RPN 19 published May 1995

1. Regulating the non-governmental sector: the dilemma by Eddie AdiinYaansah and Barbara Harrell-Bond

NGOs are believed to be a voice of `civil society'. One definition of civil society is that it comprises the `complex network of autonomous institutions sustained by a "civil" code of conduct, ... that are distinct from, yet maintain effective ties with the State'. What constitutes `effective ties with the State' is the dilemma.

The introduction of regulatory frameworks is a relatively new activity in many parts of the world. This is a very preliminary discussion of some of the issues, comparisons of legislation in Croatia, Kenya, Rwanda and Uganda, and a brief exposition of such legislation in the UK. The RSP will be producing a more comprehensive report of its current research on this subject. Your input (copies of legislation, reports, discussion papers) on this enormously complicated and contentious field will be greatly appreciated. With the much greater experience of NGOs in Latin America, our new Spanish readers are especially encouraged to contribute.

As RPN readers are well aware, NGOs relate in varying degrees of opposition to, or in concordance with, their government. Because of the diversity of NGO constituencies, sizes, strategies, structure, ideologies, specialisations, sources of funding, agendas and power, it is not possible to describe an average NGO. They may be religious, secular or affiliated with political groups; be funded by businesses, foundations, private citizens and governments; specialise in a technical field or operate for multiple purposes.

Two major factors have encouraged the explosion of non-governmental activity throughout the world of underdevelopment and in those regions where states are described as in transition. One factor is the greater amounts of funding available to NGOs. Increasingly, donors are using NGOs as conduits for assistance rather than giving bilaterally to governments. Secondly, with the increasing emphasis on democratisation and privatisation has come the growth of the voluntary non-governmental sector. This social phenomenon is being actively promoted by external organisations, for example, the UK Charities Aid Foundation, the European Foundation Centre, and many foundations and other donors.

The roles of NGOs

In a democratic society, NGOs may function to monitor the effectiveness of governments in meeting the needs of disempowered sections of the population. Ideally, the membership of an NGO comprises members of those groups whose interests are at stake. More often, however, elites assume the responsibility to represent their interests. Given the dynamic of society and the failures of all governments to meet all the needs of their constituents needs which are constantly being defined and redefined playing this critical role in a healthy society which promotes debate and opposition is a vital and an ongoing dialectic process. Campaigning, lobbying and advocacy are the normal methods used to leverage public opinion and force governmental change.

In many cases, the success of such activities can be measured by the extent to which governments recognise the needs identified and institutionalise new public services to meet them, or improve those found wanting. For example, the identification of the unmet needs of the dying led to the hospice movement being incorporated into government health services in some western countries.

The other side of the normal `tension' which exists between governments and NGOs arises from the need for governments to regulate their activities. Ideally, the services which NGOs provide (which governments have neglected or have been unable to meet) would be carried out in a highly professional manner. Too often this is far from reality. Therefore standards must be introduced as well as mechanisms for monitoring and evaluating NGO work. Since funds are often raised from voluntary contributions from members of the public, the government also has a duty to ensure the financial probity of NGOs.

Bureaucracies established to ensure that standards are met are usually too overburdened to carry out their task effectively. Often, evaluations are undertaken only when the problems have been exposed by the media or when a government has received a number of complaints from individuals. Moreover, unless an investigation of an NGO's activities leads to criminal charges, the implementation of any evaluation's recommendations depends on the concern of the organisation's trustees; the UK government itself does not have the machinery to impose them.

There are some NGOs which organise themselves specifically to address human rights issues. All governments tend to be threatened by activities which expose their failures to uphold these rights, especially those which are enshrined in international human rights conventions to which they are party. Very few human rights NGOs are regarded by their governments as nonpartisan, nonsectarian and nonpolitical. More to the point, the most scrupulous, nonpartisan human rights organisation faces dangers in an undemocratic society when its findings are taken up by groups and used in campaigns to unseat the ruling government. Perceiving its power to be threatened by such NGOs, rather than introducing the needed reforms, such governments are more likely to look for legal or illegal means to suppress them.

Creating an environment for fostering NGO activity

In the first instance, for the development of the NGO sector, there is a need for `political space', that is, an environment in which voluntary associations can organise themselves without unnecessary obstruction from the state. Such political space also requires a government that is using its power to facilitate development and encourage popular participation, rather than having as its primary concern the maintenance of its power.

Secondly, since voluntary activities require funding, it is necessary for the state to provide the `fiscal environment' which promotes charitable giving. For example, in the UK, a variety of arrangements have been made which provide tax relief on contributions to such organisations. In addition, to name but a few methods which are used, the non-governmental sector may advertise on television and in the press, organise collections from the public and promote the funding of their activities through mass mailings.

