Challenges and Solutions for an NGO:
Internal and External Views on Expectations
and Pressures for Change
April 24, 2008
2
Challenges
and Solutions
for an NGO:
Internal and External Views on Expectations and
Pressures for Change
Master Thesis
April 24, 2008
Lotte van der Hoeven s1272020
Supervisor: Drs. C.I. Quispel Co-supervisor: Drs. J.J. Hotho
University of Groningen
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Preface
With this thesis I finish my Master’s degree in International Business and Management at the University of Groningen.
This thesis would have never come into existence without the help from a number of people and organisations. I would like to express my thanks to Dr. A. van der Schaaf, who provided the opportunity to do research for her organisation – COS Groningen – and the organisations employees and governing board, who were kind enough to share their views with me.
The views and opinions expressed by the external stakeholders of COS Groningen were indispensable to the research, and for that I would like to thank these people and organisations for their cooperation.
I am grateful to my supervisor Drs Quispel for her valuable guidance and feedback, which have been very important to me in writing my thesis and co-supervisor Drs. Hotho for providing feedback in the setup of the research and finishing of this thesis.
Furthermore I would like to thank my family, boyfriend and friends for their mental support and understanding during this last phase of my studies.
In finishing this thesis an important period of my life has come to an end. Now I am looking forward to starting my career and being able to benefit from all the lessons I have learned.
Lotte van der Hoeven Groningen,
4
Management summary
COS Groningen, centre for international cooperation, is a small NGO in the north of the Netherlands. The organisations main goal now is to educate about and create awareness of international/global issues. The director of COS Groningen, Dr. A van der Schaaf requested for this research to be done because changing demands from the environment are affecting the organisation and how it does its day to day work. This study aims to provide insight to the management of COS Groningen into the ways in which COS Groningen can deal with the challenges posed by the changing demands of the internal and external environment.
The main research question is: What are the key challenges for COS Groningen posed by the changing demands of the internal and external environment and how can COS Groningen deal with them? Sub questions are: 1) What insight does
the literature provide into the key challenges for the organisation, and how to deal with them? 2) What are the views of internal stakeholders on how COS Groningen should deal with these challenges? 3) What are the views of external stakeholders on how COS Groningen should deal with these challenges? 4) What recommendations can be given to COS Groningen?
An answer was given using three different research methods. Desk research, literature research and interviews with the managing director, employees (4 of 9), members of the governing board (4 of 5) and fourteen external stakeholders such as clients, partners and financing organisations will be used to gather information. Interviews with management and employees provided a starting point for this research: a basic view of the issues at hand.
5 level of accountability that is necessary to receive funding can thereby also require other changes in strategy for example. In order to gain public support a favourable image is necessary, and according to Berkigt & Stadler (1986) this image is a reflection of an organisations identity. Identity according to Balmer (2002) consists of culture, structure and strategy and communication.
Internal stakeholder-views also provided a few conclusions: Internal stakeholders feel that the boundaries of the field of work of COS Groningen are vague. Furthermore, people realise that opportunities for learning are missed, making knowledge vulnerable. Internal coordination requires improvement according internal stakeholders. Especially the evaluations of responsibility and authority, and the actions undertaken because of these evaluations are considered to be insufficient. External communication is viewed negatively internally, there is no system or method for communication and networking. Availability of funds is a limiting factor for the organisation. Apart from funds being more difficult to acquire, when gained, their use is pre-determined in a detailed way. The impact of the organization is difficult to measure; the organisation struggles to quantify the results of projects.
External stakeholders find purpose and field of work of COS Groningen are unclear, which is caused by internal uncertainty about where boundaries of activities and the organisations field of work lie. External stakeholders also feel that COS Groningen is not very visible. Many external parties also agree that COS does not present its added value well. Mainly financing parties emphasize that politics, both local and in general, play an important role in the division of subsidies. External stakeholders explicitly mention noticing skills and methods are not considered to be uniform. However, people externally have a positive view of the organisation, and find it professional, driven and competent.
Finally the conclusions of this thesis are:
1. COS Groningen lacks a clear identity. The purpose and field of work of COS Groningen are unclear to external stakeholders. This is caused by internal uncertainty on boundaries of activities and the organisations’ field of work.
2. Internal coordination needs to be improved. There is a lack of clarity about the place of responsibilities and authority, and the evaluation thereof. Improving these issues will contribute towards a more professional clear organisation.
6 4. Furthermore, the organisations’ financial vulnerability through dependence on
only a few donor organisations is an issue that needs attention. Lack of diversity in funding, and all funds purposes being predetermined is considered a limitation. It is also increasingly difficult to acquire funding.
5. Yet, externally the view of COS Groningen is generally positive. Internal and external stakeholders agree that COS is an open, involved and enthusiastic organisation.
Finally some recommendations are given to COS Groningen:
1. COS Groningen needs to create a clear organisational identity by creating a uniform internal method of working and forming a clear mission and vision. This will be reflected in the external perception of the organisation, which will be defined better, and more correctly.
2. The identity of the COS Groningen needs to be communicated to stakeholders and the public. Many stakeholders have formed only a partial image of COS Groningen and its activities. COS should communicate who they are and what they have to offer more proactively, also among their network.
3. Internal coordination needs to be improved. The differences in work and skills of individual employees noticed by external parties should be improved by creating a more uniform way of working. This also includes improving clarity on responsibilities internally. Improving this will help creating a COS Groningen identity.
4. To strengthen the financial position of the organisation, it is necessary to gain both structural and project related funding from more different organisations, such as local governments and businesses.
5. To make being accountable as easy as possible COS Groningen should maintain a close relationship with its financing parties.
