thus the conference was instituted as an annual event organized by Sampradaan Indian Centre for Philanthropy with the following objectives: 1) Provide visibility to philanthropic organizations 2) Provide a forum to these organizations for professional exchange 3) Formulate common strategy for advancement of philanthropic interests in India In line with the decision taken at the TERI Conference, SICP organized the 2nd Annual Conference at Mumbai, the seat of many renowned Trusts and Foundations. While several of the foundations from there participated, others were drawn from Udaipur, Ahmedabad, Delhi, Chennai, Guwahati and so on. (Please see Appendix I) The Program The conference was held from 14th through 16th February 2002 with the theme “Promoting Good Governance: Internal and External” unfolded through the seven sessions enriched with the presentations of experts who have achieved a high level of excellence in their fields (Appendix II). On the 1st day, besides the 3 working sessions there was an inaugural and a Dinner session. The sessions focused on Internal Governance on the first day and External Governance on the second day. The core internal governance issues focused were a) The Role of boards, b) Finance Management and c) Human Resource Management. The sessions on External Governance focused on issues in national good governance and promoting good governance in partners. The Inaugural Session Executive Director of Sampradaan, Ms. Pushpa Sundar, welcomed the participants, resource persons and the Guests. She took the participants through the aims of the conference and how it has come to be instituted as an annual event. She expressed her optimism in bringing about a meaningful network among the philanthropic community in India and the need for this community to emerge as the mainstay of the philanthropic activities in India, and reducing dependence on foreign donors. She also reminded the audience the excellent philanthropic tradition that existed in ancient India, traces of which can still be found in different parts of our county. However, she rued, this culture has almost disappeared and modern philanthropic thought and action replacing it is very much in the lines of western countries. Ms Sundar then invited Dr. Minoo Shroff and Dr. Athreya and one of the participants to light the ceremonial lamp to throw open the conference. After the lighting of the lamp, She invited Dr. Athreya to Chair the session. Dr. Athreya Introduced Dr. Minoo R. Shroff, Vice Chairman of Raymond Limited and invited him to deliver the Keynote address. In his address, Dr. Shroff touched upon all internal governance issues within the framework of institution building processes: people, leadership, funding, finance management etc. He assigned the greatest importance to the people who make the organization, including the staff, the CEO or the leader and the board. He pointed out that the Chairman, the CEO or the leader of any organization has the following responsibilities: Setting tone Setting vision Motivating Inspiring by example. Effective leadership involves: a) Delegation of authority with due checks and balances in place. b) A smooth relationship between the Chairman, the CEO and the staff, more like a network of approachable, amiable peers c) Integrity of the leader d) Avoiding nepotism e) Compassionate and approachable disposition “If you don’t have a smile, don’t start a shop.” He emphasized the need to exercise all pre-cautions while selecting the chairman or the CEO. There is a need to find people with the right attitude and high level of motivation, and developing them through training and retaining them and the need to put in place a succession plan. Great caution is to be exercised at the time of selection of the top executive. Hence evaluate the credentials. While there is a need to retain people, nobody is irreplaceable. He advocated a proactive, coactive board capable of developing a strategy for raising demand for the services and providing for sustainable and innovative funding. Plan funding Contingency provisions must be made. With rising demands and receding income one should think of innovative funding. Good works always find funds. He cited the example of Harvard University where the alumni donate generously in appreciation of the benefits they received. He defined a good NGO or charitable organization as a self-renewing organization that instills confidence in the public through performance and receive support. The NGO, which is self-reliant, is more like any enterprise that is able to establish a market for itself. This kind of an organization has a self-evaluation system by which the whole organization is constantly in the process of development and self-renewal. Internal audits are very important in the process of self-evaluation, and self-renewal. The role of the Chairman/CEO/Leader in Finance Management and in the conduct of internal audits is vital. If the leak is not plugged at the right time, the ship may sink. While delegation is important and must be done, however, one continues to be responsible for the powers delegated. Prudent systems should be placed to safeguard the use of authority Dr. Shroff’s Keynote address was followed by Dr. Athreya’s address from the Chair. In his address Dr. Athreya focused mainly on 1) levels of governance 2) Institutional Governance 3) Vision & Strategy 4) Monitoring and 5) Institution Building. While discussing the levels of Governance he pointed out the core issues in a) Global Governance b) National Governance and c) Institutional Governance. He emphasized the need not only to set vision and strategy, but also to internalize and communicate, revisit and readjust it as required. He said that greater productivity called for more autonomy, support and teamwork than excessive leader initiative and control. He also pointed out the need to adopt an approach of research or market survey and obtaining stakeholder feed back reflecting in the planning processes of the organization. A five-year (long term) perspective should be dovetailed into the immediate action plans through a three-year (medium term) and a year (short term) perspectives. He pointed out the need for good governance emerging out of our national scene where 300 million people have been counted below poverty line faced with the question of survival and in dire need for services in the field of Health, literacy, education and vocational education. He stressed the need for foundations to articulate their core values, and work in the lines of Corporates and more. He too emphasized the need to find people who are inclined to the values of the organization and then train and develop them and equip them with necessary skills. He emphasized the need to put in efforts for career development and succession planning. The world today is increasingly aware of the interdependence of the various regimes. Governance at various levels exerts influence on one another. The foundations should utilize the opportunities created by globalization. The stakeholder