The new legislation enacted by the Rwandese government (1994) prohibits foreign NGOs from raising funds in Rwanda, apparently in order to preserve local sources for their own national NGOs. It is interesting, however, to reflect on how photographs and films of the victims and news reports describing events are the very foundation of foreign NGOs' fundraising campaigns in their own countries. Collecting such materials are activities which are necessarily carried out in the country affected by a disaster.

Regulating the non-governmental sector

If Britain's legislation is taken as an example (as Uganda has done), the reform of legislation to regulate the non-governmental sector must be a continuous process, which began with the Elizabethan legislation of 1601 and which has been followed by myriads of reforms and amendments. The scope and scale of UK charity law is indeed daunting. Over the years, the reform of legislation has been prompted by abusive practices of organisations, especially in the field of fundraising from the public for purposes which were found not to be charitable.

The administration of charities is now governed by the Charities Acts of 1992 and 1993. The 1992 Act has been overtaken by the 1993 Charities Act, a consolidation Act which replaces the Charities Acts of 1960, 1985 and parts of the Charities Act of 1992. These laws are supplemented by a welter of subsidiary legislation, plus European Community directives and regulations.

To register as a charity in the UK, one has the choice of either registering as an `'unincorporated' or a `corporated' organisation. Those falling under corporate organisations are companies, industrial provident societies or royal charter bodies. On the other hand, unincorporated associations include societies, clubs, trusts or friendly societies. The main difference between corporate or unincorporated organisations is that the former has a legal existence independent of its members while the latter has no separate legal existence apart from its members. For example, if an unincorporated organisation acquires property for purposes of its activities, the property can only be held on behalf of its members, usually its trustees.

The concept of a Trust is a very old English concept, regulated largely by judgemade law, which has been used over the centuries to establish and regulate formal relationships between three parties: the donor (first party) and the trustee(s) who hold the property for the benefit of the third party (the beneficiary).

The main advantages of registering as a charity under such laws are the tax benefits which accrue to the organisation as well as to those who give the money. Thus the Inland Revenue also has an interest in overseeing charitable organisations and during the process of vetting an application for charitable status, the Inland Revenue is automatically consulted. Since the Inland Revenue stands to lose tax each time an organisation attempts to register as a charity, there has been a tendency to introduce stricter criteria. Sometimes, even after an organisation has been registered, the Inland Revenue may still refuse tax relief if the income of the charity is considered not to have been applied to charitable purposes. Since the Charity Commissioners can register an organisation without the agreement of Inland Revenue, the latter has the option of challenging the registration in the High Court.

Generally, if the Commissioners find against an application, there is a right of appeal to the Chancery Division of the High Court, then to the Court of Appeal and, finally, with consent, to the House of Lords.

To be registered as a charity, an organisation will need to show that its purposes and objectives fall entirely under one or more of four headings: the relief of poverty, the advancement of education, the promotion of religion, and `other purposes beneficial to the community in a way recognised as charitable'. The `objects clause' is the foundation stone of a charity which can do nothing lawfully which does not fall entirely within its limits.

In applying for registration, the Charity Commissioners will look not only at an organisation's objectives in relation to the `objects clause' but also at the answers to a series of questions aimed at eliciting the organisation's plans. Sometimes there can be difficulties with registration because the Commissioners are not satisfied with the wording of the organisation's draft constitution which has to accompany the application, because they are not convinced that the purposes of the organisation are actually `charitable'.

Ironically, despite the long existence of charity law in the UK, the concept what constitutes charity has never been statutorily defined. Activities which are construed as `political' by the Charities Commissioners can cause an organisation to lose its charitable status. For example, Oxfam was challenged by the Commissioners for its campaigning against apartheid in South Africa. Oxfam argued that apartheid was a cause of poverty and therefore its lobbying was a lawful charitable activity. The Commissioners argued that antiapartheid campaigning was plainly political and to protect its charitable status, Oxfam was forced to withdraw its campaigning literature on this topic.

Concerns which have led governments to introduce regulations

As was noted earlier, from reading the laws which have been introduced in the four countries with which we have been mainly concerned 1989 (Uganda), 1990 (Kenya), 1994 (Rwanda) and the 1994 draft legislation of the Republic of Croatia it would appear that one impetus for introducing legislation has arisen because of concerns over the behaviour of foreign NGOs. Although, for example, British law may prohibit an NGO from engaging in political activities, it has no control over what a British agency does abroad except in so far as it may act through the application of constitutional conventions where an agency is seen to be compromising British foreign relations.

