Although the state remains the principal regulator of civil society in Pakistan, the absence of effective enforcement mechanisms means that compliance by non-profit organizations (NPOs) with reporting and other requirements is very low. Self-regulation is therefore necessary if the growing non-profit sector is to retain the confidence of society.
The last decade has seen various efforts at self-regulation by Pakistani NPOs, including the adoption of codes of conduct by some prominent NPO networks, though enforcement mechanisms are often lacking. The certification regime developed by the Pakistan Centre for Philanthropy (PCP) is another such effort.
Under PCP’s certification programme, NPOs are evaluated on a voluntary basis against specific benchmarks or criteria in critical areas of internal governance, financial management and programme delivery. These benchmarks are derived from international best practice, modified for the Pakistani context. Drawing heavily from the Philippine Council of NGO Certification (PCNC) experience, PCP has carried out extensive consultations with all stakeholders, including NPOs, donors and government. This has helped earn wide acceptability for the initiative.
PCP certification forms the basis for NPOs getting tax exemption from the government. The necessary legal framework is already in place, and PCP has emerged as Pakistan’s first officially authorized NPO certification agency.
Need for wide acceptance
One issue that emerged while PCP was developing its certification regime was that of ownership by the civil society sector. Unless certification is widely accepted, it will lack moral authority. So far the response from NPOs has been mixed. Indigenously financed service-delivery NPOs have mostly been supportive, seeing certification as a ‘seal of good housekeeping’ that will help them access resources. However, the Pakistan NGO Forum (PNF), a powerful nationwide NPO network, has been critical of the whole concept, claiming that their own voluntary code makes certification redundant. They further argue that certification could become a mechanism of exclusion, channelling donor assistance to an elite group of NPOs.
This criticism is not without justification. PCP’s certification regime is exclusive to the extent that it is based on merit, transparency and performance. Certification is not meant to promote certain types of NPO but to promote good governance and good financial management, thus enhancing the sector’s credibility with the public.
PNF also objects to the idea of an NPO sitting in judgement over other NPOs. In the case of PCNC, it is indeed a network of NPOs that certifies its member and other NPOs, but the PCP model is different, with a Certification Panel made up of eminent representatives from civil society, corporate sector and government. Whether this helps win wider acceptance of the certification regime in the non-profit sector remains to be seen.
Should all certification agencies in Pakistan use the same criteria and weighting for evaluating NPOs? While this has advantages in terms of helping maintain quality in the certification process, it would certainly discourage innovative thinking.
Disclosure of information is another issue. Any certification agency will collect and analyse critical information about an NPO in the course of evaluation, but the question of how much can be disclosed and to whom has generated considerable debate. NPOs that are refused certification are especially likely to dislike the idea of information disclosure. On the other hand, the certification agency has a responsibility to divulge the fact of an NPO having been refused certification to any genuine stakeholder. But who is a genuine stakeholder?
PCP faces many challenges in implementing its certification regime. Foremost is that of quality control. Certification can promote credibility only if people are confident in the objectivity and professionalism of PCP’s evaluations. As operations scale up, maintaining standards will become a big challenge. Here lies the dilemma. Certification cannot become an effective mechanism of NPO self-regulation unless a sizeable number of NPOs pass through the sieve, but scaling up requires huge financial inputs and the risk of compromising on quality.
Ultimately, the value added to NPOs, donors and other stakeholders remains the litmus test for PCP’s certification regime. Self-regulation, accountability and transparency are virtues in their own right, but they will become the norm only if they facilitate programme delivery to the ultimate beneficiaries, the marginalized and poor segments of society.
1 Scores for numerous criteria within each of these areas are specified, with different criteria for small, medium-sized and large NPOs. A score of 1,000 is possible, with a minimum of 600 being necessary for certification. Further details about PCP’s NPO certification programme are available at http://www.pcp.org.pk
2 The existing Income Tax Law and Rules provide for authorization of more than one certification agency, but so far PCP is the only one and no others are contemplated at present. In the meantime, the Central Board of Revenue continues to function as an alternate window and the NPOs still have the option to approach it directly for performance assessment for grant of tax benefits.
Mohammad Ahsan Rana is Programme Manager for Certification at PCP. He can be contacted at Ahsan.Rana@pcp.org.pk