Investing in infrastructure — What really matters?

This article was originally published in the March 2004 issue of Alliance magazine. The original article can be found here. In this article from the Alliance magazine archive, Andrew Milner sources organizations from around the world, putting into historical perspective the importance and evolution of philanthropy infrastructure.

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By Andrew Milner

To sustain its growth, civil society needs to be underpinned by a strong infrastructure – a secure resource base, a favourable legal and regulatory framework, sufficient human and organizational capital, and access to technology and information might be among the elements of this.

Has the growth of this infrastructure kept pace with that of civil society? If not, what are its weaknesses? Alliance put these questions to a number civil society professionals in different regions and asked which elements had been important for the development of civil society in their part of the world.

First of all, as Alaa Saber (Centre for Development Services, Egypt) points out, the progress implicit in the word ‘development’ is not always borne out by events. He proposes instead that ‘mere changes over time, regardless of any positive or negative value attached to them, are to be regarded as a sort of “development”’. A salutary reminder of the perils of generalizing, it also checks any false idea that civil society everywhere is moving forward.

Another caution: regions are often no more than a convenient geographic shorthand, masking very different circumstances. As Andrés Thompson (Kellogg Foundation, Latin America) says: ‘The development of civil society infrastructure is uneven. While there are countries with a solid infrastructure, there are others where it is still very weak (Nicaragua, Ecuador, Guatemala, Honduras and most of the Caribbean).’ Miljenko Dereta (Civic Initiatives, Serbia) adds: ‘Central and Eastern Europe can only be referred to as a geographic region, but not any more as a region that develops evenly.’

Legal status

Clearly, civil society organizations (CSOs) can function fully and effectively only where the laws of the state allow them to. In general, where civil society is well established, a satisfactory legal framework has been one of its mainstays. As Diana Aviv (Independent Sector, USA) says: ‘The strength of America’s civil society has traditionally rested upon a strong resource base and a legal framework that encourages giving.’

Conversely, a restrictive or inadequate legal framework can retard development. In the Middle East, the legal framework has been, in Alaa Saber’s view, mainly responsible for ‘what could, at best, be described as “slow-moving” civil society’. According to Miljenko Dereta, ‘Serbia still has not changed its NGO law from Milosevic’s time, which … prevents establishment of any institutional and stable forms of cooperation and dialogue with the government or for-profit sector.’

This general picture should be qualified. A long-established and generally good relationship between state and civil society does not always mean that laws are attuned to current circumstances. UK charities are still subject to laws made over 400 years ago and, as Stuart Etherington (National Council for Voluntary Organizations, UK) points out, ‘an Elizabethan definition of what is charitable hardly seems appropriate for a new millennium’. The UK government has promised reform, and by 2005 it is hoped that a new law will oblige all charities in England and Wales to pass a public benefit test to obtain charitable status.

It’s also one thing to make laws and another to implement them, as the experience of the Philippines shows (see Mayan Quebral interview, p13). Here, the position of civil society appears to be secured by the Constitution and subsequent legislation, which expressly provides for NGO involvement in policy development and representation in local government bodies. Yet, as Quebral points out, there is no systematic means of ensuring compliance with these provisions.

Funding

The long-term survival of CSOs depends on their ability to obtain a secure funding base. Pushpa Sundar (Sampradaan Indian Centre for Philanthropy) sees expansion of the resource base as the most important factor in the recent development of India’s civil society. Few would disagree about the importance of this. For Eugene Saldanha (Charities Aid Foundation, Southern Africa), the two key factors which have allowed South African civil society to play an effective developmental role in the past decade are ‘management and leadership skills on the one hand, and a good resource base on the other’. As we will see below, he feels the focus now needs to shift to governance.

One of the problems with funding, however, is that, even when it’s available, there are so often strings attached to it. While donors may be willing to sponsor projects, they are often less willing to fund the grantee’s organizational development. Pushpa Sundar characterizes the type of funding available to the sector as ‘inflexible’. ‘Donors,’ she says, ‘ do not see the importance of sustained funding … Core costs are seldom allowed, and most funding is project funding.’ Diana Aviv agrees: ‘It would be of great value if funders understood the connection between a strong infrastructure and the programmes they are interested in funding – and were then supportive of both.’

Investment also needs to be sustained beyond the usual life of a project grant. ‘All funders … must realize that support for voluntary and community sector infrastructure must be sustainable and built upon a long-term strategy,’ argues Stuart Etherington. Most respondents agreed. ‘Civil society development is a process that needs patience,’ says Miljenko Dereta, while Andrés Thompson and Pushpa Sundar both stress the need for a long-term perspective.