7 TABLE OF CONTENTS Preface... 3 Management summary... 4 1 Introduction...10 1.1 COS Groningen ...10 1.2 Research request ...10
1.3 Challenges for COS Groningen ...10
2 COS Groningen...13 2.1 The organisation...13 2.1.1 History ...13 2.1.2 Structure...13 2.1.3 Cooperation...15 2.1.4 Finance...15
2.2 Focus and activities ...15
2.2.1 Fields of focus ...16
2.2.2 Projects ...17
2.3 COS’s network for cooperation...17
2.3.1 Financing parties ...18
2.3.2 Target groups ...19
2.3.3 Partners...20
2.3.4 COS Nederland ...20
3 Research design and methodology ...21
3.1 Research objective ...21 3.2 Research question...21 3.3 Sub-questions...21 3.4 Methodology ...22 3.5 Key concepts ...23 3.6 Timeline of research ...24 3.7 Outline of thesis ...25
4 Outcomes of literature study on key challenges ...26
4.1 NGO’s & challenges ...26
4.1.1 The phenomenon of NGOs ...26
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4.1.3 Pressures for change ...28
4.1.4 NGO’s in the Netherlands...29
4.2 Accountability and access to funds...30
4.2.1 Accountability ...31
4.2.2 Access to funds ...33
4.4 Visibility, identity and image...34
4.4.1 Visibility ...34 4.4.2 Identity...35 4.4.3 Image ...36 4.5 Professionalism ...38 4.6 Solutions...38 4.6.1 Repositioning NGOs...38
4.6.2 Model for dealing with challenges for NGOs ...39
4.7 Conclusions ...42
5 Outcomes of research among internal stakeholders ...43
5.1 External communication ...43
5.2 Customer orientation ...45
5.3 Image...45
5.4 Accountability & internal coordination ...46
5.5 Open questions ...48
5.6 Conclusions ...50
6 Outcomes of research among external stakeholders and experts ...52
6.1 External communication ...52 6.2 Customer orientation ...53 6.3 Image...53 6.4 Accountability ...54 6.5 Open questions ...54 6.6 Conclusions ...56 7 Analysis...58
7.1 Differences between board and employees...58
7.1.1 External communication ...58
7.1.2 Customer orientation ...59
7.1.3 Image and professionalism...59
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7.1.5 Conclusions ...61
7.2 Differences between board and external stakeholders ...61
7.2.1 External communication ...61
7.2.2 Customer orientation ...62
7.2.3 Image and professionalism...62
7.2.4 Accountability and internal coordination ...62
7.2.5 Conclusions ...63
7.3 Differences between employees and external stakeholders...63
7.3.1 External communication ...63
7.3.2 Customer orientation ...64
7.3.3 Image and professionalism...64
7.3.4 Accountability and internal coordination ...64
7.3.5 Conclusions ...65
7.4 Open Questions...67
7.4.1 Goal of the organisation ...67
7.4.2 Strengths ...67
7.4.3 Weaknesses ...68
7.4.4 Challenges and solutions ...69
7.5 Conclusions ...70
8 Conclusion ...72
8.1 Literature outcomes ...72
8.2 Views of internal stakeholders ...72
8.3 Views of external stakeholders ...73
8.4 Conclusions from literature and stakeholder views...74
8.6 Scope and limitations ...77
9 Recommendations ...78
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1 Introduction
This first chapter introduces a local NGO, and the pressures for change and external expectations the organisation is dealing with.
1.1 COS Groningen
COS Groningen, a centre for international cooperation, started out in 1978 as a third world documentation centre, focused on education. It is a small NGO with 9 employees (2008) located in the city of Groningen. The organisations’ main goal has shifted from education and development cooperation to a wider goal: to create awareness of international and global issues, and to educate and assist people and organisations in participating in this actively. The emphasis in this is on development cooperation, international solidarity and multi-cultural society. (This will be more extensively discussed in chapter 2.)
1.2 Research request
The executive director of this NGO in Groningen, Dr. A van der Schaaf, feels the changes in society’s approach to accountability are affecting the organisation; the availability of funding is no longer self-evident. To gain funding, the plans of the foundation now need to be explicitly justified, and results need to be measurable. The issue that the director of COS Groningen finds most urgent is that many people and organisations do not seem to know about COS and what it does, or only to a limited degree. She feels that COS would be able to fulfil its goals much better if the organisation were more widely known and suspects the organisations image and unclear positioning to be related to this issue.
This thesis will attempt to give some clarity about the situation and on how issues are related and provide COS Groningen with advice on how to approach the specific challenges related to the organisation.
During the research conducted for this thesis, Dr. van der Schaaf was temporarily substituted by Drs. J. Satoor de Rootas, from February 2007 up to June 2007.
1.3 Challenges for COS Groningen
11 accountability. Some financing parties have organised a tender to help choose who gets subsidies and how much.
The local governments and financing parties also expect a certain measurable ‘benefit’ from their donations; they want statistics on how many people have been reached through a certain project, and how much publicity in local newspapers is expected. This is also related to similar challenges that NCDO, an NGO and financing party, is dealing with. They have to be accountable to the central government.
In order to meet the new requirements, COS is changing their way of planning, organising and reflecting on the work the organisation does. In short, the organisation is required to become more professional. This affects the organisation, as the attitude to their environment influences financing of the organisation. Previously, the financial support from NCDO especially was expected, even taken for granted; now it has to be competed for. These changes also raised questions in the organisation about which things it should and should not do, as is reflected in the organisations strategy and vision.
Another thing that has become more important for COS is their image and reputation. According to management, for an organisation in development cooperation as COS was in the 1970s and 1980s, it was unheard of to put yourself into the picture and to draw attention. The done thing was to ask, and hope for money and support. Now, as has already become clear with the acquisition of funds, quite the opposite is expected and required. Market forces have now even come through to the NGO sector; many organisations are vying for attention and money; a large financing organisation for NGO’s in the Netherlands, NCDO, for example now organises a tender. Issues like public relations and networking are becoming more important for the organisation according to management.
In this preliminary model (fig.1) these issues and challenges for COS Groningen are illustrated. Each block represents an issue that the organisation is currently dealing with. The model was formed from several discussions with management about these issues and the topics linked to them.
12 necessary to professionalise. After funding has been received, sometimes further funding, for example the next year, requires a certain level of result or performance.
Performance also has an effect on public support and the reputation or image of the organisation, which can influence the size of the network. These aspects seem to determine the organisation’s visibility. Visibility is also related to the access the organisation has to funds: as the organisation is more visible, it is able to perform better on it’s projects (reach more people), and is more likely to gain public support, and a larger network. Professionalism is closely related to the other challenges, and is also a part of them.
The issues and challenges, their interrelations and how COS Groningen could deal with them will be investigated in this report. In the next chapter the organisation will be introduced in more detail.
