Transparency and Accountability of Civil Society in the Context of Terrorism

Transparency and Accountability of Civil Society in the Context of Terrorism

Hon. Rollin van Broekhoven

President, International Committee on Fundraising Organizations (ICFO)

Adri Kemps

Secretary General, International Committee on Fundraising Organizations

Executive Director, Centraal Bureau Fondsenwerving (CBF)

Background

            As stated in the September 2002 issue of International Journal of Not-For-Profit Law, in an article titled, Charities and Terrorism: The Charity Commission Response: “It is difficult to imagine an issue that could undermine public faith in charity more than the suspicion of terrorist links.”

            The issue was brought to our attention in ICFO in December 2001, following the Al-Qaeda attacks on the World Trade Center in New York and the Pentagon in Washington. The Bush Administration, as part of its War on Terrorism, declared legal and financial war on groups believed to have aided and supported sponsors of terrorism.  These initially included Islamic groups that reportedly raised funds that helped militants in the Palestinian territories, Iraq, Afghanistan, and other conflict areas in the Middle East.

            Then, the European Commission held a conference in mid-February 2009 addressing the European Center for Not-For Profit Law (ECNL) study on ‘Recent Public and Self-Regulatory Initiatives Improving Transparency and Accountability of Non-Profit Organizations in the European Union’.  The focus of this meeting at the EU headquarters in Brussels was to encourage discussions on the outcome of this study, its recommendations, and possible follow-up.

            Much of the agenda discussion during this conference arose out of the recommendations of the Financial Action Task Force on Money Laundering (FATF-GAFI), and specifically, out of Special Recommendation VIII (SR8).  Broadly stated, the FATF in SR8 recognized that non-profit organizations are particularly vulnerable to being abused for the financing of terrorism.  Whether or not this is true in much of the developed world may be subject to debate.  Nevertheless, countries were encouraged to review the adequacy of their laws and regulations to ensure that the sector was not misused by terrorist organizations posing as; (1) legitimate non-profit organizations; (2) by legitimate organizations that were exploited as conduits for terrorist financing; or (3)  were used for concealing and obscuring the clandestine diversion of funds that were donated for legitimate purposes to terrorist activities.  A document, dated 11 October 2002, entitled ‘Combating the Abuse of Non-Profit Organisations’, provided detailed recommendations or best practices for addressing SR8.

            In January 2009, the European Court of Justice issued its decision in Hein Persche v. Finanzampt Lüdenscheid, addressing the tax deductibility of a gift-in-kind given by a taxpayer in one country to a charity located in another country.  Briefly, the Court ruled that legislation of a Member State which precluded the deduction for tax purposes of gifts to bodies established and recognized as charitable in another Member State violated Article 56 EC. This limited the free movement of capital, which Articles 56 to 60 EC addressed.  This rule applied to claimed donations without regard to whether they were financial transactions or gifts-in-kind.  Although this decision was unrelated to any potential financing of terrorism, we believe that achieving the objectives of SR8 becomes more complicated when countries are not in a position to evaluate the legitimacy of charitable organizations in other Member States or determine whether the funds contributed for legitimate purposes are diverted to terrorist activities.

Know Your Donor; Know Your Beneficiary

            A number of examples have been provided to illustrate the reason for SR8 and the problem.  The 11 October 2002 document detailing best practices stated the problem as follows:

Unfortunately, numerous instances have come to light in which the mechanism of charitable fundraising – i.e., the collection of resources from donors and its redistribution for charitable purposes – has been used to provide a cover for the financing of terror. In certain cases, the organisation itself was a mere sham that existed simply to funnel money to terrorists. However, often the abuse of nonprofit organisations occurred without the knowledge of donors, or even of members of the management and staff of the organisation itself, due to malfeasance by employees and/or managers diverting funding on their own. Besides financial support, some non-profit organisations have also provided cover and logistical support for the movement of terrorists and illicit arms. Some examples of these kinds of activities were presented in the 2001-2002 FATF Report on Money Laundering Typologies; others are presented in the annex to this paper.