is the customer. Thought should be given to how they are treated. Should there be a full cost subsidy, part subsidy, free. Their feedback is to be considered carefully. Funders should adopt a research or market survey approach. Reacting to the comments from the participants Dr. Athreya pointed out the need for documentation and a marketing strategy for NGOs and philanthropic organizations. Demand should be created through Advertising just as the corporates do. Working session I – Governance: Role of Boards The session was addressed by Mr. Noshir Dadrawala and chaired by Dr. V. Subramanian, and focused on the Role of Boards in Good internal Governance. The presentation set forth the legal and general aspects of effective Boards. He defined the role of Boards at the outset by a simple activity. He brought out the dictionary meanings of ‘governance’ and ‘govern’. Out of the 3 different meanings provided, he was quick to rule out the one which said, “sway and control,” and “rule and control with authority.” He pointed out the preferred meaning to be, “influence or determine a course of action.” He then pointed out the 3 kinds of boards pertaining 3 kinds of organizations, namely, 1) Board of Trustees (in a Trust), 2) Managing Committee or Governing Council (in a Society), and Board of Directors (in a sec.25 company). In legal terms the boards are responsible for a) the Funds, properties and assets of the organization, b) for advancing its “aims and objects” c) ensuring the organization operates within the framework of the organization’s own charter and statutes d) not to use funds, assets or influence for personal benefit, e) set policy through processes of periodic meetings and resolutions. The ideal Board is such where members take up responsibility with commitment, purpose and direction and considers the involvement as a labor of love. He summed up the qualities of an ideal Trustee in the words of Nancy Axelrod as: “An ideal trustee is a person with the versatility of Leonardo da Vinci, the financial acumen of Bernard Baruch and the scholarly bent of Erasmus.” The role of boards lay more in the area of governance and less in management or handle day to day affairs. The boards need to do their homework before meetings and the quality of their meetings determine the quality and effectiveness of the entire organization. Quality of governance is mainly reflected in a) accountability and transparency, b) self-regulation and c) organizational sustainability. The following were recommended for improving performance: a) Performance evaluation b) a strategic plan developed with consensus c) systems of “checks and balances” d) Moving Board Members who are only there for their “star value”, to positions of Patrons or Advisors f) System of rotation e) Functioning as a team. Good Board members normally should have openness, fairness, enthusiasm, flexibility, ability to stimulate others imagination rather than browbeat others etc. The presentation was followed by a discussion. The key points that emerged out of the discussion are: 1. In case of litigation, though the Chairman is sued by name, all others are equally responsible and will be held so, in case the irregularity is established in court as fraud. 2. The law of the land will prevail. Others will be held responsible in as much as they were expected to know, and had a role to prevent fraud happening. 3. If the trusts under the same person work with the same objectives and funds are transferred to support these objectives there is no legal problem. 4. If other organizations solicit loans fro m a trust it can be given if the Trust is instituted with that objective. Otherwise prior permission from the competent authority such as the Charity Commissioner as in Maharashtra and Gujarat needs to be taken. 5. Provision for rotation of boards every 3 or 5 years is good. However the entire board stepping down at a given point of time is not good. Terms are provided as a safety valve. The outgoing board members could serve as advisors etc. to support the incoming board. Trustees cannot be forced to step down if no limitation or term is defined unless he/she is declared insolvent or proved criminal. 6. In case an organization takes a loan and the same is not returned as agreed, The Trustees will be sued and the recoveries will be made from them. The charity commissioner regulates loans. Loans should be taken with prior permission. When the loan proposal is sent for permission the Commissioner will be in a position to judge whether such a loan will create a liability or not. However Liabilities of the Trustees are not limited and the recoveries will be made from them. A sec. 25 company has a limited liability. The board can make an amendment in the byelaws to protect themselves. However the process of amendment should be adhered to. Trusts cannot make any such amendments. In case of a problem it has to appeal to the High Court. 7. In case some trustees do not reside in the locality or state where the trust exists, there is no legal problem and two or three residing in the state can register according to the guidelines. However, the non-legal problem of contribution needs to be considered. 8. The provision for renewal of registration every three years could be a control mechanism. Trusts can have control. According to Co-op Society’s Act the Charity Commissioner plays an arbitrator’s role if openness and transparency is misused and goondas are inducted into societies etc. 9. With regard to taxation a Sec. 25 Co. is treated at par with Society or Trust. If the Government Departments do not do so, it is either due to the attitudes of the concerned and sometimes due to lack of awareness. This issue needs to be taken up with the Government Departments and CAPART. The provision of three types of charitable organization is made for the purpose of flexibility and choice. 10. Only 2 societies or two companies can merge. However if they want to work together a society and a company can be partners. 11. FCRA is of 1976 to regulate foreign contribution, and is an Indian regulation. In other countries there must be registrations under their laws. 12. Western countries give tax benefits to donors provided they give to charitable organizations there. 13. The leadership should play a role. Trustees providing certain services can have honorariums. Concluding the session, Dr. V. Subramanian enquired of participants if some common action could be taken up such as: a) Developing a manual of how to run voluntary organizations b) Do something about the payment for good managers in NGOs c) Whether the retired IAS cadre and others could serve NGOs as volunteers d) Can we have some norms for self regulations e) Net working f) Develop a system for training managers for NGOs. Dr Subramanian commented that the Voluntary Organizations are popular only so long as they are not successful. Once they are successful, they become an eyesore. But we want to be successful. Working Session II – Finance Management The session started after lunch. Mr. S. Srinivasan, CA, Mr. M.M. Chitale, CA and Mr. Rajiv Shah, CA were the panelists. Ms. Sundar chaired the session. The first speaker, Mr. Srinivasan, explained the tax laws affecting finance management of charitable organizations. 