When overseas foundations do leave, it is vital that this is well managed. Andrei Kortunov (Eurasia Foundation, Russia) remarks of CIS countries: ‘The state is back, and in most post-Communist countries, the state is growing faster than civil society.’ Where this resurgence of statism threatens to eclipse civil society, he sees it as crucially important for foreign funders ‘to stage their exit strategies in such a way that there is no perception of sudden “betrayal”… and abandonment of principles and goals set in the early 1990s.’

Local resource mobilization

Pushpa Sundar’s mention of public and corporate awareness opens up another aspect of the funding question. Increasingly, securing a resource base is seen to mean cutting reliance on overseas funders and tapping local resources. To some extent this is an enforced change. As Mayan Quebral points out, ODA in the Philippines has declined, leaving CSOs with the problem of making good the shortfall at home. With the stock-market slump affecting the endowments of even the biggest foundations, they have less grantmaking potential themselves so are keener to see projects capable of becoming self-supporting beyond the life of a grant.

Often, as Andrei Kortunov remarks, ‘It’s not about lack of resources. It’s about how to mobilize local resources for something more than corporate PR or political lobbying.’ There are obvious benefits in terms of independence and a sense of local ‘ownership’ of CSOs in mobilizing local resources which go beyond simple fundraising.

Good as it sounds, there are obstacles to leveraging local support. Civil society has often not been good at presenting itself to its supposed constituency. Even in the US, Diana Aviv observes ‘a lack of public understanding of what civil society is’. Sometimes, as in the Philippines, CSOs’ reliance on a few corporate and overseas donors has aroused popular suspicion that they are the tool of those donors.

Chicken or egg?

But it is often the inability to draw on indigenous resources that forces CSOs to seek overseas funding. Ironically, the more they rely on such funding, the more likely they are to arouse suspicion among those they claim to represent, and the less likely they are to be able to count on their support. As Alaa Saber explains, there are elements in the Middle East that use the maxim ‘security comes first’ to justify overruling calls for an autonomous civil society. ‘In this situation,’ he says, ‘the capacity of civil organizations to obtain resources from home-based sources becomes limited. To cope with this stumbling block, many NGOs tend to rely on external sources of support, a tendency that in many cases further diminishes their capacity to maneouvre at home.’

More basically, as Miljenko Dereta points out, poverty has many deleterious consequences for civil society development. ‘It makes volunteering almost impossible, poor governments tend to centralize their insufficient budgets and create a restrictive, de-stimulating tax environment for civil society funding. Poverty also leads to dependence on foreign funding. It eliminates (or reduces) direct participation of local government, local business and local taxpayers in civil society activities. This further affects the identity of CSOs and how they are perceived in their respective communities.’

Capacity-building

So would training in how to draw on local resources help? Very likely, but even where adequate training is on offer, and NGOs recognize the need for it (and neither of these conditions can be safely assumed), the problem again tends to be money. Funders, as we’ve seen, are either unwilling to pay for it or have grantmaking criteria which don’t allow them to, while NGOs themselves don’t have the resources to invest in it. As Mayan Quebral indicates, to do so would often mean diverting funds from their main purpose. Despite the benefits, investing in this way is not a luxury many CSOs can afford.

Infrastructure development depends on other forms of NGO training, too. For Diana Aviv, this is a neglected area in the US. For Pushpa Sundar, NGO operations in India are ‘less professional and efficient than they could be’. She sees this, again, as partly a question of funding but partly to do with ‘mindset’: ‘even if corporate functioning is not totally practical or desirable … CSOs need to be more professional in their approach.’ Compare this with Mayan Quebral’s remarks about CSOs learning from the private sector.

The governance question

Clearer and more transparent means of governance and greater accountability would also help make the case for NGOs both locally and nationally. Mayan Quebral talks about Philippine NGOs’ constantly relying on the same people and sharing the same board members. This can only add to the idea of the NGO world being a closed circle, and may be as much a cause of Philippine civil society’s failure to attract wider local support as a consequence of it. For Eugene Saldanha, the governance question is now so important that he describes it as ‘the big challenge for this decade’.

In other places, too, the sector suffers from overdependence on one or two individuals, with corresponding problems when these individuals move on. This is the case in the Philippines, where NGO leaders are often co-opted by government. In Serbia, too, Miljenko Dereta speaks of ‘a substantial brain drain from the sector to state institutions and private business’. Similarly, while Andrei Kortunov thinks that human capital is not a problem ‘as such’ in Russia, ‘it is becoming increasingly difficult to keep the best and brightest in the non-profit sector while so many lucrative opportunities emerge in business’.

Support networks

In almost all areas, networks to promote the interests of groups of NGOs and the sector in general have been established, but how effective have these been? The case of the Philippines, where Mayan Quebral feels that there may be too many networks and that they often duplicate each other’s efforts, is a rare one.

More often, it is the other way round though, with organizations newly fledged and struggling to find their feet. Ten years ago in Latin America, says Andrés Thompson, ‘there were no national associations of NGOs like you see now in several countries, there were no grantmakers’ associations’. Their establishment has been an important step, but ‘they face a big, big challenge in sustaining themselves’ and becoming less dependent on foreign funding.