            Here is the situation: There is a relief and development charity based in Europe or North America. The charity is recognized as a tax exempt organization under the laws of the relevant country in which it is located, and may or may not be monitored by an independent, or self-regulatory, non-governmental monitoring or accrediting body, such as those which are members of ICFO. Through its child sponsorship funding and other fundraising efforts, it supports a group of orphanage homes in the Gaza Strip. These homes may be owned and operated by that charity, or a consortium of similar cooperating charities licensed in Palestine.

            While the United States, Canada, the European Union, and other countries characterize Hamas as a terrorist organization, the United Nations, Russia, and other countries do not.  Nevertheless, Hamas, in addition to governing the Gaza Strip, may be responsible for operating these orphanages and may even take over ownership of the properties.  Much of the funding as a result of individual donations is directed to the humanitarian causes for which it is raised in North America and Europe.  However, as money is fungible, some of it may end up in the hands of Hamas and be used for the purchase of weapons and munitions, communications equipment, medicine, visas and so on. These appropriations could subsequently be utilized when fighting UN police forces, Israeli forces, and other allied groups.

            Or, for another example, during the 2010 summer floods in Pakistan, relief aid flowed to NGOs involved in alleviating the devastation of the flooding.  Demands for food, water purification tablets, shelter, medicine, hygiene kits, and medical teams to help save the lives of flood victims poured into government offices and NGOs.  Requests for aid also addressed the added need for transportation of these supplies and medical teams by raft, boat, or donkey.  While militant groups in Pakistan previously had limited success in providing aid to refugees, the flood disaster, as well as anger and mistrust of the Pakistani government, had certainly given militant groups offering services and disaster relief some credibility.  Jamaat-ud-Dawa (JuD), under the name of Falah-e-Insaniyat Foundation Pakistan, had set up approximately 29 relief camps in a number of flooded areas.  According to one report by the Times of India, JuD had set up camps in its own name until police started demanding extortion money.  JuD claimed to have provided food to 50,000 flood survivors in all four provinces every day and was in the process of reaching out to 100,000 survivors.  Additionally, it claimed to be distributing packets of food, hygiene items, and other items to 8,000 families.

            There are a number of issues in these examples with respect to transparency and accountability in the charity sector in connection with SR8.  One is simply the question of whether the charities in question are in compliance with national laws.  In the case of the European and US charities providing aid to the Gaza Strip, most of them were completely legitimate and operating in full compliance and respect to their fundraising and humanitarian activities.  Moreover, many were accountable to the public regarding their operations, to ensure they function in accordance with the laws of the US or of a European country in which they were located. Many countries require that domestic charities legally control and operate the foreign entity to which it channels funds.  In the United States, the tax authorities will disallow a tax deduction for contributions to domestic charities if the domestic charities are mere conduits for funds to foreign organizations.  In Europe, a different result would probably be obtained as a result of the European Court of Justice Decision in Hein Persche v. Finanzampt Lüdenscheid.

The situation with respect to the disaster aid in Pakistan might be different, although there was no indication that JuD was operating outside the limits of Pakistani law.  However, there were reports in the international press that JuD was involved in the attacks in Mumbai, India, and was a front for a terrorist organization, Lashkar-e-Taiba.  As a result, there may have been questions about the ultimate use of funds donated.

            Secondly, there is simply the question of standards and monitoring to be performed on charities, and whether such monitoring is to be done by government agencies or some form of independent or self-regulation monitoring regime.  In the case of government monitoring, what sort of sanctions should be applied; criminal, civil, or some other form of sanction?  Prosecution is challenging in these cases because even if intelligence shows signs of terrorism support, it is difficult, if not impossible in many cases, to obtain the unambiguous evidence that is admissible in court proceedings to prove that the money ended up in the hands of terrorists overseas and that the charity knew that to be the case, or understood its probability.  This is often further complicated by the security classification of the intelligence gathering methods.

            So, what is the solution?  We are not persuaded that reliance on governmental regulation and charity monitoring are always the answer.  Indeed, it is in the context of increased cross-border fundraising that independent self-regulation and charity monitoring mechanisms may actually foster, from a national perspective, an international response to money laundering and terrorist financing and the misuse of funds donated by individuals to charities that is better than a response by individual states through active regulation and monitoring of the sector.