As one government official wrote from Croatia, there are some 790 `both local and foreign active NGOs ...It is a fact that foreign NGOs oppose any attempt to regulate their activities... that the government [which]... wants to do such could be accused of obstruction of democratic institutions of civilian society. In such situations the government ought to be determined because democracy still does not mean chaos'. Although NGOs are always accountable financially to donors, there are no legal means to regulate their activities abroad. (Some governments have threatened NGOs' tax status when they have criticised the foreign policy of the donor government.) If problems with foreign NGOs have been the primary motivation for introducing legislation, it behoves foreign NGOs to take note; it is likely to be the national NGO movements which will suffer the greatest from attempts by governments to introduce draconian restrictions on this sector.

i. Registration and coordination

Governments which depend on foreign aid have good reason to be concerned about the rapid proliferation of NGO activity in their countries, especially under emergency conditions. Whether foreign or national, NGOs today control significant proportions of the resources available through international aid.

In many countries there has been no method for registering either foreign or local NGOs. Often governments are not informed of what each NGO is doing, whether they are actually carrying out their stated objectives and whether these objectives fit government policy, their own overall development plans, or actually address priority needs. Croatians, for example, have not always been convinced of the need for the large number of foreign NGOs which are intervening on behalf of persons deemed to be `traumatised' or those who are victims of rape. Rwanda's law goes much further than any of the others by requiring NGOs to demonstrate the involvement of the beneficiary community in defining its own needs and in planning the project before the NGO can be registered. It also requires that the impact of projects be evaluated and approved by the responsible ministry before the NGO's registration can be extended.

Sometimes governments are not even made officially aware of the presence of a foreign NGO. Although the legislation in the four countries provides for the registration of NGOs, surprisingly, all have included provision for exemptions. In both Rwanda and Uganda there is discretion to exempt an NGO from registration in emergency situations. In Kenya, this power is vested in the Minister who may `by notice in the Gazette, exempt such nongovernmental organisations from registration as he may determine'. Such discretionary powers leave space for abuse. Where not exempted, both Kenya and Uganda criminalise the activities of an NGO found in breach of the rules of registration. Staff can be fined and face stiff terms of imprisonment. (In Kenya, disqualification can lead to a sentence of ten years.) However, in the case of an expatriate, the Minister may recommend to the Ministry in charge of immigration that the nonKenyan be expelled.

Although all organisations providing humanitarian relief are to be registered, our reading of Croatia's draft legislation suggests that it would effectively exempt the majority of organisations from registration and regulation. Exemptions include `foreign legal persons, religious communities, and domestic legal persons', suggesting that the responsible ministry or government department will have no means of establishing whether these exempted organisations are carrying out their objectives in Croatia.

Governments are also concerned about their inability to coordinate NGO activity in order to avoid duplication, to ensure that NGO work fits in with the government's own development plan or emergency policies and to ensure the judicious use of funds to meet the most urgent needs. Both Uganda and Kenya have established NGO Boards whereas Rwanda has created a coordinating Bureau. In Kenya, the legislation met with stiff resistance from the NGO sector which resulted in their proposing alternative legislation to the government. The drafting group included both foreign and Kenyan NGOs. While the Kenyan government has not totally bowed to the NGOs' alternative proposal, it has introduced some amendments to its NGO Coordination Act 1990.

ii. Sources of funding and accounting

Given that foreign NGOs are major conduits for international assistance, governments feel they have a right to know the sources and amounts of money which are being brought into the country and the purposes to which they are being put. In Britain, registered charities are required to provide the Charities Commissioners with annual audited accounts. Companies registered as charities are subject to financial scrutiny under both the Companies Act and charities legislation.

Many foreign NGOs depend on government sources to support their activities abroad. It is known that some donor governments use NGOs to transfer resources actively to support opposition groups (in the case of Renamo, even to transfer arms).

NGOs are the first to demand `transparency' of governments. However, the suggestion that they should be similarly open about sources and amounts of their income and expenditures has been almost unanimously regarded as an unacceptable intrusion.

Foreign NGOs enjoy significant financial advantages over national organisations. Legislation provides for customs exemptions to foreign NGOs, their staff and families; no corresponding benefits are extended to local NGOs in Kenya, Rwanda and Uganda.

iii. Qualifications of expatriate staff

Since they are not in control of recruiting foreign NGO staff and many governments have had reasons to be concerned about the professional claims of these organisations, both Uganda and Rwanda are now demanding to see evidence of the qualifications of expatriates. However, it is unclear how such evidence can be verified. (In the case of one UK NGO planning to work in the Philippines, the embassy in London took responsibility for vetting the NGO before its staff were provided with entry visas.)

iv. The staffing of NGOs

Normally, foreign NGOs employ local staff but often neglect to observe local labour legislation. Some do not even provide them with contracts laying out conditions of service or job descriptions. An issue which is of great concern, but not adequately addressed by any of the laws thus far surveyed, is the question of salary scales.