1) Sec. 10(23) C deals with charitable Trusts and Institutions. According to this, income could be allowed to accumulate up to 10 years till 2001. Now it can be accumulated for only 5 years. Intimation has to be given in the prescribed form in ITD. 2) If registered under the section 10(23) C, and have received donations of 1 crore and above, the annual accounts must be published in a local Newspaper. 3) The Newspaper carrying the published accounts must be attached to the income tax returns. 4) A public co. with the object of accepted mode of investment in sec. 11G restrictive clause Sec. 13 defined a prohibitory category exemption. If the organization throws open services to prohibited persons the amount will lose tax exemption according to market value of the services. 5) Collection between Jan.26, 2001 and Sept. 30, 2001 should be used only for the victims. 6) Separate accounts must be kept of this amount 7) If donations not spent for objects spelt out until 31st March 2002, they must be handed over to the PM’s Relief Fund or will be taxed. He said that this should be amended and last date extended to 31 March 2003 to avoid hardships that may be caused where work is underway. Corpus donations are also included under sec. 12 for specific objectives provided in Sec. 11 – i.e. specific directions form donor. If 75% is not spent is income of year on charity 2 options are there: write to IT that amount disbursed to charity in coming year shall be deemed to disbursed in current year, amount disbursed in ext year 2nd option is to accumulate for specific charitable purpose for 5 years. Intimation of the same be sent in prescribed form be sent to IT dept. FCRA was enacted to control the fundraising efforts of not only political parties but also NGOs. Dharmada collections are not taxable at the hands of the collector. Mr. Srinivasan suggested the forum should approach the parliament to entitle a company who pays 3% of its profits to an eligible charitable organization for tax exemption. Mr. M.M.Chitale simplified the whole concept of finance management and gave a few very simple guidelines: 1) You will not do anything out of rule – this is not acceptable. 2) You will do everything for your own benefit and because you want these to be done. He said the best practices of finance management need not sought out from the west. In our tradition there is ample to learn from. Mahabharata and Chanakya are two such sources. He said that most people shy away from finance management. They consider it as necessary evil. He stressed that the donors intent was sacrosanct in all cases and the conditions of the donor govern investment, for how long to invest, when to invest, where to invest until the purpose of the donor can be achieved, etc. Mr. Chitale pointed out that the golden rule for best application of finance as “ that is desirable or can be considered good which can give long lasting value.” He illustrated this with a humorous anecdote: Once he and a friend of his went for a dinner party of a common friend. While they were taking leave of the friend he asked them about the food. Mr. Chitale promptly replied, that it was good, and he enjoyed it. But his friend said, “ I will tell you about it in the morning.” (!) Mr. Rajiv Shah, AF Ferguson & Co Mr. Rajiv Shah exposed the participants to the basic principles of good finance management. At the outset Mr. Shah highlighted the much-unrecognized fact that the voluntary sector has indeed now taken its place as the fourth sector in Indian economy along with public, the private and the co-operative sectors. He pointed out that it contributes directly to the economy through its diverse activities, especially, income generation and housing for the poor and the less privileged. He presented some data from a study undertaken by SOSVA, which shows that the voluntary sector indeed is emerging as one of the major service providers in the fields of education and secondary health care. Mr. Shah then touched upon the strengths of the voluntary sector which were enumerated as follows: a. Ease of operation b. Flexible approach c. People-sensitivity d. Consequent ability to respond to field realities e. Relative freedom from bureaucratic restrictions f. Easy accessibility and the capacity to attract committed people and funding from the community These strengths have led to a recognition that the voluntary sector can and needs o step in to play a major role in development activities. On the other side the sector had its own limitations such as: a. Inadequate financial resources b. Erratic supply of funds c. Informal management d. Untrained and inadequate staff e. Non uniformity of guidelines/standards f. Lack of infrastructure Mr. Shah pointed out that the success of any foundation would be determined by the effective and efficient use of its financial resources, which could be achieved by way of: Ø Fund raising/mobilization in a fair transparent mode Ø Effective management of corpus/endowments to preserve them for future use Ø Budgeting the operations properly Ø Investing prudently Ø Maximizing results with same level of resources He then explained what Corporate Governance means. The term refers to structures and systems by which companies are directed and controlled. These relate to ownership and control and the roles of owners, directors, managers, shareholder, etc. In the context of Charitable Foundations it refers to structures and systems by which foundations are directed and controlled. These relate to ownership and control and the roles of trustees, donors, managers, etc. Financial Management is one of the major components of good governance. He then drew attention to what constitutes good financial management and what is its outcome. Financial Management is constituted by 1) budgeting 2) working capital management 3) Managing corpus funds 4) financial analysis and reporting. If these are done efficiently, the result would be minimum cost raising funds and maximum return or utility of expenditure. A good budget, he pointed out, should have an analysis of both the estimated costs and expected revenues. A budget should provide for benchmark or comparison point and early warning of variations from the organization’s operating plan, of revenue shortfalls or cost overruns. Budgeting is an iterative process and should involve: Ø Determining programs, time lines and basic costs Ø Developing detailed cost estimates Ø Assessing available funding and identifying possible new sources Ø Reviewing and revising both program objectives and cost estimates in light of expected funding and Ø Reviewing, revising and reducing program plans as necessary in light of expected funding He then continued to give details of format, monthly MIS etc. He detailed the importance of working capital management, management of corpus or endowment funds and financial analysis and reporting and cash flow statement. Mr. Shah then shared the SOSVA experience with the participants. SOSVA is an organization involved in institutional support of NGOs. In this capacity it has made out a project of providing bridge loan funds to NGOs, which has become financially viable. It has also done a feasibility study for constituting a National Evaluation and Monitory Agency (NEMA). The session was followed by a brief discussion. Some of the important points that emerged are below: 1. With the ROI declining (15 – 10 – 9) accumulating funds leads to loss. Interest income is no more attractive. Unless you have an expert the route of earning interest income to develop corpus is not possible. Create infrastructure today, and then wait. Create real estate first. 