ICFO, as an international umbrella body of national monitoring organizations, has led coordinated efforts to contribute to the cause of transparency and accountability on billions of funds raised from private donors and spent for the public benefit.  It is, we believe, noteworthy that the FATF in its Special Recommendation VIII specifically recommended that the third sector, or NGO sector, take action on Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF).  ICFO is building a network on the concept of donor’s trust instead of promoting specific measures on AML/CFT.  The question naturally arises as to what ICFO and its members are doing in this regard, and how they are doing it.

Most members of the ICFO use the model of awarding seals to trusted charities as a component of accreditation schemes. This can be referred to as innovative oversight in addition to legislation or obligatory measures on AML/CFT. ICFO takes an alternative way of oversight based on independently articulated standards and assessments to protect donors trust.  The effectiveness of this model is that it relies, in part, on existing structures.  These include existing laws and regulations, auditing services, and the availability of news media.  The authors argue that the concept of “know your donors and know your beneficiaries”  can be of added value to good governance by charities and will help NGOs strengthen trust in public fundraising as long as the concept is not used by authorities to take control over the NGOs and their policies to pursue their objectives.

Civil Society and AML/CFT

Historically, the concept of civil society can pose a bit of a problem with respect to addressing AML/CFT and government or state regulation and monitoring.  Civil society has been generally understood as being historically one of the three legs of a democratic and open society.  As such, civil society is understood to refer to the un-coerced collective action around shared interests, purposes, and values. Its institutional forms are distinct from the state, family, and market.  Therefore, the sector is set apart from government and the market, and does not distribute profits.  It is self-governing, and is a mediating organization, or group of organizations, voluntary in nature, between the state and individuals.

The problem occurs when much of the activity of the civil society organization (CSO), such as a charitable organization, is funded by government largesse, meeting a need which the government deems to be important, and perhaps even part of the government’s own sense of governmental responsibility. The work of the charitable organization is accordingly regulated by the government because of the nexus between government funding and the activities of the charity.  It is clear, it seems to us, that if funds from the state treasury are to be used to accomplish some public or humanitarian purpose, which the government asserts to be part of its responsibility to be a good steward of the money entrusted to it through taxes, the government acts appropriately in requiring the CSO to account for the expenditure and use of that money.  Such accounting would naturally cover some form of regulation and reporting, through audits and the submission of information concerning the work of that charity.

However, it would seem that some form of legislative or regulatory regime would also be proper in the case of the government’s obligations with respect to the flow of funds through NGOs on the same basis as its obligations to protect its citizens and satisfy its obligations under the FATF-GAFI Special Recommendations on Terrorist Financing.  For example, Special Recommendation No. I provided that countries were responsible for implementing UN resolutions regarding the prevention and suppression of financing of terrorist acts, including UN Security Council Resolution 1373.  Similarly, Recommendations II, III, IV addressed the criminalization of terrorist financing and associated money laundering, freezing of terrorists’ assets, and the reporting of suspicious transactions relating to the financing of terrorism.  Recommendations V, VI, and VII addressed the requirement for international cooperation between nations, and the regulation of the transfer of funds, including wire transfers.  All of these seem appropriate functions of government, both with respect to AML/CFT, as well as to the prevention of fraud on the private donor sector.  While none of these recommendations specifically addressed the regulation of non-profit organizations, the actual handling of monies was implicated, and to that extent, had relevance to the activities of non-profit organizations.

We have seen no evidence that a regulatory scheme imposed by the government, instead of regulation schemes of independent watchdogs, increased the level of transparency and accountability of NGOs. and that to the extent it did, that it increased the level of trust between donor and NGO, thereby increasing the level of giving.  The charitable impulses of the giving public are based on more than simply whether the civil society sector is regulated by the government, and whether the monitoring by the government both ensured compliance with the regulations, and was consistent with the freedom and effectiveness of organizations to fully serve their role in civil society.  We sometimes forget that giving to charity is more than simply a financial transaction.