In recognition of this problem, Uganda has attempted to introduce regulations on these matters but their ambiguity reflects what a controversial area this is. The section dealing with staffing requirements reads: the organisation `shall ensure that any remuneration including salaries, allowances, fringe benefits and other terms and conditions of service of the Uganda employees of the organisation are reasonably comparable to those for the time being prevailing in the employment market in Uganda or reasonably comparable to those of their foreign counterparts'. The interposition of the word `or' is very unfortunate. It gives the impression that a foreign NGO can choose whether to pay a Ugandan employee (doing the same work as the expatriate member of staff) those wages prevailing in the Ugandan employment market or pay according to the same scale considered appropriate to an expatriate. It is unlikely, given this option, that any NGO would opt for the higher salary bill.

At the same time, while a foreign NGO may avoid paying local staff on a par with its expatriates, nevertheless, most pay much more than can be earned locally. It is well known that one of the major forces which is weakening local institutions of governance is the extreme disparity between salaries in the public and private sector. For example, in Arua, Uganda, the office responsible for producing medical statistics was operating efficiently until the one trained official was employed by a foreign NGO as a registration clerk in a refugee camp. He had been lured by a salary many times higher than the government had been paying him. Since this officer could not be replaced, medical statistics are no longer produced.

Another concern relating to the staffing of NGOs is that of encouraging foreign NGOs to give preference to employing nationals. Kenya requires any registered NGO wishing to obtain entry permits for expatriate employees to show that no nationals with comparable skills are available or that such expatriates will contribute towards the training of Kenyans. Rwanda requires NGOs to limit stringently the numbers of expatriates employed and to indicate the time frame within which suitable nationals can replace the foreigners. Uganda simply requires a plan for replacing foreigners with qualified Ugandans.

Another issue related to staffing is the unfair advantage which expatriates have over local staff with regard to income tax. While abroad, expatriates are normally exempt from income tax and they are also exempted from paying tax in Croatia, Kenya, Rwanda and Uganda. At the same time, all nationals working for NGOs in these countries are liable to pay income tax and all NGOs are required to withhold the tax of their local employees. (Pakistan is one country where legislation does require expatriate NGO staff to pay income tax but one former employee there states that his agency's expatriate staff did not comply.)

v. Anti-social and criminal behaviour

Governments' concern about antisocial behaviour of expatriate staff is also reflected in some legislation. For example, Uganda requires a certificate of clearance on criminal record from the applicant's country of origin. The scope of this requirement is unclear. Does it mean that the applicant should never have had a criminal record? Under the UK Rehabilitation of Offenders Act 1974, once a person's convictions have been spent, the person is deemed no longer to have a criminal record.

Rwanda provides for criminal charges to be brought against the staff of the organisation in the event that they are found to be involved in `antistate or antisocial activities and/or acts hostile to the welfare and security of Rwandan people'. The limits and scope of these offences are not defined and appear so wide as to encompass any activity from the minor (using prohibited drugs?) to the very serious (importing arms?).

It might be assumed that expatriates guilty of breaches of either the civil or criminal law should be dealt with under the appropriate laws of the country in which the offences have been committed. However, in practice, the tendency is simply to deport them. For example, after the head of one foreign NGO was apprehended the third time for dealing illegally in foreign exchange, rather than being tried in the courts of Malawi, he was simply sent home. While there may well be cases where governments introduce special exchange rates aimed to exploit charitable funds coming into their economies, it is equally worrying to hear of NGOs which make changing their foreign currency on the black market a regular practice the dubious justification being that with more money, one can do more good.

vi. The `agendas' of foreign NGOs

A major concern of governments which is reflected in legislation is the question of the covert objectives or agendas which are perceived to have negative political consequences or are in contradiction to the ruling party's national objectives.

As noted in the discussion of UK legislation, the purposes and objectives of NGOs must be to relieve poverty, advance education, promote religion or to be engaged in other activities which are beneficial to the community. The laws of the four countries with which this paper has been principally concerned reflect these objectives. Rwanda defines an NGO as an organisation which is nonpolitical, nongovernment, noprofit making and humanitarian. It goes on to say that an NGO is also an organisation which uses its own resources in its activities which `join in the national effort to eliminate poverty and improve people's welfare'. (If `own resources' refers to voluntary contributions from the public, would this provision exclude NGOs who receive funds from government sources?)

