A comprehensive bill with a new approach for monitoring and regulating NGOs, which would repeal the current National Directorate Act (1961) and Association Registration Act (1977), has been drafted.

Among the many positive aspects of the bill are points like section 10, which demands transparency of funding. Especially impressive is a provision that requires NGOs to make available half-yearly and yearly reports of their activities along with their financial records to the public. Similarly, there is a provision to ensure yearly evaluation of the activities of such organisations. Section 11 mandates that the hiring and promotion of employees within such organisations be done freely, transparently, and through open competition. It also prevents position-holders of management committees from simultaneously being employed by the same organisations. In hiring employees, NGOs are encouraged by the bill to promote representation of women, indigenous people, different ethnic groups, Madhesis, and Dalits. A provision has also been kept to allow up to 25 percent of the annual budget to be spent on administrative work.

Another important aspect of the bill lies in promoting clarity with regards to the functioning of NGOs. At the district level, for example, programs to be implemented in any fiscal year need prior approval from local administrations. Before implementing development programs, NGOs will need to make formal agreements with the respective district development committees. 

NGOs will consequently need to present details of their yearly activities, sources of funding, approval letters from the Ministry of Finance and relevant bodies (if foreign funding is involved), financial statements, audit reports, etc. to relevant local officials. Without providing such details, an NGO cannot be approved for renewal.

Section 22 lists the conditionality that NGOs must abide by. According to this section, organisations can only receive money from donors through checks. This eliminates the risk of fraudulent cash-based transactions.

Problems with the proposed Bill and suggested improvements:

While the Bill is praiseworthy with regards to its goals, it is undeniable that some of the provisions in the NGO (regulation) Bill can be too restrictive for non-governmental organisations. In this sense, the Bill might even discourage some of the fine institutions that have been working for social service and development without the intention of generating profits. Perhaps some changes can be made to the current draft of the Bill to assist the smooth functioning of NGOs while striving for greater transparency and accountability.

1. Until now, the registration and functioning of NGOs has been governed primarily through the Association Registration Act (1977). Although the role of District Administration offices in the registration and renewal of NGOs has been acknowledged, it is evident that the Social Welfare Council has been the primary body governing these procedures. The SWC is also the only body that enjoys jurisdiction over all aspects of social work. It is for these reasons that the SWC was formed and its officials hired. It is undeniable, however, that the SWC has thus far failed to achieve all of its goals and that a lot remains to be done. Institutional weaknesses like politicisation are partly responsible for these failures. But despite of its many shortcomings, the institution carries with it the history of non-governmental organisations working in the social sector in this country. To displace its role by allocating its responsibilities to chief district officers or other local authorities seems rash because it forces NGOs to behave like organs of local administrations rather than development partners.

2. The ability to work freely and independently is essential for the success and improvement in quality of NGOs. While organisations must be monitored and regulated, the home ministry does not have the capacity or manpower to undertake this task. Instead, if the Social Welfare Council is restructured as a body of public-private partnership, it will definitely be better suited to govern the formation and regulation of NGOs and to ensure transparency and accountability. A ‘one door’ policy is best in this regard.

3. Before proceeding, any mention of local authorities in the Bill must be replaced with appropriate officials from the SWC. A provision that allows local authorities to acquire from the SWC the necessary information relating to NGOs, from the standpoint of administration, will suffice. 

4. Sections 2 (d), (e), and (f) divide NGOs into organisations, societies, and trusts and make appropriate provisions for each category. This is positive. But 2 (f) allows a trust to be formed even if it are registered under one individual.

5. The term ‘yearly’ under section 2 (g) implies one fiscal year as defined by the Government of Nepal and requires the translation of the calendar of activities of an NGO from the Gregorian calendar to the official calendar. This provision is overly restrictive. The majority of funding for NGOs working in Nepal comes from foreign donors. Donors usually allocate funding based on the Gregorian Calendar and demand reports on such time-lines as well. Although dates between the two calendars are easily convertible, it is unreasonable to expect NGOs to change their workings to be based on the official calendar.

6. Sections 4 (3) of the Bill requires NGOs to be registered with district development committees of the districts in which they operate. Going by what is mentioned in the same Bill, NGOs can work in such diverse fields as social service, religion, culture, literature, science, education, economics, health, disaster relief, etc. Thus, it can be argued that district administrations may lack the capacity to register organisations working in such diverse fields.

7. Section 6 creates distinct categories for NGOs. As mentioned above, this is a positive step. The Bill proposes to classify NGOs based on institutional goals, nature of work, and area of focus. But further elaboration is needed. For example, the Bill is ambiguous about organisations working in fields such as science, agriculture, law, women’s empowerment, community development, etc.