Informed Trust as Basis for Credibility of Charitable Work

A national registration system for non-governmental charitable organizations is widely required by law in countries around the world, particularly where there is some tax exemption to the organization or tax consequences applicable to the donor.  In most countries, this registration requirement insures that the non-governmental charitable entity is established for a public benefit purpose and is in compliance with minimal legal requirements for registration.  True standards of accountability and ethics and monitoring standards are seldom associated with the requirement.

The issue of establishing standards promoting transparency and integrity and monitoring non-governmental charitable organizations through an accreditation process is a different matter.  For example, the ICFO standards cover five key areas of the activities of international NGOs, or not-for-profit, public benefit, private organizations.  These include membership and responsibility of the governing body, fulfilment of public benefit goals, fiscal control and management, fundraising practices, and provision of public information, such as disclosure of audited financial statements.  Important to the satisfaction of these standards is the goal of ensuring that the public, donors and recipients of the public benefits, have ready access to sufficient and adequate information to enable them to make informed decisions about the organization, their relationship to the organization, and the accountability of funds raised by the organization.  Standards, without monitoring, provide little assurance to the donor regarding the transparency, integrity, and governance of charities and other public benefit non-governmental entities.

However, it is equally important that the monitoring body, responsible for setting standards and monitoring charities to insure their compliance with those standards, have insight into the charity sector and the trust of the organizations which are to be subject to the standards and monitoring.  Implicit in this model is the idea of a relationship between the NPO and the monitoring organization based on the establishment of standards of accountability and monitoring to ensure compliance with those standards.  This requires maintaining currency with fundraising techniques and activities, particularly in a fast moving technological age, worldwide monitoring practices, and the free exchange of information with other monitoring or accrediting bodies external to a particular country.

Governmental versus non-governmental monitoring is a matter of considerable interest to the ICFO, and has been the subject of frequent debate in many countries, particularly those with an active charity sector.  Much of the public benefit work around the world is done by charities, the Church, or religious communities.  As the readers may well appreciate, non-governmental organizations have become an important social counterpart of the economic and political forces in society.  Private donations are widely regarded as an important factor for the independence of the charity sector.

One concern is that this independence could be compromised when there is substantial funding by the government, particularly when those funds are targeted to government objectives.  While it is important to protect the rights of donors, donors are also generally assumed to be aware that they are not always adequately protected by the state from fraudulent fundraising appeals, and indeed, that they are ultimately responsible for their contributions to the charitable causes. This is why private and semi-private monitoring and advisory boards, such as various forms of self-regulation and accreditation bodies, have been established in many countries, including those countries represented by the ICFO.  These monitoring and accrediting non-governmental bodies are building bridges of trust between reliable NGOs and the donor public.

One of our concerns is that a statutory regulatory scheme, with governmental monitoring, together with the potential reporting of suspected fraud or similar irregularities to police, and the denial of registrations or criminal prosecution, tend to increase the administrative costs.  Specifically, such schemes generally require accounting and legal services beyond those normally required for the responsible administration of the charity.  The experience in the United States, and no doubt in many countries, suggests that, as a result of governmental regulatory requirements and governmental monitoring, there is an increased requirement for additional accounting and legal services beyond that normally required to meet the general transparency, integrity, and other operational interests of the charity, to insure that all the requirements of such laws are met.  There is also experience and some data that tend to support the conclusion that such requirements do little to assure the public that the finances and operations of the charity are in accordance with the requirements of such laws.  This is particularly true since many donors do not understand the requirements of the law, and give to those charities with which they are familiar and which perform public benefit services they support and for which they have personal commitment.  While many large charities can bear these added costs with little effect to their administrative cost ratios to total donated funds, most smaller charities cannot continue to operate and perform the public benefit functions for which they were established, with the added burden of governmental regulation and monitoring, plus the costs of the accounting and legal services that would not otherwise be warranted.

Conclusion

Traditional independent monitoring by an independent organization or self-regulation scheme to promote trust of donors has been focused on good governance of NPOs and their policies on fundraising and the transparent reporting of the income and spending of the funds.  The question is how we in the general public and donor pool are to have some sense that particular NPOs are well-governed and whether their policies and practices on the raising of funds and the use and disbursement of funds are disclosed to the public and to donors on request.  In other words, is it possible to improve trust between donors and the NPO sector, and is it possible to formulate clearly understood standards applicable to good governance, transparency and accountability, and to specific techniques of fundraising?  And if so, is it possible to monitor the activities of NPOs against such standards to enhance the level of trust between donor and NPO?  We think so.