Access to Funds
Performance
Visibility
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2 COS Groningen
In this chapter first the organisation, COS Groningen will be described following some preliminary investigation into the organisation. The organisations background and history will be described. Next is the organisation’s structure internally and its relationship to the national office. The organisations focal points will be described and a few examples of its continuous projects will be given. Finally, the organisations financial situation, and the network of external stakeholders will be described.
2.1 The organisation
COS stands for Centre for Development Cooperation (translated from Centrum voor Ontwikkelingssamenwerking). The abbreviation however is no longer in use as an abbreviation, but instead as the organisations proper name. Additionally, the fact that it is now called “COS Groningen, centre for international cooperation”, illustrates the organisations expanded field of work; from development cooperation only, to including multicultural society and sustainability.
2.1.1 History
When COS Groningen was founded, a local ‘Wereldwinkel’, a shop run by volunteers selling fair-trade products, was involved from the start. The organisation focused mainly on education then. As a Third World Centre it was mostly involved with providing support and information to volunteer initiatives in the field of international cooperation. Another issue that received attention is poverty. The organisation was initially aimed at the city of Groningen only. In 1979 a provincial umbrella organisation for development cooperation, POOG, was set up. In 1997, the foundation was registered under its current name; COS Groningen, centre for international cooperation.
2.1.2 Structure
14 Please note that in this thesis several organisations are mentioned who carry the name COS. To avoid confusion, from this point in this thesis, when referring to COS, COS Groningen is meant. The national office, COS Nederland, and any other regional offices will be referred to by their full names (e.g. COS Overijssel).
COS Groningen consists of the executive director, three consultants, supporting staff and volunteers. Overall, there are nine employees, 5 board members, and 4 volunteers at the office, and about 10 volunteers involved in other activities with varying levels of involvement. Some volunteers coordinate activities of other volunteers from the office regularly, while others are called upon to give a guest-lecture every few months. The executive director, Dr. A van der Schaaf, is responsible for the general management of COS Groningen. The consultants organise projects, give advice to organisations and coordinate the volunteer work.
The governing board of COS Groningen, consisting of 5 members, is focused on supporting the organisation through the set of different areas of expertise the board-members. Currently (2007) the board consists of the chair Mr. J. Legters, Mrs. P.A.M. Debets-Bakker, Mr. R. Beije, Mr. W. Havenstein and Mr. A.R. Demiray.
Through the members of the board, knowledge is accessible about legal procedures, local politics, HRM, finance, organisational consultancy and development
Secretariat (1)
Finance (1)
Volunteers (10) Governing board (5)
Executive director (1)
Figure 2: Organogram COS Groningen, source: author Public Relations (1)
Consultants (3)
15 cooperation. Next to this, the board members are also expected to have a relevant network in the region.
2.1.3 Cooperation
For most projects, COS cooperates with one or more organisation in its network. COS tries to involve local organisations in the activities of nation-wide organisations (top-down), but also aims to recognise local developments that are relevant at a national level (bottom-up). COS tries to use its network to accomplish its mission of increasing awareness of global issues. It also does this through improving the organisations own position in its network, and increasing the subsidies and other funds this way.
2.1.4 Finance
COS is financed by several subsidies, which are structural or project-related. Structural funds come in every year almost certainly, and are intended for the general ongoing projects the organisation runs. Project related funds are given specifically for a certain project, which is often executed on request of the donor. The annual budget for 2006 was about 250.000-300.000 euros. NCDO’s financing, when acquired, is then a structural income certain for a period of four years. Other structural funds are subsidies received from the Province of Groningen and the Municipality of Groningen. These financing parties will be further discussed in paragraph 2.3.1, where the network of stakeholders around COS Groningen is illustrated
2.2 Focus and activities
In this section the topics that COS Groningen focuses on in their mission will be explained. To illustrate what this entails in practice some of the organisation’s structurally running projects will be described.
Source of funds Relative contribution
NCDO 46%
Province of Groningen 24%
Municipality of Groningen 2%
Project funds 27%
Other 1%
16 2.2.1 Fields of focus
The mission of COS Groningen as found on the website1 states the following:
“COS Groningen focuses on the relationship between North and South through three core themes:
Global society: International cooperation, poverty issues, international relations, Kyoto, world trade, international justice. This theme has the highest priority.
Multicultural society: Migration, integration, background knowledge of countries of origin of refugees, prejudice.
Sustainable society: Sustainable development, sustainable agriculture, Ecological Footprint, corporate sustainability. “
Historically the organisation has focused on development cooperation in a narrower sense. The focus was on reducing poverty, world trade, and supporting small local initiatives related to development cooperation. These topics are now part of the theme of global society.
In recent years however, the focus of the organisation has shifted and broadened, now no longer a centre for development coordination, but rather focused on international cooperation in the broadest sense of the word.
The second two themes, multicultural society and sustainable society were added to COS Groningen’s field of work. Multicultural society involves topics such as migration, integration, preconceptions and knowledge of the background of refugees, while sustainable society focuses on sustainable development, agriculture and corporate sustainability.
North and South as mentioned in the mission statement, are generally considered illustrate the North as those countries donating aid, while South stands for countries receiving aid.
COS Groningen’s work is not limited to the relationship between North and South only, issues concerning East and West are considered equally important. One could say that the relations between nations and people in specific geographic locations are no longer the main focus, but rather relations between developed and undeveloped nations and people globally.
17 2.2.2 Projects
In this paragraph, a few of COS’ structural projects will be described.
1. Linkis is a project run by COS that provides support to people who wish to set up their own development cooperation project. In the Netherlands, Development Cooperation is a task of the ministry of Foreign Affairs, but has a dedicated minister The minister for Development Cooperation. This minister started the programme in order to provide support with respect to finance and content of the projects. COS advises and supports people who wish to apply for support through the Linkis programme, as the applications terms are quite specific for the different Co-Financing Organisations.
2. Stories from Far away (Verhalen van Ver) is an education project where COS organises for migrants and refugees who live and work in the Netherlands to give a guest lesson on a topic related to the cause of their migration, conflict, multicultural society, non-western culture and cultural differences. COS has over 40 volunteers for project, so the topic can be adapted to the wishes of the school or institution that requests the guest-lesson.
3. The “Groninger Wereldatlas” is a website set up and maintained by COS Groningen that contains information about people and organisations concerned with development cooperation in the province of Groningen. The main goal of this project is to encourage exchange of knowledge and make local support for development cooperation more visible.