2. Those who have space may do income generation. 3. You can give and receive loans if the regulations of the organization permit. There is one caution to be exercised: none of the loaning organization should be on the board of the recipient organization Working Session III - Human Resource Management Dr. Shyamala Vanarase and Dr. Sudheer Vanarase in their presentation explained how good governance is dependent upon the following factors: a. What is being governed b. How is it being governed c. Who is in authority Though the three factors are clear with respect to internal governance, with reference to external governance, contextual factors such as the local economy, political situation, overall human development etc. play an important role. Human Resource Development tends to be the same in principle, irrespective of the context. All the existing practices with relation to Human Resource Management can be placed within two broad categories: equality based or power based. There is a vast majority of practices in the second and a small minority in the first. Power based practices are, more often than not, manipulative, converting interactions into win-lose situations. Equality based practices tend to develop trust, own responsibility and interact in terms of the task. One of the HRD challenges for the Trusts and Foundations, who do not have profitability as a prime concern, was stated as a lack of opportunity for staff to develop a career. The staff finds themselves on an economic plateau. HRD in this context means how to keep people happy and efficient. They explained the giver receiver relationship between the donors and beneficiaries. While humility is central to the giver, gratitude is central to the receiver. As long as these two are in perfect balance there is no problem. But if the relationship is to be effective and wholesome the receiver should be enabled to move on to the status of independent survival and later to that of prosperity with dignity for all. If this graduation does not occur the giver receiver relationship is aberated. They recalled the instances when a receiver demands for more. Through a joint presentation Dr. Shyamala Vanarasse and Dr. Sudheer Vanarasse described to role of Trusts and Foundations to be helping people not only to survive with dignity but also prosper with dignity for all. The presentation brought out the fact that the Trusts are the social arm of the surplus generating commercial or industrial units and as such seeks to return to society the surpluses generated by the profit making units. It is in this context that governance becomes relevant along with its natural ingredient: Human Resource Management. They asked the Trusts whether they would return the surpluses to the society in a manner that dignity of all is maintained. And if it is so the Human Resource need to be developed accordingly so that people move out of a stage of helpless dependence to independent survival and to prosperity with dignity for all, which means, competitiveness, the ethically managed, the non-greedy handling of money and the equality based handling of people. Professionalism, level playing fields, sharing prosperity with all stakeholders, marketing strategies, globalization are all relevant too. As HRD professionals, they said, we are confronted by lofty prescriptions on the backdrop of mutilations of every kind that beat factual descriptions. The road to improvement and change is a long one, that of training and development activities. For the Trusts, training of beneficiaries is going to be as important as their own staff. Rather than disbursing money and holding checks on accounts, it is going to be more important to introduce participative monitoring practices. This would also mean greater variety in the talent one looks for. Are the funding agencies willing to change into voluntary helpers who would help people help themselves? For Trusts to be functional for social good, these matters of attitudes are significant. The attitudes of givers, receivers, administrators have to be taken into account. Dr. Vanarase pointed out that “the who” is of equal importance as the what and how. If what and how are clear, the element of who can play havoc with an idea, however great on paper. Training for a general approach to achievement orientation is, more or less, established and well articulated. But training for putting available help to appropriate use for the receivers are somewhat neglected areas. Many a time, monetary resources seem to run into dry sands because of lack of preparedness on either side. Mr. R.Venkat Addressed the session after the joint address of Dr. (Mr. & Mrs.) Vanarase. He highlighted the fact that HR practices are based on TQM approach. He defined TQM as a management practice to maximize effectiveness of resources. HR is the backbone of TQM, which is a bundle of tools and techniques. TQM believes 1) Every human has the spark within which can be set off; no one is a dud. 2) There is no human that does not want to work, but the system does not permit. On the day of joining enthusiasm is great, but it slowly dies down. And at times the employee becomes totally defunct. Of the four m’s (man, methods, machine, material) man is the most complex. And people who need to handle them are not equipped. They are not exposed behavior skills. He said that TQM talks about total employee involvement. He pointed out that, when the employee feels the workplace is an extension of his home, this could be said to have occurred. “How does this happen?” he asked. TRUST He pointed out that there are many personality types and many intelligence types such as mathematical and logical intelligence, social intelligence and so on. All people cannot be satisfied with money. Some can be satisfied by money, others by power, yet others by R&D, and yet others need none of these. They are the transcendental lot. How can a person whose need is to do research and development and not just have a lot of money be satisfied by the pay packet alone? It may be secondary to him. The needs of different people are different. But they are all the same at one point. They all need TRUST. How can the employees feel that they have the trust? The