Standards promoted by the ICFO and its members can help charities protect themselves from becoming involved in fraud, money laundering or the financing of illegal activities.  The bridges of trust will be stronger if the charities are willing to submit to accreditation schemes and be monitored by independent or self-regulatory monitoring bodies, such as the members of the ICFO.

In these days of globalization, extended social media, and increased cross-border fundraising within the European Union, bridges of trust can be eroded by permitting “open areas” without national monitoring systems in the European Union.  Independent monitoring should honour the national laws, history, values, traditions, and circumstances, but will be more effective when charities based in one of the countries of the European Union, will be in all cases subject to standards of substantial monitoring procedures.

Civil engagement, supported by donations for public benefit purposes, can flourish and strengthen open societies as long as trust between charity and donor, and the donor public, is maintained.  In the new era of upcoming social media, personal connections and relationships are often replaced by Internet connections.  It will be a challenge for charities to make use, for example, of new platforms of social networks to keep donors and beneficiaries recognised as persons with real identities and not with faked identities.  Charities who know their donors and beneficiaries will be able to build and strengthen relationships in a changing world.

The authors recommend that countries that do not have self-initiated models that include standards and methods of monitoring for promoting transparency and accountability, consider adopting such models, such as those employed by the members of the ICFO, to strengthen donor trust in civil society and reduce the probability of the misuse of funds.

This post was submitted by the authors to, and published by the Office of the Secretary General, Organization for Security and Cooperation in Europe (OSCE) in the CTN Electronic Journal, June 2011, on Preventing the  Abuse of Non-Profit Organizations for Terrorist Financing.  This edition of the Electronic Journal, in its entirety, may be found at http://www.osce.org/atu/78912.   All CTN Electronic Journals may be found at http://www.osce.org/atu/76931.  The authors and the Board of the International Committee on Fundraising Organizations (ICFO) express here our thanks to Mehdi Knani,  Editor or the Journal and an officer in the Action against Terrorism Unit (ATU) of the the OSCE for his kind assistance, not only with the editing of this paper, but also for addressing this important topic in this issue.

Global Charity Trends: Challenges for National Monitoring Organizations

Shiftung ZEWO, the national monitoring organization of Switzerland, co-hosted with the International Committee on Fundraising Organizations, ICFO, its annual event with the public portion of the Annual General Membership Meeting of ICFO.  The focus this past May, was on globabl trends in the charity sector and the challenges involved for national monitoring organizations.

While new fundraising techniques, such as those based on Internet technologies, mobile phones (and especially the newer types of smartphones with many "apps,") and those equipped with SMS capabilities, and instant, on-site high-definition satellite broadcasting, and all the techniques used to manipulate psychological and charitable impulses, international NGO developed fundraising activities in different local markets around the world, the challenge is how to promote charity transparency and accountability.

What do donors, development agencies, and NGOs in this context expect from national monitoring organizations?  Or, maybe to put the matter more bluntly, what to these donors, development agencies, and NGOs expect from government authorities in the context of regulating their activities and promoting transparency and accountability?

Engaging An Evolving Civil Society

 This presentation presented the question as to how civil society develops around the world?  What do research and studies say about global charity trends?  How can ICFO help national monitoring organizations be prepared to address these trends?

Funding the Future 

Internet, mobile phones and new apps open up new possibilities to make payments.  How could charities use these new options to raise funds?  What are the upcoming trends in fundraising?

 What About Donors

How do donor's feel about new fundraising trends?  What can be recommended to them?  Where are potential risks of misuse?  How should monitoring agencies deal with the new developments?

International Fundraising

International NGOs (INGOs) raise funds in various local markets.  What are their most common business models? What are the challenges for a monitoring agency operating in the European market?  What does DZI (Deutsches Zentralinstitut fur soziale Fragen, Germany) request from international NGOs and their local subsidiaries to deserve domestic donors' trust?