4. Xplore is a government programme for people between 12 and 30 years of age who are involved in an international exchange. For this exchange it is expected that applying organisations organise their own preparation before travelling to a developing country; a training programme is part of this. COS Groningen organises these training programmes to ensure that people get the most out of their time abroad. These training programmes are largely subsidized by the government, though sometimes a small fee is asked from participants.
2.3 COS’s network for cooperation
18 The network of COS Groningen consists of different types of organisations and groups. There are financing parties, who provide funds and through this influence and determine policy and activities. These are also the parties that COS Groningen has to report their results too.
Another group of organisations are the partners COS cooperates with directly. In general it can be said that the motivation for cooperation with these organisations is working towards common goals. In some cases COS cooperates with organisations that are also instructing parties.
The last category consists of the target groups COS Groningen aims to reach. The main target group consists of the entire population of the province of Groningen. COS tries to reach some people directly; the ones who are or want to be directly involved in a local initiative related to COS themes. Others COS tries to reach through local businesses, local government (politics) and education.
Finally there COS Nederland which does not fall into any of the categories above.
2.3.1 Financing parties
There are three financing parties that structurally subsidise COS Groningen, the NCDO, the provincial government of Groningen and the municipality of Groningen. The National Commission for International Cooperation and Sustainable Development (NCDO) is located in Amsterdam. NCDO has been appointed by the central government to divide a part of the budget for development cooperation over several interested parties, COS is one of these. The yearly budget available for NCDO in the 2007-2010 period is 37 million euros. The funds, which are the largest structural financial support COS Groningen receives, have to be spent on themes/projects assigned by NCDO, because of this NCDO is a very important instructing party.
19 2.3.2 Target groups
The population of Groningen is the most important group COS tries to reach; the organisations mission is to create awareness, and actively involve the population of the province in issues related to international cooperation. COS does reach the population through activities it organises, so there is a relationship as indicated in figure 4.
20 COS has limited contacts with municipalities in the province of Groningen, apart from the municipality of Groningen itself. Previously COS did not consider businesses to be a target group, however this has changed in the last few years. Corporate sustainability is a main focus in relating to businesses. The organisation has few relationships with businesses. COS Groningen’s involvement with the educational sector includes connections with the University of Groningen and other schools. This is largely conducted through the Verhalen van Ver project, and providing information about COS themes to teachers for multiple subjects.
2.3.3 Partners
Local development organisations are local organisations such as Third World development groups, the ‘wereldwinkels’, town twinning initiatives, and church related development groups. These are the traditional ‘support-group’ of COS. Most of these are relatively small local initiatives. Many of the COS projects involve one or more of these organisations. Other non-governmental organisations cooperating with COS include women’s organisations, welfare organisations, and student organisations. Some of these are local, some work from national umbrella offices, others are national organisations. The basis for cooperation is mainly a common interest in the topics related to COS’ work. A sub-group in this category consists of the 6 official government co-financing organisations (not including NDCO). COS also cooperates directly with educational institutions. A recent development is the setting up of a training centre with COS; this is still in the start-up phase.
2.3.4 COS Nederland
COS Nederland is the national association of which all 15 local COS offices are a member, an organisation that facilitates the work of the local offices. COS Nederland acquires projects, divides them over the local offices, and determines national policy applying to all local offices. It does not finance the local COSs however. It is an instructing party, because it determines to a large extent the policy and direction of the organisation. The local COSs are required to submit their results to COS Nederland. However, responsibilities go both ways, without the local offices and their (financial) support there would be no COS Nederland.
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3 Research design and methodology
This chapter provides information about what is being researched exactly, and how it is done. The research goal is attuned to the question or problem posed by the organisation, and what is relevant for them, and what result may be expected. The research question is formulated from the research goal, and followed by sub-questions that divide the main question into specifically researchable aspects. Together the data and information gathered this way will provide and answer to the research question and fulfil the goal.
3.1 Research objective
The research goal of this thesis is: To provide insight to the management of COS Groningen into the challenges posed by the changing demands of the environment, and the ways in which COS Groningen can deal with them.
3.2 Research question
The research question following the goal:
What are the key challenges for COS Groningen posed by the external pressures for change and how can COS Groningen deal with them?
3.3 Sub-questions
Based on the description and analysis of the organisation presented in the last chapter, several investigative questions are formulated to help answer the main research question.
In order to create a background for the study, the literature on issues and complexities related these challenges will be reviewed to gain insight into the concepts and their relatedness:
1. What insight does the literature provide into the key challenges for the organisation, and how to deal with them?
Then the views and ideas present inside the organisation will be investigated:
2. What are the views of internal stakeholders on these challenges and how COS Groningen should deal with them?
22 3. What are the views of external stakeholders on these challenges and
how COS Groningen should deal with them?
Finally, the conclusions from the research can be translated to recommendations: 4. What recommendations can be given to COS Groningen?
3.4 Methodology
In this section, the methodology used for this research will be presented and explained. In this research, three different methods are used.
1. Desk research: This involves studying documents related to the organisation; COS Groningen, its history, strategy, application documents for subsidies, the organisations website, its communications, the newsletter, year reports, etc. The results are presented in chapter 2.
2. Literature research: In this research the available literature on the topics connected to the key challenges and possible solutions for the organisation will be investigated. The key challenges are presented in chapter 4.
3. Interviews: Interviews were used in different stages of this research. In the first stage, informal interviews and discussions with management took place. The subject of this was the reason for and goal of this research, as well as the challenges the organisation is facing. This was an iterative process of feedback from management. The result from these first interviews is the presentation of the challenges and issues for COS Groningen in the chapter 1, and it forms the starting point for the problem statement.
In the data collection phase, more formal semi-structured interviews took place. Interview will be conducted with both internal and external stakeholders of COS Groningen. For the interviews a list of questions was created (See appendix D), the interview each took approximately one hour. During the interviews the interviewees were asked to answer questions, some open and some on a scale of 1 to 5 (later converted to a scale from 1 to 10), with these questions they were asked to explain their answer if possible.
23 interviews will take place in July, August and September of 2007 (See appendix C for a list of persons to be interviewed). In presenting the results, for reasons of confidentiality, management will be included in the group containing the governing board.