EBA (Emotional Bank Account) How can this be developed? We need to develop an EBA or Emotional Bank Account. Check your deposits and withdrawals Kindness Courtesy Support ….are deposits while Discourtesy Failure to commitment Backbiting ….are withdrawals Again Meeting expectations Loyalty Apology …….are deposits Every time one makes a deposit one builds up Trust and every time a withdrawal is made one warrants mistrust. Many in offices end as errand boys rather than leaders and problem solvers. The ‘follow me’, do as directed culture obstructs the path to excellence. Those who have set up their own goals strive for excellence. How do you instill these qualities at the right time? Working with people at the formative years of their lives is very important. This is the reason why I am working with the schools, to get the system put into schools. Mr. Venkat stressed on the role of the leader. A leader is to be a role model. He/she should promote commitment, transparence, open offices, role models, shared vision, empowerment and trust. Working Session IV – Promoting National Good Governance Dr. Jayaprakash Narayan aptly opened his presentation on Promoting Good National Governance with words of Mark Twain, “All complains of the weather but no one does any thing about it.” This is so true of governance. The whole country complains about it, but no one does anything about it. Of the three organs responsible for good governance, the judges are the most culpable. Both the legislators and the bureaucrats are vulnerable, more so the former. The judiciary alone is invulnerable under the constitution. There are 25 million cases pending in the courts today. In our country 71% of the population is below the age 34. We have a responsibility, an adult responsibility for action. It is not that the politicians are bad or are power hungry. The politicians are part of us. In a country where good behavior is penalized because some times it is not in conformity with certain norms, and bad behavior is consistently rewarded, we cannot expect any thing better unless we rectify what is wrong in our system. Every election is a promise of peaceful change. But it fails to deliver. 150 thousand million of corruption pays the price. Every elected leader has 2000 employees collecting. Once there was a pastor in the US senate. Once he was asked whether he prays for his fellow senators when he was praying alone in his room. The pastor replied, “No. But when I am in the senate, I look at the senators and pray for the country.” Governance is “my” – “our” business. During his presentation he brought out the need to exercise people’s power and participate in governance rather than just complain about it. He drew an analogy in a humorous story. Charlie didn’t want to go to school. He stayed on in bed. His mother came and coaxed him to get out of bed and go to school and informed that his best friend waited for him to go with him to school. But Charlie refused to get out of bed to go to school. His mother asked him then to tell her two reasons why he does not want to go to school. He said that he could give her two reasons, 1) all the teachers hated him and 2) the students disliked him. So he does not want to go to school. Then he asked his mother if she could give him two reasons for going to school. The mother gave him two reasons 1) that he was 45 years old and 2) that he was the headmaster of the school. So are we, the public, the common man, vested with the sovereignty, and power, do not exercise our responsibility. Government is to be run by us, the people; we are the headmaster of that school. But unless we exercise the power we have, the elected representatives and bureaucrats will take hold of it and misuse it. He then took the participants through some hard statistics that exposed the vital areas where non-governance impacts. Basic infrastructure, Primary Health and Primary Education, school education, rule of law, justice, law and order are crucial areas where government’s role cannot be reduced. Dr. Narayan vividly brought out the reality of present day governance and its impact on day-to-day life. Crisis of governance Increasing lawlessness Inefficient state apparatus Unresponsive bureaucracy Ineffective judicial system All pervasive corruption Criminalization of politics Money and muscle power in elections Political instability Erosion of legitimacy of authority Role of state Defend freedom i. Laws to regulate conduct ii. Laws to protect liberty (child labor etc.) Common services Facilitate enjoyment of freedom iii. Public order and peace iv. Education v. Health care vi. Elimination of drudgery vii. Conditions for economic growth Why is governance vital? Government spends Rs. 1800 crore every day Out of27 million organized workers, government employs 70% Fiscal deficit (union and states) has reached 10% of GDP 50% of Union Tax revenues go towards interest payment Only 5% of GDP spent on Health, Education and Social Security. He pointed out that the Government’s role is irreplaceable in the following areas: Public order Rule of law Justice School education Healthcare Infrastructure Natural resource development He pointed out that money was not actually the issue. He provided excellent data to contest that. The following was put up for consideration: Sanitation 140 million toilets needed Cost Rs 35000 crores Equals just 20 days expenditure School Education 1.6 million classrooms needed Capital cost: Rs.16000 Crores equals to 9 days’ govt. expenditure Recurring expenditure: Rs.8000 crores – 5 days govt. expenditure. What does the citizen expect? Justice Dignity Vertical mobility Keys to Resolution Change of players is not enough Values are not the issue; institutions are the key Most players are victims of a vicious cycle Resources are not a problem; the way they are deployed is the key. Distortions of State Power 1. Positive power restricted 2. Negative power unchecked 3. All organs are dysfunctional 4. Crisis is systemic Political processes ought to be the solution but has become the problem itself Failure of political process is mainly due to: a) Parties Autocratic and unaccountable Repel the best A problem, not solution Choice – tweedledom & Tweedledee b) Election process Change of players No change of rules of the game Criminalization Money power Flawed process ·