How Does an International Development Agency Enforce Accountability

Questions presented in this session included:  How do international development agencies measure the effectiveness of their activities to reduce poverty in developing countries?

Requirements of Swiss Development Agencies Toward NGO 

Questions presented in this session included: What are the requirements of the Swiss Agency for Development (SDC) towards international NGOs?  What role does a national monitoring organization, like ZEWO, play in this context?  Presentations of the new admission process of SDC and some of the main challenges will be discussed.

What Role Can a National Monitoring Agency Plan in Institutional Fundraising?

More and more companies are willing to act with social responsibility.  At the same time, charities look more and more for institutional donations and cooperation with companies.  What is needed for a good cooperation?  What do institutional donors expect from national monitoring agencies?  What role can a national monitoring agency play in this context?

Some tentative thoughts about some of the themes and some conclusions

• There are differences between people in affirming comfort in giving through these new technologies.

• There are differences between countries as to the triggering mechanisms for giving -- printed material, email, and new media.

• Social networking may be good for branding and connecting with charities, but is not particularly effective in raising funds.

• There is increased attention to, and calls for measuring effectiveness impact of the work of the charity or NGO.

•  Over the years there has been an increased depends on government or public funding, and with the economic crisis around the world, there are diminishing funds available from government sources thereby jeopardizing the work and identity of civil society organizations.

• People generally, and donors more specifically, tend to be confused or misled by the nature of certification or seals granted by national monitoring organization, thinking that such certifications suggest effectiveness of the work of the charity. 

•  As a result of postmodernity, the nature of dissemination of news, and an increasingly prevailing sense of skepticism in society, there is a declining trust in institutions at all levels of society, including civil society raising the challenge of how trust is to be restored to the sector.

• There is an increasingly important role in civil society played by institutional donors, such as for profit companies, either operating as limited partnerships with public benefit purposes while minimizing the objective of profits, or in partnership with charitable organizations as key players and donors. 

•  Problems with charity monitoring are complicated further with internationally operating charities. 

• Money flow is difficult to follow.

•  Responsibilities and accountability are not so clear.

•  Truthful information on international structures is not always forthcoming or clear to understand.

• Outsourcing costs are difficult to track.

•  Monitoring online platforms is complicated by lack of standard practices, languages, and methodologies of presenting information.

The purpose of ICFO is to ensure that fundraising for charitable purposes is being organized and performed in a satisfactory manner and that the administration of the collected funds is adequate.  ICFO and its Members look after the interests of donors.  This Annual General Membership meeting was directed like all of the Annual General Membership meetings, to that end.  But, beyond that, it gave each member organization the opportunity to hear what challenges we face in this era of new media, to network within our association, and to hear the views of those leaders in the nonprofit sector that came to participate in this important meeting.

Monitoring Agencies Evaluate Global Trends

International Committee on Fundraising Organizations              

ICFO – the association of national monitoring agencies

Press Release Amsterdam, 25th May 2011

Monitoring agencies evaluate global charity trends

New fundraising methods create chances and challenges 

New fundraising techniques provide promising potentials for charitable organisations worldwide, but also significant risks for donors and serious charities. This twofold message was presented at the annual conference of ICFO, the worldwide association of national agencies monitoring charitable organizations. ICFO members and guests met in Zurich/Switzerland on 20th and 21st May 2011 to discuss “Global Charity Trends” and their relevance for “watchdog” organizations which provide independent donor advice.

“With stagnant levels of giving, the charity sector needs to find ways to engage with younger audiences and technology could be key”, postulated John Low, Chief Executive of Charities Aid Foundation (CAF, London) at the conference. CAF research found that 43% of British people feel “comfortable” with donating online but in fact only 2% of the money donated to charity in 2010 was donated online. Art Taylor, President and CEO of the BBB Wise Giving Alliance (Arlington/VA, USA), stated that new fundraising techniques like SMS donations or online giving platforms are less supervised by government and therefore create an increased need of independent review for accuracy and transparency to be done by independent “watchdog” and accreditation agencies. He encouraged independent monitoring agencies to find new ways and more effective ways to provide donors with their valuable information, because “85% of U.S. donors say they care about nonprofit performance but only 35% do any research on any gift they make.”