External stakeholders are the partners, instructing parties and target groups in the existing network of COS Groningen. This does not include organisations and people with whom COS Groningen currently does not have a relationship with. The interviews with people from this group will provide information and views illustrating the current image and visibility of the organisation. The 14 external stakeholder interviews will take place from August to November of 2007.
The results will be presented in chapter 5 (internal stakeholders) and chapter 6 (external stakeholders). These results will be analysed in chapter 7. (See appendix D for a list of interview questions.)
3.5 Key concepts
Non Governmental Organisation (NGO): An organization that is not directly part of the structure of government, non-profit and aims at the public interest in some way. Non Governmental Development Organisation (NGO): NGO working in the development field.
Co-financing organisation (CFO): Organisations in the Netherlands that support partner-organisations in developing countries, for which they receive funds from the Dutch government. There are six officially appointed CFO’s: Cordaid, ICCO, Novib, Hivos, Terre des Hommes and Plan Nederland.
Accountability: A process in which an organisation builds and maintains a relationship with stakeholders based on transparency and influence (Lewis, 2001). According to Fowler (2005) there are two aspects to accountability; legitimacy and governance.
Legitimacy: Refers to the credibility of an organisation, based on perceived moral justifications for its social and political actions (Lewis, 2001).
Governance: The ongoing process within organisations by which guidelines for decision-making, mission and action are developed and compliance with them is monitored (Lewis, 2001).
24 great skills and abilit: the power and professionalism of her performance. 3 the practice of using professional players in sport: Increased professionalism has changed the game radically.2
Identity: Mental associations about the organisation held by organisational members (Brown et al., 2006:102).
Reputation/Image: Mental associations about the organization actually held by others outside the organization (Brown et al., 2006:102).
Visibility: the fact or state of being easy to see: high visibility equipment for cyclists | The advertisements were intended to increase the company's visibility in the marketplace (= to make people more aware of their products and services).3
Communication: the action of communicating. 2 a letter or message. 3 (communications) means of sending or receiving information, such as telephone lines or computers.4
Transparency: the quality of something, such as a situation or an argument, that makes it easy to understand: a need for greater transparancy in legal documents.5
3.6 Timeline of research
Task Start Finished
Orientation 11-2006 01-2007
Literature review (NGO’s) 02-2007 04-2007
Problem statement 03-2007 05-2007 Preparation data-collection 05-2007 07-2007 Data-collection 07-2007 11-2007 Interpretation findings 10-2007 12-2007 Conclusions 12-2007 12-2007 Draft report 12-2007 02-2008 Revising report 03-2008 Final report 04-2008 Presentation at COS 05-2008
25 3.7 Outline of thesis
This thesis is structured in 8 chapters.
Chapter 1 This chapter describes the context of the research, and the organisation that requested the research.
Chapter 2 In chapter 2 the organisation being studied, its strategy and its network will be described.
Chapter 3 In chapter 3 the problem statement and methodology is presented, based on the information gathered about the challenges facing NGO’s in general, and COS Groningen in particular.
Chapter 4 The fourth chapter will review the literature on the key topics.
Chapter 5 Chapter 5 will present the results of the research regarding the views of internal stakeholders.
Chapter 6 Chapter 6 will present the results of the research regarding the views of external stakeholders.
Chapter 7 In chapter 7, the results from chapters 5 and 6 will be analysed. Chapter 8 Chapter 8 will outline the conclusions drawn from this research.
Chapter 9 Chapter 9 will provide recommendations to the management of the organisation.
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4 Outcomes of literature study on key challenges
In this chapter, literature available on the phenomenon of NGO’s will be described: their nature, management, challenges in general, pressures for change and challenges for NGOs in the Netherlands. Then, challenges and changes facing NGOs will discussed specifically in more detail. The current situation regarding access to funds for NGOs will be discussed, and then accountability, professionalism, and visibility, identity and image This will provide a clearer view of these challenges. The final section of this chapter goes into possible solutions.
4.1 NGO’s & challenges
This thesis examines the pressures for change faced by a particular NGO caused the changing expectations of the environment and how one such organisation may best handle these challenges.
4.1.1 The phenomenon of NGOs
The term non-governmental organization (NGO) is used in a variety of ways and, depending on the context in which it is used, can refer to many different types of organizations. In its broadest sense, a non-governmental organization is one that is not directly part of the structure of government. NGOs can be large bureaucratic organisations, with a budget of millions, but also small informal local initiatives, and everything in between. Lewis (2001) argues that resources available can be unpredictable, and that NGOs are more and more concerned with the survival of their organisation; in the context of uninterested donors and public, political oppression and government suspicion.
27 same change also happened on the level of governments, who now keep a close eye on the subsidised organisations.
Organisations are expected to account for the money and time spent, showing the exact results they accomplished, or plan to accomplish. The need for legitimacy, and more importantly accountability has increased (Fowler, 2005, Ebrahim, 2003). The credibility and reputations of NGOs depend on it (Edwards and Hulme, 1996), and through this, their own survival.
In order to understand the phenomenon of NGOs, and their importance and complexities, their rise and growth, ideological legitimacy and political position will be discussed in this introduction.
4.1.2 NGO management
Lewis (2001) argues that NGO management needs to be approached from four different perspectives simultaneously: 1) business management, 2) public management, 3) third sector management and 4) development management.
He also promotes the idea that both the context and an NGO’s own identity are vital in NGO management:
“In the process of building appropriate practice, an NGO may need to draw upon different combinations of ideas, approaches, and techniques from various sources, and the precise mix adopted will depend on an NGO’s own mission, culture and values, as well as on the forces in its wider operating environment, such as the demand of donors or the requirements of government. (Lewis, 2001:190)”
Lewis (2001) also describes three inter-related areas as management challenges for all NGOs: 1) the organisation, 2) its activities and 3) its relationships, all in the organisations political, historical and cultural context. Lewis points out that NGOs have not taken the idea of management seriously for many years:
“While people in NGOs have often been committed activists, they have been reluctant managers (Lewis, 2001:8)”
For this reluctance, he gives five reasons (2001: 9):
1. NGOs have a ‘culture of action’; people feel that thinking about organisational issues interferes with doing their work.
28 3. NGOs, because of their origin of searching for alternatives to mainstream
thinking, have sometimes linked the subject of management negatively to businesses and the public sector and their practices.