Despite references to prohibiting NGOs from having political connections or affiliations, Kenya's legislation is unclear. The focus is on an NGO becoming affiliated to, or connected with, a foreign organisation or group of a political nature established outside Kenya without the prior written consent of the NGO Board. It leaves the question of such political affiliations within Kenya untouched. There is a surprising lack of reference in the Ugandan legislation to NGOs being limited to `nonpolitical' activities. Croatia only emphasises that foreign NGOs undertake the specific activities which they have been approved to undertake. Its draft legislation, however, distinguishes between religious organisations, educational institutions and foundations which are covered by separate legislation.

Whatever prohibitions legislation might contain, many governments are concerned about the hidden agendas of foreign NGOs. For example, in the mid 1980s, Sudan threatened three foreign NGOs with expulsion on the alleged grounds that one was actively proselytising Muslims and the others of supporting the Sudanese People's Liberation Army.


A major problem facing all governments is the lack of resources to monitor and enforce legislation designed to regulate NGOs. To enforce its new legislation, Rwanda, for example, would require a very large staff of independent researchers to carry out impact studies. It has also failed to include proper appeal mechanisms and the requirement that a series of officials must approve applications for renewal of NGO registration leaves enormous space for misuse and abuse on all sides. What can be drawn from this discussion is that laws can never anticipate change nor encompass all dimensions of an issue. As the British example demonstrates, NGO legislation will require regular reform. If NGOs wish to act as a voice of civil society, it will be incumbent on them to develop effective ties with their own governments in order to meet each new challenge as it arises.

Eddie AdiinYaansah: of Grays Inn, Barrister, and SocioLegal Centre, Wolfson College, University of Oxford.

Dr Barbara Harrell-Bond: Director of Refugee Studies Programme and anthropologist of law, University of Oxford.

Research funded by ESCOR/ODA.


1. Shils E `The Virtue of Civil Society', Government and Opposition, 1992.


1. Charity Commissioners `Accounting by Charities', Statement of Recommended Practices (SORPS), 1 February 1995.

2. Chazan N `Liberalization, Governance and Political Space in Africa' in Hyden G & M Brattan (eds) Governance and Politics in Africa, 1992, Lynne Rienner, Boulder.

3. European Community `European Community Council Regulation' COM(94)650 (in the field of employment creation and support to small and micro enterprises in the Maghreb countries), Brussels, 22 December 1994; `Draft Statute of European Association' COM(93)252 (final), Brussels, 6 July 1993.

4. Goodman Committee Report of the Goodman Committee: Charity Law and Voluntary Organisations, 1976, NCSS, SG Press, Bedford, UK.

5. Home Office Voluntary Service Unit `Accounting by Charities: Draft Regulations', Consultation Document on Part VI of the Charities Act 1993, January 1995.

6. Houston J Strengthening the NonGovernment Sector in Africa the Legal and Fiscal Framework, A Study for the Charities Foundation, London, May 1994.

7. Middleton F & Lloyd S Charities The New Law: The Charities Act 1992, 1992, Jordan & Sons.

8. Ministry of Labour and Social Welfare `Draft Proposal of the Law on Humanitarian Aid', Zagreb, May 1994.

9. Pettit P Equity and the Law of Trusts, 1993, 6th Ed, Butterworths.

10. Phillips A Charitable Status (A Practical Handbook), 1994, 4th Ed, Directory of Social Change.

11. Republic of Kenya `NonGovernmental Organisations Coordination Act 1990', 1990, Act No 19 of 1990; `The Non-Governmental Organisations Regulations, 1992', 1992.

12. Republic of Rwanda `Working Procedures for Local and International Organisations (NGOs)', December 1994; `Basic Agreement between the Government of Rwanda and NonGovernmental Organisation', December 1994.

13. Republic of Uganda `Statute 5, NonGovernmental Organisations Statute, 1989', 1989; `NonGovernmental Organisations Regulations, 1990', Standing Instruction No 9, 1990.

14. Shils E `Nation, Nationality, Nationalism and Civil Society', Nations and Nationalism, 1(1), 1995, pp 93118.

15. United Kingdom `Charities Act 1992', Chapter 41, 1992, HMSO, London; `Charities Act 1993', Chapter 10, 1993, HMSO, London.

16. Confidential interviews conducted in Britain, Croatia, Gaza, Jordan, Kenya, Malawi, Mozambique, Pakistan, Slovenia, Sudan, Swaziland, Uganda and the West Bank, 19821995.

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