ICFO International Committee on Fundraising Organizations

1. ICFOInternational Committee on Fundraising Organizations A REGIONAL FORUM “REVISITING CSO GOVERNANCE AND ACCOUNTABILITY IN SOUTHEAST ASIA IN CONTEXT OF POST HIGH LEVEL FORUM 4 IN BUSAN” Perspectives in Charity accountability Hon. Rollin A. Van Broekhoven, JD, LLM, DPhil, DLitt President, ICFO

2. INTRODUCTION The possum in the attic The statutory scheme for regulating the sector. Reports in the news media My thesis

3. Reports in the news media Board governance – 129 articles Conflicts of interest – 61 articles Executive compensation – 60 articles Fundraising practices – 45 articles Extravagant spending – 60 articles Legal investigations – 70 articles

4. Reports in the news media Other – 43 articles Unwilling to be open and transparent in responding to requests Poor quality of audited financial statements Failure to stay current with changes in the law

5. Reports in the news media Other – 43 articles Failure to follow the organization’s own bylaws and policies Improper allocation of fundraising and overhead expenses Use of restricted funds for operational purposes. Terrorist related activities

6. The Thesis I Have Been Working on is This: The present model for NPO accountability is not a sustainable model. Some authoritative body issues rules Accountability requires disclosure of specific kinds of information Accountability is confined accounting type information.

7. Challenges to Thinking About Accountability The challenge of language and definition The challenge of postmodernity and postmordernism The challenge of appearance of impropriety The challenge of the assumption that accountability is a moral virtue

8. Challenges to Thinking About Accountability The challenge of understanding the nature and role of government with regard to civil society and accountability The challenge posed by media ecology

9. Challenges to Thinking About Acccountability Definitional problems According to some, “civil society” simply means the fundamental reduction of the role of politics and public policy in society to expanding free markets and individual liberties. According to others, “civil society” is the most viable alternative to the authoritarian State and the tyrannical market

10. Challenges to Thinking About Accountability The Challenge of Media Ecology The point here is that with the advent of the digital era since 2000, and the advent of new media and social media, communications have become totally impersonal, and we tend to live in a virtual world rather than actual reality.

11. Challenges to Thinking About Accountability Civil society refers to the arena of uncoerced collective action around shared interests, purposes, and values. Its institutional forms are distinct from those of the state, family, and market, though in practice, the boundaries between state, civil society, family, and markets are often complex, blurred, and negotiated. London School of Economics, Centre for Civil Society

12. Models for Promoting Charity Accountability Accountability through government fiat. Accountability through financial disclosure. Accountability through independent monitoring focused on financial analysis and rating schemes. Accountability as part of a monitoring and/or certification system (ICFO Model) Written statement of philosophy or belief and commitment to operate in a manner consistent with that philosophy or belief Responsible and independent governing board and governance policy

13. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Financial oversight with audited financial statements, audit committee with authority to engage and independent auditor and authority to communicate with auditor, and to be apprised of any material weakness in internal controls or risks. Use of resources and compliance with law and regulation.

14. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Transparency through the provision of audited financial statements on request and financial reporting of the funds raised for specific projects Avoidance of conflict of interests and limitations regarding third party transactions under specified circumstance.

15. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Fundraising standards relating to truthfulness of communications, donor intent and expectations, and the prohibition of compensation on the basis of percentage of funds raised.

16. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Best Practices Governance, including charters and bylaws, minutes, financial controls and oversight, policy vs. management, philosophical statements regarding fundraising and financial matters. Financial, including use and accounting for funds received, due diligence regarding funds used internationally.

17. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Best Practices Transparency, disclosure of financial information, the provision of reports to donors regarding outcomes, and internal controls Related party transactions, including written conflicts of interest policy. Stewardship of gifts

18. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Compliance and Enforcement Require certified independent auditor’s audit with statements regarding compliance with accounting standards. Self-reporting based on a detailed questionnaire related to each standard, with annual reviews for renewal Regular site visits to NPO to verify material provided in self-reporting, and to review minutes, and board actions

19. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Compliance and Enforcement Compliance review procedures in response to allegations of noncompliance, with appropriate peer review Standards Committee and Board review of noncompliance reports Decisions to suspend or terminate accreditation or membership as a result of a finding of noncompliance.

20. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Compliance and Enforcement Public disclosure of the results of the investigation including sanction imposed Agreement by NPO to permit compliance and enforcement procedures as a condition for accreditation

21. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Balanced Organizational Structure of Monitoring Agency Professional staff and adjunct staff of field representatives and inspectors Standards Committee Board as ultimate decisionmaker

22. Models for Promoting Charity Accountability Accountability through self-regulation or independent monitoring Effectiveness of self-regulation through membership organization Buy-in to standards and monitoring scheme Effective compliance through the synergistic nature of the broad NPO community. Value of peer review and commitment to membership community Membership consisting of cohesive class of NPOs