Electoral rolls (40% errors What Lok Satta is doing? 1st climate building Organizing people for “People’s watch”, strategic changes, political strategies Procure and disseminate right information, insisting on speedy action. 1. Collective informed action and assertion 2. Swarajya through low cost changes at local level like toilets for everyone 3. Election watch People’s Watch People are informed organized and trained for collective action, assertion of rights. This is collective informed assertion of rights to services from govt. departments. He recalled Mahatma Gandhi’s words, “Swarajya does not mean acquisition of power by a few but acquisition of capacity by all to resist authority when abused.” In order to bring this about, strategic changes need to be made and speedy implementation of the same. Change should be measurable. Work on small affordable measures where people can participate without difficulty. Election watch 45 criminals were found to be in the assembly. Decriminalization is very important. Watch on election campaign. Illegal expenses warrant illegal acquisition of money. Thus the people and the leaders and the entire government machinery comes into the vicious cycle of corruption. This has to be stopped. 1500 Petrol pumps in AP collect Rs. 1 Crore per day Manipulation of meters at the pumps is a common practice well known to all. The campaign to stop this has been an immense success and now in AP one can say the petrol pumps are functioning, as it ought to. A simple measure of walking into petrol pumps with a few senior and responsible citizens with a calibrated can and asking the pump to fill it and meter it brought out the truth. And since then the pumps have reformed themselves. Rules like every day of delay in issuing ration cards etc. the government must pay a penalty of @Rs.50/- per day for basic services. Insist on timely service delivery. Justice. 1000 out of 8000 applications pending in departments were cleared on account of Lok Satta’s action in 30 days’ time. And Bribes collected to a tune of 1.5 lakh was returned to the people. While condemning the wrong doings of government departments, politicians and judges, Dr. Narayan also talked about the positive initiatives taken by certain governments like the judicial reforms in Maharashtra following the arrest of one of the judges few years back. He talked about the strategic changes made by the Government in Tamil Nadu, which has improved the quality of life of people irrespective of failures by the politicians. He said in a vastly illiterate country where 92% are daily wage earners and 8% are extraordinarily privileged with an iniquitous power relationship, specialist raj and colonial legacy where citizens have become slaves constitutional issues have priority to minor issues of training and management. The citizens must attain the sovereignty, which they do not realize they have. In a country where birth determines the future of vast majority, what the citizens must realize and pursue is people’s power. The State must fund, must deliver through local bodies. The parents of the children must run the schools and farmers run the agriculture sector and so on. Earlier, the children who studied in government schools had a future. But it is no longer so. Earlier these schoolteachers were local, now they are known to be provincial and have no accountability. The link between the vote and good governance, i.e. quality delivery of public services needs to be established. Every election is a promise for a peaceful change for the better, good governance. But the leaders fail to deliver. Good governance is forgotten. They get into the vicious cycle of illegitimate, expensive campaigns, elections, recovery of campaign cost plus provisions for next election. Every elected leader has 2000 employees doing the collection. Dr. Narayan believed that certain government cadres could be eliminated without any harm to the country, as they are not doing anything worth the while. He advocated the institutionalizing the empowerment of Punchayats. Dr. Samuel Paul Dr. Samuel Paul defined governance as an exercise of political power by the state for the smooth functioning of all constituents of the nation, and as such, the state playing the role of enabler. The second major aspect of governance, he pointed out, is the provision of civic amenities so that it can be done in a cost effective as well as harmonious manner. He described the problem of governance at present as wholesale and retail corruption. The Grand corruption at the top level was constituted of top-level abuse of authority, supported by pervasive feudal values, political interference supported by wide administrative discretion and official secrecy. The retail scene was prompted by the government monopoly of services, non-responsive regulators, short leadership tenures and weak & poorly trained staff on the one side, public ignorance and harassment/delays on the other. Dr. Paul described the context of Governance in India as Ø Monopoly in services Ø System Overload Ø Weak Implementation Culture Ø Competitive Populism What leads to abuse of power? Monopoly increases power. Many services were, until recently, monopoly of the government. The privatization process is going to bring in competition. Monopoly increases power and leads to abuse of power. There is a system overload. This leads to delays. Bureaucrats also misuse the system. There is a weak implementation culture and a competitive populism. Programs for development are manipulated to serve political ends. Funds lie unutilized while crying needs are still not met. Delayed implementation, negligence of training of staff leads to poor performance. There is poor enforcement of law, penalties for failure and breaking law. He pointed out that the situation was compounded by Resource constraints, Incompetence in Government, Corruption, low priority for Productivity and Civil society’s weaknesses. The less developed the state, the greater the role of government in education, and the greater monopoly of services. The question is how to create incentives to providers of services, private schools etc. in order to create competition. The Kerala example could be considered. There the government’s role is more to subsidize costs and monitor rather than run the entire education program. The state of the public services is due to the way the market; civil society and the state play their roles. Today, the Government work has become totally irrelevant. Training is much required to step up quality. However, not in isolation but should accompany other measures such as re-organizing departments and reallocating duties and responsibilities. The departments are settling individual problems. More people should be put on to frontline problem solving duties. A reallocation of duties is called for. Legislators behave as executives and control all decisions on the use of money. There is no real separation of powers. Most of the ministers are interested in posting and transferring etc. In the vast public eye he feels the need to show his authority. This problem cannot be tackled at the central level. May be at the punchayat level. Is it possible at this level where the position is less and doings are more discernible? In this context he described the role of the market as that of providing competitive options to reduce the load on Government. While at present very little importance is laid on productivity, the market options would place great priority on productivity and quality thus the delivery mechanism will become much more effective coupled with citizen feedback, structured dialogue and collective action to support quality services. The state needs to play the enabler’s role bringing about a balance between both the forces. Dr. Paul, just as Dr. Narayan had, pointed out that the citizens were ignorant of basic facts in governance and would be guided at every step by any and everyone associated with governance and are befooled. Civic ignorance is the great loophole providing a lot of room for corruption. Thus both of them emphasized the need for public education. Can Economic Reforms alone deliver? Smaller and a more focused government will help But the government still has a large role. Some of the major segments will still continue to be the government’s responsibility due to the sheer complexity and vastness of the need. Transport, water, sanitation and so on will have to be handled by the government. Dr. Paul prescribed a four-pronged reform action. 