4. Many NGOs have experienced rapid growth and change. Management issues could be dealt with on an informal ad hoc basis when the organisation was small, but after the growth, their activities often become more complex. The organisation does not always realise that they need new systems and procedures to deal with the new situation.
5. The power of external pressures.
These external pressures are the focus of this research, and their nature, impact and significance will be discussed further in the next section.
4.1.3 Pressures for change
In the last decade, significant changes have taken place in the system of international development and aid that have strategic implications for NGOs. NGO’s are dependant on financial donors, and because of this have to comply with the donor organisations wishes closely, and as they require more, the NGO has little choice but to follow instructions. Lewis (2001) emphasises that NGOs becoming closer to donor agencies are increasingly required to develop systems for accountability. The organisation’s efficiency and effectiveness may also be questioned. Lewis argues that this had led to the impression inside NGOs that this demand for change is externally motivated, and therefore suspicious. This can cause some resistance to these changes.
29 Lewis (2001) explains there is some disillusionment with NGO performance; it fell well short of expectations in relation to performance, sustainability and impact. Some NGOs received a lot of media attention in the last few years regarding their large expenses on overhead costs. People started wondering if the money donated was worth it, or if it never really got to it’s destination. Lewis and Opoku-Mensah (2006) say that the role of the ‘governmental’ is now more explicitly engaged in development policy, as donors have been making stronger claims about ‘bringing the state back in’.
In the 1990s, NGO participation was seen as an important and innovative new approach. Today they are still invited to contribute ideas and perspectives reflecting the needs of the poor, and to maintain a watchdog role on the performance of governments in that field, but there are signs that NGOs are no longer seen as being the mainstream in development (Lewis and Opoku-Mensah, 2006). The role of governments (sometimes in cooperation) has increased again relatively, and ‘new’ methods, such as micro credit are becoming mainstream.
Lewis and Opoku-Mensah (2006) argue that for some donors, NGOs are primarily seen as practical service delivery partners, while other consider them unaccountable critics of official policy.
Fowler (2005) argues that NGOs in today’s world should develop well thought out strategies and identifies questions in order to strengthen their identity and improve their activities to fulfil their mission.
According to Beckwith, Glenzer and Fowler (2002), this heightened pressure to demonstrate effectiveness and improve inter-agency collaboration raises urgent organisational questions and relational challenges for NGOs. Official aid is the subject of critical discussion, as is the issue of NGO roles, responsibilities, and accountability (Fowler, 2000). These conditions demand a higher level of professionalism, better demonstration of performance, and stronger inter-organisational relations (Beckwith et al., 2002).
4.1.4 NGO’s in the Netherlands
30 1. It tends to be dominated by a few large NGOs that have a special co-financing
arrangement with the government, a co-financing programme, which was started in 1965. Currently (2007) there are six of these organisations (CFOs), namely Cordaid, ICCO, Novib, Hivos, Terre des Hommes and Plan Nederland. Next to these there are more than 300 other organisation, both local and national.
2. Instead of there being an overall umbrella body for NGO coordination and dialogue with the government, there is a variety of networks and coalitions that enable NGOs to work together, and with the government on issues of mutual interest.
Another important actor in the Dutch NGO community is the NCDO, the National Committee for International Cooperation and Sustainable Development. NCDO is mainly aimed at supporting organisations that are involved in development education; educating the Dutch population, rather than being directly involved in Third World countries. NCDO started out in 1970 as the National Committee for Development-strategy (NCO), after the UN requested that governments provide information about the situation in poor countries. In 1995 NCO merged with the Platform for Sustainable Development (PDO), becoming NCDO. They are an independent foundation funded by the Dutch government with a budget of around 30 million, and 85 employees.
Since the early 1990s, CFOs have made an effort to improve their management systems and effectiveness, and has undertaken changes in the way they operate; choosing partners more carefully, working with fewer partners, higher cost consciousness, hiring more experts etc (Randel and German, 1999). These changes also took place in NCDO, as they themselves are expected to be more effective efficient and accountable to the government. These changes spread though the NGO community, from larger more (financially) powerful organisations, to the smallest ones, trying to find funding.
4.2 Accountability and access to funds
31 4.2.1 Accountability
The demand for NGO accountability has grown as NGOs have grown in scale and scope (Lewis, 2001). Most NGOs are accountable to some kind of voluntary board, who have no financial interest in the organisation, depending of governance rules and practices in the NGO’s home country. NGO’s are also accountable to the relevant laws of the country they operate.
Edwards and Hulme (1995) argues that two types of accountability are demanded of NGOs;
1. functional accountability, accounting for resources and immediate impacts, and
2. strategic accountability, which accounts for the wider impact of NGOs work.
The first type of accountability, functional accountability is to donors of the organisation, can be reported in detail, and is measurable. Strategic accountability is much more difficult to measure, yet the impression stakeholders have of the organisation is equally important. Reputation and credibility of NGO’s is very much dependent on accountability (Edwards and Hulme, 1995).
control influence appreciate
Figure 6: A framework for understanding management of NGO’s (source: Lewis, 2001:142) National political structures
32 Ebrahim (2003) suggests several mechanisms for accountability for NGO’s specifically:
1. disclosure of statements and reports, 2. performance assessment and evaluation, 3. participation,
4. self-regulation and 5. social-auditing.
NGO’s and their funders quite commonly use the first tool. There are conflicts however on whether processes like participation should be assessed, or if more tangible things should be measured like the numbers of schools built for example. Edwards and Hulme (1996, p. 968) suggest that the wide use of logical frameworks and their derivatives may “distort accountability by overemphasizing short-term quantitative targets and favouring hierarchical management structures––a tendency to accountancy rather than accountability.” The second tool, performance assessment and evaluation, is also commonly used and has its own set of problems (Ebrahim, 2003). For one, NGO culture traditionally favours action over analysis. Next to this, a concern especially for small NGO’s is that their limited staff and resources are spread too thin by evaluation and funding reports requested by funders. Donors according to Ebrahim sometimes do not realize that their requirements can overwhelm small organisations, and suggests that the size and capacity of an NGO should be key considerations in determining the scale of the assessment. A third problem (Ebrahim, 2003) is the purpose of evaluation; they tend to focus on projects and programs, while overlooking the organisation itself, and thereby missing an opportunity for organisational learning.