8. Section 7 lays out the criteria to be a member of a management committee. Most of these points seem reasonable. However, sub-section (e) says that such position-holders may not simultaneously be in the management committee of another NGO of a similar nature. This does not seem appropriate. Capable individuals sometimes receive multiple opportunities. Tying such individuals up to one organisation does not necessarily improve the quality of an organisation. Additionally, according to prevalent laws, position-holders in the GoN can be, and are, members and position-holders of many committees and sub-committees, assisting in decision-making in various bodies. It is unclear why the same sort of flexibility should not be given to those working in NGOs. Instead, a provision should be made to address situations in which there is potential for a conflict of interests. A provision should be made to include this observation in the minutes of such meetings or to disallow such individuals from attending such meetings.

9. Section 10 is also riddled with problems. While it seems extremely important that the financial and physical support that an NGO receives be transparent, and it seems reasonable to demand that an NGO present a summary of its work and financial records to the general public on a yearly basis, expecting such reports on a half-yearly basis is unreasonable. If this is unreasonable for the various organs of government, it is certainly an unreasonable demand for an NGO.

10. Section 11 of the proposed legislation says that up to 25 percent of an NGO’s budget can be spent on administrative functioning. This is an excellent provision. The provision relating to inclusive hiring of employees is also laudable. But the provision related to hiring that calls for open competition seems unnecessary. It costs NRS forty-five thousands rupees to publish a job opening in a widely-read newspaper like Kantipur. This is an unreasonable cost for an NGO to bear, although a secret hiring process also seems unfair.

11. The provision laid out in section 12 that asks NGOs to seek prior approval for their district-based programs with relevant local authorities at the beginning of a fiscal year seems arbitrary and near-sighted. Normally, approval is sought based on projects. NGOs, unlike the government, cannot announce policies and programs at the beginning of every year without finalising plans for projects, or without securing funding. Similarly, sub-section (4), which requires an MoU to be signed between an NGO and a district development committee before implementing district-based programs, is also a big ask.

12. The monitoring of NGOs is a big problem. Mechanisms for monitoring are definitely in need of improvement. However, certain proposals laid out in the Bill seem either pointless or could potentially exacerbate some of the existing problems. For instance, it is not prudent to make a Chief District Officer the co-ordinator of the monitoring and evaluation committee. The SWC should determine the head of such committees. The Bill recommends another local development authority as the second member and the district-level representative of the federation of NGOs as the third member of such committees. If decisions are to be made through government mechanisms and with the exclusion of any representatives from the concerned NGOs, this will hamper the monitoring process severely. 

13. The Bill mentions that the Home Ministry, as well as the Ministry for Women, Children, and Social Welfare, can issue directives to NGOs with regards to their management, and that it shall be the responsibility of the management of such organisations to comply. This provision also seems excessive. The Home Ministry does not need to be involved in things unrelated to peace and security.

14. Section 23 proposes that if any NGO is found to have taken part in corruption or corrupt activities, then the Commission for the Investigation of Abuse of Authority will have the responsibility to press charges as per the Prevention of Corruption Act (1960). But NGOs cannot be treated as government bodies solely on the basis of this provision.

15. Section 29, which describes the dissolution of NGOs as well as the consequences, is also problematic. According to this provision, if an NGO performs actions contrary to the provisions of this Bill, or if it is found to be involved in espionage or conspiracies against the state, its unity, and its sovereignty, or found to be involved in corruption, then the relevant local authority can give directives for the dissolution of such organisations.

Keeping in line with what has already been mentioned, the SWC and not the local authorities need to be given such rights. Regardless of that, the goal of the legislation should remain focused on promoting compliance with the law rather than shutting down organisations.

Conclusion:

Overall, anyone reading this Bill can easily understand that it was drafted by the Home Ministry. It is also evident that the Bill fails to imagine any higher purpose than unnecessarily over-regulating NGOs and keeping them under a government calendar.

In order to govern and help improve NGOs and bring them under the law, the Government of Nepal needs to elevate its perception and think of NGOs as development partners. But the Bill seems least bothered about basic questions like how to engage NGOs in social welfare in a meaningful way. As a result, the Bill lacks vision.

There are currently many big NGOs working in Nepal. Some of these organisations have organised development work in more efficient ways than the government. The Bill should acknowledge positive aspects of NGOs as well and help them improve. Instead, as it currently exists, the Bill is simply a document for exerting control.

The Bill in addition to lacking any vision is also counter-productive. It needs to be substantially revised after consultation with stakeholders before being presented in parliament.

This recommendation paper prepared for discussion by the Nepal Constitution Foundation has been finalised based on inputs given by various pressure groups: women’s, ethnicity-based, Dalit, Madeshi, youth, and others. The Constitutional Foundation would like to thank Kamala Bishwokarma, Dr. Surya Dhungel, Bhawana Gurung, Hari Sharma, Shehnaz Banu, Rajkishore Yadav, Dipendra Rai, Nitu Pokharel, Sambojan Limbu, Bishal Khanal, as well as Ganesh Datta Bhatta, Bishweshwar Prasad Bhandari, and Dr. Bipin Adhikari.

This research has been supported by The Asia Foundation and opinion expressed in this report are of the authors and don't necessarily reflects of the The Asia Foundation.