1) He advocated citizen’s feedback and benchmark of costs, quality, rights, access all over the country and moving from access focus to quality focus. a. Socio-political reform supported by transformation of leadership, mass education, public funding of elections b. Institutional reform supported by supported by transparency and right to information, civil service boards and lok pal/ombudsmen c. Market reforms supported by competitive options and deregulation Service standards, IT applications, citizen interface and Local civic action must supplement these measures. The various actors in the process would include the political elite, civil society, religious leaders, government, industry leaders, political leadership, Agency leaders, higher bureaucracy, NGOS citizen groups, media and local representatives. Dr. Samuel believed in the people’s ability to take on the movement for promoting good governance in their own constituencies, and cities in their own way and at their own pace. He felt we should be able to develop replicable models and tools that people can use. We should create pools of knowledge for people to draw from. He emphasized the need to create knowledge to empower people. He felt that diverse efforts will emerge from various corners of the country and they could draw from each other. We need not wait for one movement to catch momentum and spread across the country, which may be difficult in today’s scenario. He stressed on the need to inspire public action groups so that they take on. Develop strategies. Make it a resource available. Change is a slow process. The progress card done by PAC is one tool that can be used to sensitize people, sensitize authorities and call for action and deliver measurable results. We should create many more tools that the people can use to ask for accountability from the Government. He emphasized the need to work with the young so that they grow up to be responsible citizens and leaders. He said He worked with the young to develop civic clubs for civic action. Q. Why has no one raised any question regarding the facilities and pay packet for the legislators, which has been just revised? R. Dr. Narayan responded that his sympathies are with the legislators. They do deserve a good compensation package. What needs to be fought is the abuse of authority and failure of leadership. Q. Environment is a great factor in all this. What can be done with states like Bihar where corruption is legitimized, there are fixed rates for bribing. How do you see the efficacy of this kind of process for change? People’s initiatives are directed to improving situation created by politicians and bureaucrats. There should be groups who are self regulated. Talking of politicians, Dr. Narayan said that they are more sinned against than sinning against. Some of the participants expressed the need for aware and responsible people to enter politics and improve governance. They felt that the corrupt party system could be improved if a philanthropist, a social worker, technocrat etc. enter the political arena. To Dr. Samuel’s urge to create models for replication Dr. Narayan responded that the need is not to innovate but to replicate the many innovations the country can boast of. The need is to replicate, institutionalize, monitor. At Jamkhed a health center of world class has been developed and is functional. Can that be replicated all over the country, if not, why not? Dr. Narayan also protested the way we exaggerate our problems and under estimate our potential. He said the good that happens in the country is not highlighted. The evil and the failure is highlighted and nothing is done to rectify those. He emphasized that thing have been improving in our country steadily and that it will continue to do so. We want to make sure that we get all the good things happen. We cannot let corruption take over our country. So we must fight against it. That does not mean nothing is right in our country. There are several reform movements going on and have gone on. We must strengthen these. We want to have minimum intervention with maximum result. The principle of levers needs to be applied. A large boulder cannot be removed by a child, a weak adult, an old person. Nor can a muscle man, or even several of they remove it. But a lever is devised then the boulder can be shifted. This is strategy. Intelligent application of strategy is the solution. He attacked the pretentious behavior rampant in society today. A good illustration was made through a story: There were two mothers talking to each other. A rich mother well dressed with her child also well dressed and ready for school was talking to another mother. She lamented the burden of books that the education placed on young children. The other woman asked how she tackled this problem. The first woman pointed to a young child carrying a heavy school bag and walking along her child and said that she employed him to carry her child’s bag. He narrated another instance where a very wealthy lady falls seriously ill, due to the environmental pollution. However the rich pretend they can live in their well protected homes and forget about the dirt outside. ORG, funded by Ford Foundation has undertaken a survey of 22 states on the status of major services that affect the poor such as PDS, Public Transport, health, education and childcare. The results will provide a good feed back as to what the states are doing in provision of basic services. Dissemination of findings could be done with the help of Trusts to the state and district levels. WORKING Session V - Promoting Good Governance in Partners Mr. Sanjay Bapat He said the entire question of Partnership and how to promote good governance in Partners is centered on these two letters: IT. ‘I’ stands for ‘Integrity – of vision corporate, and ‘T’ stands for “Transparency of operating systems”. Speaking of integrity and how could foundations promote integrity, Mr. Bapat pointed out that the following would be useful steps: 1. Spend time with NGO partners to go through their vision statement, and what it means in achievable terms 2. Share your experience, expertise, your values with NGO Partners. 