The third mechanism suggested by Ebrahim (2003), participation of the public is more a process than a tool, and occurs at different levels;
1. Information about projects being made available to the public, 2. Public involvement in the project-related activities,
3. Public are able to negotiate over decisions with NGO’s, 4. People’s own initiatives occur independently from the NGO.
33 Ebrahim (2003, p824) concludes that “while traditional approaches to improving accountability, such as increased oversight through reporting and disclosure requirements, enable a degree of upward accountability, they are of limited use for enhancing downward accountability.” Lewis (2001) states that although accountability is necessary for its own sake, both under- and over accountability should be avoided. Over-accountability brings unnecessarily high costs, while under-accountability does not satisfy the demands for accountability to a high enough standard; stakeholders still do not know whether or not an organisation is efficiently using its resources. NGOs should also keep the balance between different types of accountability in mind, and not focus exclusively on that of one donor for example.
4.2.2 Access to funds
Accessing funds on a competitive basis will grow as a method for provider selection and resource allocation (Fowler, 2005). Tied to this way of allocating money, Fowler argues, will be incentives for ‘partnership’ between NGOs as well as with businesses. Increasing leverage could be accomplished through cooperation; agreeing on agendas and collaborating on topics could work against any divisiveness introduced of reinforced by competitive tendering for financing (Fowler, 2005).
For many NGOs resources diversification involves income-generating enterprises, developmental or not (Fowler, 2005). The becoming of a non-profit/for-profit hybrid has implications for organisational identity, values, management demands and government concerns. Fowler wonders whether choices made by NGOs will collectively alter the character of the sector over time.
Ebrahim (2004) posed another view on NGO-funder relationships; he does not consider the NGO to be the dependent party, but sees interdependence between the parties. This view is based on the exchange of ‘capital’ and resources, however, following Bourdieu, distinguishes between two types of capital: 1) economic capital, which includes material resources such as money and property, and 2) symbolic capital, which includes non-material resources, such as status, prestige and authority, in which information plays a key role.
34
“In other words, the success of a grantee enables its funder to take credit for that success, and to build a reputation for finding and supporting projects that are good investments. Thus, a key resource which funders need for their continued operation is a good reputation, or more specifically, the status or prestige associated with that reputation. The information is valued for the reputation which it confers, but is not necessarily important in itself. I use the term reputation not only to refer to general perceptions of an organization’s standing and credibility, but also to the power derived from this standing. It is thus reputation, rather than information, that is a key resource needed by funders. The presentation of information in “successful” terms transforms that information into reputation and thus into a form of power.” (Ebrahim, 2004:18)
This provides another point of view for the relationship between NGO’s and funders, who do in fact often have the same final goal. Information if an important factor in this; one does need to take into account for what and by whom the information is used. Ebrahim states that only providing information ads up to transparency, explaining decisions and actions goes towards accountability, which is the topic of the next section.
4.4 Visibility, identity and image
In this section the three closely related concepts of visibility, identity and image are discussed. They are not only related to each other, but also to other concepts discussed in this chapter. It is to be expected that a certain level of accountability for example will be perceived positively or negatively by the financing organisation, thereby creating an image.
4.4.1 Visibility
Visibility is not a term used often in business literature as a concept on its own, and it is defined in many different ways, as it is viewed from different perspectives. It is used in marketing, as a measure of how much the public see a product or its advertising. Investors view it as: ”The level of predictability of upcoming financial data about a company, especially sales and earnings. When the numbers are fairly easy to predict, visibility is said to be high.” 6
The meaning of visibility in a dictionary provides another set of perspectives: “1 how far or well you can see, especially as affected by the light or the weather: poor / bad / zero visibility....etc.
35 2 the fact or state of being easy to see: high visibility equipment for cyclists | The advertisements were intended to increase the company's visibility in the marketplace (= to make people more aware of their products and services).”
The latter applies most closely to the issue at hand. This point to concepts such as image, but also to (external) communication. In existing literature these concepts are often linked to each other.
4.4.2 Identity
Birkigt and Stadler (1986) were the first to link image and identity, defining image as a reflection of identity. Authors do not seem to have reached agreement on the definition of either identity or image. Dutton and Dukerich (1991) describe an organisation’s identity as what its members believe to be its character. The basis of an organisations identity is described by Albert and Whetten (1985) to be organisational members collective understanding of characteristics of the organisation that are central, relatively permanent, and distinguishable from other organisations.
Many authors have argued the relevance and importance of organisational identity. Many now agree that in is not enough for companies to distinguish themselves through superior products only. More and more companies now consciously use their identity to stand out (Van Riel, 2001). According to Olins (1996) a clear identity creates loyalty among stakeholders. Collins and Porras (1998) have proven that a corporate vision and clear identity are crucial for profit and growth of the organisation. A favourable corporate reputation results in improved organisational performance according to Fombrun & Shanley (1990).
36 authors describe the place of identity, and following that, questions of self-reflection: “Who do we think we are?” and “Who do we think we should be?”
Birkigt and Stadler (1986) include three aspects in viewing identity; behaviour, communication and symbolism. Behaviour is the way the organisation acts, does business etc. Communication is a wide concept, and in this case mainly refers to communication to external parties in any way, shape or form. Symbolism is also a part of an organisations identity and for NGOs often even more important, as they often rely on being a symbol of a cause. Balmer (2002) reviews the different approaches authors have taken since then, and suggests a new identity mix. In this mix, he mentions culture, structure and strategy explicitly, and includes both behaviour and symbolism in communication.
Organisational behaviour as perceived by stakeholders is the strongest in determining perceptions (Dutton & Dukerich, 1991, Hatch & Schultz, 1997, 2003). Strategy consists of several aspects, such as management vision and corporate philosophy, corporate strategy and performance (Balmer, 2002). Communication refers to the total corporate communication; it encompasses primary, secondary and tertiary communication. Balmer describes primary communication as effects of the company’s products and services, corporate behaviour and employee behaviour. Secondary communication refers to formal communications, advertising, public relations and graphic design. Tertiary communication is word-of-mouth communication such as media.
4.4.3 Image
The role of image or reputation in perceptions of an organisation, and supportive behaviours of the environment toward the organisation is illustrated by Sever (2003 in: van Riel, 2003: 94-95).
