Corporate Governance Reform in Irish Development NGOs

Introduction: Irish NGOs and the Governance Challenge

"Irish Development NGOs," notes a 2008 associational guidebook from the Corporate Governance Association of Ireland (CGAI), "exist to create a better world. They operate on a global scale with diverse missions, but are united by a shared commitment to social justice and the eradication of poverty" (CGAI, Irish Development NGOs).

But as noble as these intentions are, many NGOs are falling short of their missions because they do not have in place the kinds of effective and efficient governance structures needed to ensure success in their work. Many NGOs, much like many for-profit businesses, are struggling with extraordinary financial challenges. They are finding that just as they need to become more effective in their operations, they have few guidelines in place for improving the services they provide or for professional conduct in general (CGAI, Irish Development NGOs; CGAI, Professional Conduct).

New corporate governance ideas have recently begun to take shape in Ireland for the specific purpose of showing how such standards can translate into direct service and mission improvements, just as similar ideas have helped for-profit businesses become more efficient. Together, these types of enhancements generally seek to help willing organizations become more transparent in their decision-making processes and, as a result, become better at demonstrating that their outcomes make a difference. As the CGAI for NGOs states, achieving these refinements in the people and organizations the public trusts will enable us all to determine if they are "fit to serve" the broader missions we look to them to achieve (p. 10).

Financial Pressures and the Case for Reform

The financial challenges that Irish NGOs have been experiencing are serious enough that many may have to close in the near future. A survey conducted by The Wheel, a nonprofit hub that advocates for the interests of the country's 19,000 such organizations, found that more than one third of its member organizations have been experiencing very real funding problems (Irish Examiner, 2011). Perhaps as many as 50% have already cut back on the services they provide, and many more are likely to do so as government austerity measures continue to take effect. By adopting better governance practices, the strongest of these agencies that survive will become more secure in their futures.

Governance Frameworks and Guiding Principles

Several Irish oversight agencies and private sector groups have begun to address what better, more cooperative governance means in practice. There are different examples of what this concept might look like operationally. In general, however, most of these efforts base their ideas on the common expectations first articulated in the UK's Nolan Principles. These ideals hold that organizations function best for their public purposes when they are characterized by selflessness, integrity, objectivity, accountability, openness, honesty, and representative leadership (NHS, 2008). It has gained wide acceptance that living up to these expectations through top-down compliance enables organizations to assure their stakeholders that they are fulfilling their responsibilities.

In 2006, a London-based national oversight group framed this idea in operational terms: "Good governance leads to good management, good performance, good stewardship of public money, good public engagement and, ultimately, good outcomes" (OPM/CIPFA, 2006). Irish support agencies that have undertaken their own initiatives have translated this perspective into numerous articles and voluntary guidelines for NGOs. Their standards offer various levels of recommendations and, being pragmatic, suggest differing thresholds for compliance.

The CGAI premises its expectations on what it calls "comply or explain" tactics. Implementing efficiency changes is always difficult when organizations are strapped for resources. As such, it may sometimes be best to do what can be done and then openly acknowledge those issues that cannot yet be addressed. At a minimum, it can be expected that specific directions be detailed about how the organization will move from where it is to where it wants to be. Doing so clears the path so that others can see what is coming and make their own judgment about whether the organization can achieve the changes it needs to make.

Practical Benefits and Implementation Strategies

When properly implemented, good corporate governance recommendations have been linked to a number of specific outcome benefits. Most of these center on administrative and management tasks, though some seek to address larger social and even ethical concerns. For example, the case is often made that implementing these kinds of recommendations directly minimizes organizational risks, brings about more controlled management, generates cost reductions, and even affects insurance rates. There is also near-universal agreement that such measures will help broaden access to funding opportunities.

The Wheel (A New Framework for Partnership), for example, outlines on its website how these types of practices can benefit many agencies. It describes a new model of statutory funding that can ensure:

community and voluntary sector service providers recover the full cost of the services they provide, while being provided with multi-annual funding so they can plan ahead; service level agreements and grants make provision for organizations to make pension contributions where appropriate; and standardization is achieved to the greatest extent possible in all paperwork associated with service level agreements, grants, activity and financial reporting, monitoring and evaluation reports, and other similar reporting requirements.

How an organization reaches the point of making all these changes in practice is not always straightforward. Still, the movement broadly recognizes the importance of at least getting started. The CGAI governance report recommends first looking at the size of an organization to determine where it might begin. It notes that smaller NGOs might direct their attention first to "getting the basic things in place" to ensure clarity about who in the organization is doing what and that everyone is working toward a common purpose. For larger organizations, the priority may be more about demonstrating what they are already doing and how their efforts lead to program quality, donor accountability, stakeholder confidence, and board-driven directions for further improvement.

Conclusion: Governance as a Mission Imperative

It needs to be reinforced that all of these efforts to generate better corporate governance are not just about operational efficiency. They seek to make the attainment of larger missions more feasible. If organizations work better, they serve their missions better, and people achieve more justice, find ways to access help, and perhaps even work their way out of poverty toward the social justice that many organizations envision. Good governance, in this sense, is not merely an administrative concern — it is a moral imperative for any organization serious about changing the world.