Eugene Saldanha feels that there are organizations doing excellent work in this area, but ‘there are simply not enough of them’. Pushpa Sundar takes a similar view: while networks of Indian NGOs are active and better organized than before, they are still small in relation to the size of the country and the sector. Nor is there one unifying organization. Another gap she draws attention to is the absence of a donor network: ‘Donors in India have yet to see themselves as part of civil society or as a “donor sector” which would benefit from making common cause.’

In Serbia, Miljenko Dereta feels that the effectiveness of the Federation of NGOs (FENS), whose purpose is to lobby for a more enabling legal environment for civil society, has been hampered by political instability. ‘After the first meetings with the Prime Minister, the government fell. We are getting tired of new beginnings.’ Here, in other words, the problem is not newness but weariness.

He feels, too, that there is a tendency to create networks that serve no real purpose, ‘networks of local resource centres that in most cases only redistribute information from a mother organization. They have no capacity to deliver training or provide consultancy. It often looks like wasted investment.’

Research and information

Most felt that this was another neglected but crucial area of civil society infrastructure. The US lacks ‘an adequate communications network, which is critical for the transfer of knowledge and best practice between organizations’, thinks Diana Aviv. Mayan Quebral, too, feels knowledge about the sector is ‘piecemeal’, and Pushpa Sundar agrees. ‘There needs to be more research on civil society issues, and especially on giving and funding. It’s not happening in the academic world and the quality of research in CSOs is not high.’

Work to be done

As Alaa Saber cautions at the start of this article, we should be wary of generalizing. Naturally, the infrastructure of civil society has not developed uniformly. The demands on it, too, have changed in many cases to reflect changing demands on civil society itself. As Andrei Kortunov observes, the challenge facing civil society in CIS countries today is not about ‘physical survival of intellectuals or about teaching former Soviet subjects the ABC of democracy and market economy’, but the tendency towards ‘a proxy civil society subordinated to, if not consumed by, the resurgent state’.

However, he goes on to say, ‘the challenges we face in the region are very specific, but they are in no way unique’. Echoing this, a number of common themes have emerged from our respondents. Almost everywhere, infrastructure development has lagged behind the development of civil society itself. In the US, Diana Aviv can talk of ‘the disparity between the growth of the sector over the past two decades and a corresponding adequate growth of its infrastructure’, while Andrés Thompson describes civil society infrastructure in Latin America as generally ‘scarce and weak’.

So what is needed? Eugene Saldanha is crisp and to the point: ‘More social entrepreneurs. Many more.’ Many respondents spoke of the need for training for staff and boards in all areas, but especially in fundraising; for good-quality research about the sector, and a coordinated approach to identifying and addressing pressing social problems; of the need for more attention to ‘selling’ the sector to the public. These deficiencies were brought up constantly, the differences in respondents’ backgrounds and circumstances notwithstanding.

Another area of concern is relations between the sector and government. Even where a legal environment conducive to the sector exists in principle, there may be no adequate means of ensuring its effective operation in practice. Laws or not, as Diana Aviv remarks, ‘politicians need to be better acquainted with the work of civil society and to support its efforts’.

The message to funders from our respondents is almost unanimous: provide resources for organizations, not just for projects, and be patient. It will take time – the figure of five years and upwards is mentioned by two respondents. As Mayan Quebral says, such an approach will require both innovation and risk-taking by funders. In an important sense, donor education must precede NGO officers’ education.

When asked what message he would send to funders, Eugene Saldanha is characteristically pithy: ‘That we welcome accountability.’

Alliance would like to thank the following for taking part in the interviews on which this article is based:

Diana Aviv President, Independent Sector, USA
Miljenko Dereta Executive Director, Civic Initiatives, Serbia
Stuart Etherington CEO, National Council for Voluntary Organizations, UK
Andrei Kortunov Vice President for Russia, Eurasia Foundation
Mayan Quebral Executive Director, Venture for Fund Raising, Philippines
Alaa Saber Executive Director, Centre for Development Services, Egypt
Eugene Saldanha Executive Director, Charities Aid Foundation Southern Africa
Pushpa Sundar Executive Director, Sampradaan Indian Centre for Philanthropy
Andres Thompson Program Director, Kellogg Foundation, Latin America

Andrew Milner is an Associate Editor of Alliance. Image: Reuters.


The 2014 WINGS report, Infrastructure in Focus: A Global Picture of Organizations Serving Philanthropy, identifies four elements that help build common values around data, best practices, impact measurement, and communication. The followup report, Infrastructure in Focus: A Special Look at Organizations Serving Community Philanthropy, shares new data on CP infrastructure organizations, suggesting how our practice and knowledge about them can improve. Download both reports from the WINGS Knowledge Center.

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