37 Image and reputation have sometimes been used as interchangeable labels for the same concept. However, Van Riel (2003) explains that while image has been the most commonly used term in the Dutch context until recently, Americans mainly use the word reputation. To clarify the difference between image and identity Van Riel defines reputation as the “overall evaluation of an organisation on the areas of presumed skills and responsibilities in comparison to the competition (2003:86)”, and image as “a perception of a partial aspect of an object, in this case an organisation. (2003:86)”. For example, the image of the country of origin, or a product, or the branch the organisation is part of can each partially determine a company’s reputation.
Brown, Dacin, Pratt & Whetten (2006) take a different approach distinguishing between image and reputation. In their view, images are concerned with what an organisational member believes others know (construed image), or an organisational leader wishes others to know (intended image), while reputation is a ‘perception of the organisation actually held by an external stakeholder.
According to Dutton and Dukerich (1991), an image describes “attributes members believe people outside the organisation use to distinguish it”, while a reputation consists of “the actual attributes outsiders ascribe to an organisation”. Their definition of image corresponds with Brown et al. (2006) definition of a construed image. For
Figure 8: Relationship between business goals and reputation data (source: Sever, 2003 in: Riel, van, 2003, p94)
38 clarity’s sake in this thesis, image and reputation will be considered on par, and following the definition of Brown in the research design (2006).
4.5 Professionalism
Professionalism is defined a social process whereby people come to engage in an activity for pay or as a means of livelihood. This can be interpreted in different ways. In this study, the most relevant view involves relating professionalism to the adaptation of NGOs to business style practices. When the need for professionalism in an NGO is discussed, it is most likely meant that these organisations should conform to the general codes of conduct accepted for professional organisations such as businesses and government. This involves the way things are done day to day in an organisation. A certain type of behaviour is expected of what one would call a ‘professional’ organisation. For example, professionalizing a Fire Department may involve all the volunteers gaining official certification, or a volunteer organisation developing a logo and letterheads.
The process of professionalisation, or becoming more professional, especially when it is to some degree pushed by external forces can cause some difficulty and resistance to change. Professionalisation takes place in different operational areas. It is an aspect of everything any organisation does, and is therefore closely related to the concepts discussed in this chapter: accountability, accessing funding, identity, but also the perception of activities related to these in day to day business: anything from how filing is done, to answering the phone. Often external communication is considered important in this, as this is the most immediately noticeable aspect of an organisation to the outside world. Another way the outside and specifically clients relate to this is through the level of customer orientation.
4.6 Solutions
4.6.1 Repositioning NGOs
39 One of the ways NGO’s could reposition themselves according to Fowler, is to combine domestic and overseas development work. Advantages of this could be that the activities overseas could be the basis for education and increasing involvement on the domestic side.
Another way is to focus on post-conflict development and peace building, rather than only advocating the cause of a certain party, this way legitimacy and accountability, which is often a problem for this type of NGO, is less of an issue; the focus shifts from a political to a practical one (Fowler, 2005).
NGO’s can also concentrate their capacity; they can use aid goals for a post-aid era. They’ve built up skills in this area, which risk becoming redundant, but can still be used if updated and applied to the current situation.
Local government service orientation is also a way an NGO can reorient themselves. They can provide services and support to or for local governments, and so ensure a task is done, that would otherwise not be, and give themselves a new purpose. The last option mentioned by Fowler is multi-sector contracting; an NGO could choose not to focus on and work for only their original target group, but also others. Through these new groups, they can be surer of the continuity of their organisation. An NGO could also choose to function as a relational broker and facilitator to interested parties; in changing, they can use the network they already have and expand this.
4.6.2 Model for dealing with challenges for NGOs
The model in figure 9 was partly adapted from Van Riel and Balmer (1997) and Balmer (2002) concerning the identity-mix, and related the concepts to the research
Fowler (2005) suggests several options for NGOs re-thinking their functions: • Combining domestic and overseas development work
• Post-conflict development and peace building
• Capacity concentration – using aid goals for a post-aid era • Local government service orientation
• Multi-sector contracting • Relational broker and facilitator
40 question. The original model by Van Riel and Balmer (1997) reflects the identity mix as proposed by Birkigt and Stadler (1986), in this model Balmers’ (2002) revision of this mix was incorporated. The identity mix thus includes strategy, structure, communication and culture. The part of the model regarding public support is adapted from Sever (2003 in: Riel, van, 2003, p94). Accountability and its relationship to changes in behaviour through mechanisms of accountability such as evaluation can are derived from Ebrahim (2003), who also further clarifies the role of the public through participation.
Supportive behaviour of public
Political interest & cooperation
Public interest & participation
Interest & participation by other organizations
Figure 9: Dealing with challenges for NGOs, Source: author, Birkigt & Stadler (1986), Balmer & Van Riel (1997), Balmer (2002), Sever (2003) and Ebrahim (2003).
41 It is clear that the main goal of any organisation is good performance. This can be defined, not in terms of profit, as it is applied to a non-profit NGO, but rather in terms of first survival, accomplishing its mission, and growth of the organisation and the support for its activities.
According to Lewis (2001), accountability is extremely important to NGOs; however, organisations should find a balance between the different types of accountability that is expected internally and externally. Too much is as bad as too little according to Lewis. Increasing accountability requires new systems and methods of working, planning, and reflecting on activities; a new higher level of professionalism. This is reflected in the governance of the organisation.
In order to accomplish this, funds are necessary. The acquisition of funds is increasingly difficult, there is more competition, as funds as now divided between fewer NGOs, and much is demanded of the organisation in terms of accountability and legitimacy. With respect to funding, even though there is increased competition between NGOs, they can often gain more leverage more by working together and setting agendas (Fowler, 2005). Fowler mentions another opportunity for NGOs; repositioning the organisation, to include more partners for cooperation, such as businesses.
Professionalism is necessary for both public support and access to funds, and it requires changes in the organisation in different ways, both strategic and in day-to-day activities. Professionalism as a concept is a large black box, because it is an aspect of all parts of organisational behaviour. Visibility is equally important, yet hard to define. In the context of this research, it mainly covers the organisations’ image/reputation in combination with its external communications and visible activities. These are separately positioned in the model to clarify their individual interrelatedness with other concepts in the model.
Next to these, public and political support for the organisation and its goals also plays a role in the performance of the organisation. This determines the extent to which the public participates in activities organised and services offered. Another part of public support is more politically oriented. If the public finds a topic important, it receives more attention in politics, which can result in more funds that are available.