3. Find the relation between the vision and the work in the communities 4. Let there be discussion and dialogue in the process rather than examination and evaluation. Mr. Bapat advocated the credit rating system, which is being developed. However he insisted that the foundations must serve the NGOs if they want to govern. They should promote the NGOs they serve by talking to friends about them etc. The funding partners must look at the following: l Focus of program l Methodology, whether stakeholders are taken into confidence l The external interface l Output l Teamwork l Finance systems, how revenue is generated He was of the view that the NGO salaries need to be considered. There should be provision for good salaries for their staff to attract competent people. Ms. Sheela Patel Ms Patel, in her presentation, represented the standpoint of the grass-root people with regard to partnership. She cautioned the audience against the pitfalls existing in the present style of partnering. Ms. Patel spoke about working in partnership with poor communities. She pointed out the need for the middleclass professionals need to undergo a deprofessionalizing process to help them understand the line of thought among the poor. She said it took 18 years for SPARC to make a sensible resettlement package for their communities. Generally professionals and funding organizations are in a great hurry. She questioned the risk assessment undertaken by donors/foundations and funding agencies. One needs to understand the circumstances in which the poor live. Is credit available to them? They need credit for a particular purpose but the banks and credit institutions have no provision to meet that purpose. Then the people lie and cheat so that they can procure a loan of Rs.5000/- What are the risks involved and what instruments are being used, are they relevant to the kind of organizations being assessed? The small organizations doing good work may not meet the criteria laid down by the assessors. That means they cannot receive funds and continue their work. Systems cannot understand organizations work. The work needs to be understood first. The funders need to explore the possibility for good work through the small organizations that may not stand the tests of credit rating agencies. That does not mean they are not credible. She also pointed out the lack of interest on the part of Indian foundations to fund innovative ideas. She expressed her distress at the support extended to antiquated standards, which are not relevant today. She pointed out that huge amounts allocated for welfare work are unused while so many organizations and their people wait for some funding. The funding organizations need to explore partnerships with government departments and Municipal Commission departments to bring better quality of life to people. At the end of the session, several participants expressed their distress at the funds remaining unutilized and welfare work urgently needed pending due to bureaucratic bottlenecks, laws and their amendments, and systems. She explicitly questioned the participating foundations about their inability or fear of funding controversial or innovative programs. She said there is no shortage of funds at the macro level but there is one at the micro level. Ms. Sheela Patel questioned the excessive role of funding organizations/foundations in promoting ‘good governance’ by risk analysis and credit rating. She contended that these practices were not appropriate for the small NGOs, who are doing an excellent job at the grass root and whose credibility cannot be measured by the standards set by people who little understand grass root realities. She challenged these systems, which destroy the beautiful spirit with which the work is done with people at the grass root. The Wrap Up The session on promoting good governance in partners was followed by the wrap up.Ms. Pushpa Sundar chaired the session and numerous suggestions for action flowed in. 1. Form a partnership with CII for advocacy 2. Send the copy of the memo to the Finance Minister w.r.t. taxation to all present and request them to endorse the same or take similar action in their own region separately. 3. Invite policy makers to the next conference and then organize a dialogue with NGOs and Foundations. 4. Organize conference for NGOs and Foundations w.r.t. Institution building and the role of foundations in the same. 5. Tripartite partnerships theme for the next conference by end of January. 6. Field visit during the annual conference. 7. Sharing best practices implemented by participating organizations. 8. Explore possibilities for identifying regional partners. 9. Form regional committees to take the philanthropy agenda forward 10. Organize foundation meets at the local level in between conferences. 11. Extend the scope of the Directory to include other states. 12. Reduce subscription to the Newsletter by getting sponsorship. In her wrap up comments Ms. Sundar pointed out that there are but few members among foundations. Without the strength of membership she was not in a position to effectively represent the philanthropy sector. She urged the participants to become members of SICP and subscribe to Sampradaan too. Those who could not become institutional members, at least subscription to the Newsletter would be expected. Vote of Thanks A vote of thanks was proposed by SICP as well as well as the participants. The participants expressed their overwhelming happiness and thanked SICP for organizing the event. Some of the participants also expressed their wish to contribute to ‘Sampradaan’, the bimonthly Newsletter. Thus the step forward to networking seems to have been taken at the conference. SICP thanked the resource persons and participants and all those who played a role both on stage and in the background to make the event a success. The following acknowledgements were made by SICP: Several Institutional and Individual members and friends assisted ICP in organizing the 2nd Conference at Mumbai. Besides all of the resource persons made themselves available as volunteers for the conference. The cost of the Conference was partially met by the registration fee. 21 participants were registered at full cost. A few participants availed full subsidy and a few others partial. All members were given a 10% discount on the fees. Dhirubhai Ambani Foundation and the Centre for advancement of Philanthropy provided financial support. The Executive Director of CAP also volunteered to be a resource person for one of the sessions. The Dhirubhai Ambani Foundation also supported SICP in the smooth conduct of the conference by providing manpower at the venue and making logistical arrangements. The Bombay Community Public Trust also supported by providing assistance with photocopying background papers, procuring stationery etc. Dr. Subramaniam, Director, Bajaj Foundation and Mr. SV Sista, Director, Sista’s private limited, took very special interest in identifying resource person. Mr. V.K. Sharma, Advisor, Human Resource, JK Industries, Delhi also assisted in identifying resource persons.
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