The public part of the conference was joined by 120 charity experts. Konrad Specker, Head of Department Institutional Partnerships of The Swiss Agency for Development and Cooperation (SDC) presented the selection process for Swiss charities to be financially supported by SDC. Ruerd Ruben, Director Policy and Operations Evaluation Department, IOB, Ministry of Foreign Affairs of The Netherlands explained how development agencies could measure the effectiveness of their activities to reduce poverty and be accountable. ICFO members and guests from Swiss non-profit organizations also discussed new models to evaluate and to report on charity effectiveness, such as the reporting framework “Charting Impact” which has recently been established in the U.S. by the ICFO member BBB Wise Giving Alliance and two partner organizations.

As a new supporting member ICFO welcomed the One World Trust from London, United Kingdom. “OWT brings into the network of ICFO 60 years of experience in researching and promoting accountability from an independent status. Its worldwide map on CSO self-regulatory schemes is a unique and most valuable information source in the field of nonprofit accountability”, said Rollin van Broekhoven, President of ICFO in Zurich.

At the Annual Meeting 2011 ICFO also decided to sign a joint statement of international NGOs and association on the second draft of the Cambodian Law on Associations and Non-Governmental Organizations. The proposed NGO legislation would give far-reaching power to the Cambodian authorities to control the rights of citizens to organize and express themselves.

ICFO was established in 1958. Its members have sophisticated national and common international standards for good governance and management of charities.

For more information, please contact: Adri Kemps, Secretary General ICFO a.kemps@cbf.nl (tel.+31 (20) 417 00 03)

Disaster Again! This Time, Japan

There is something about being focused on the third sector that seems to awake our sense to what is going on in the world.  True, the news media, both print and electronic, are covering the disaster in Japan, just as it did when just over a year ago, a tremendous earthquake struck Haiti on 12 January 2010.  But, this time, we are faced with a triple disaster, in a country prone to experience earthquakes and tsunamis, from which we got the word.

Perhaps Japan is best prepared for these types of natural disasters, and yet, no country can really be prepared.  And as if that was not enough, Japan's Shinmoedake volcano on the other side of Japan from the epicenter of the earthquake erupts Sunday, 13 March 2011, just two days after the earthquake, spewing ash and rocks after weeks of inactivity.  Has anyone heard of this?  Yet, as reflected below, what has happened in Japan these past few days is not just a disaster; it is a calamity.

As if an earthquake and tsunami are not enough!  Here we combine the 9.0 earthquake with a tsunami, all to be complicated by a potential nuclear disaster as four nuclear power plants are damaged and in melt-down.  This in a country that experienced the death and destructive force of atomic bombs dropped on the cities of Hiroshima and Nagasaki.

And yet, no sooner had the earthquake hit, with all the aftershocks, and another separate earthquake not far from Tokyo, than we were riveted with the pictures and video clips of the tsunami.

We have seen the effects of earthquakes before.  After all, in America, not far from our shores, a devastating earthquake hit Haiti in January 2010.  In fact, this was followed by several earthquakes around the world, but none of them seemed to attract the attention of the earthquake in Haiti.  Beside, Japan is located on fault lines and is located on the Pacific Rim where the geology is such that earthquakes always present a potential danger.  And yet, as this chart shows, the catastrophic earthquake in Japan just a week ago in early March seemed to dwarf, in intensity, that earthquake on 12 January 2010 that hit Haiti and seemed to wake the earth up from is focus on economic problems around the world.


But, attention spans are short.  What we see on television hardly seems to match what we expect of reality.  We have been acclimated to action, violence, panic, crisis, and often destruction by what we see on video games, at the arcade, or on television.  And yet it is real, horribly real, but also so far away.  But, not so far away that the tsunami did not soon reach North and South America traveling across the Pacific Ocean at the speed of jet aircraft.  Only minor damage on the coast of Oregon and California.

As The Wall Street Journal reported on 14 March, just three days after the earthquake and tsunami, "Even while thousands of people are reported dead or missing, whole neighborhoods lie in ruins, and gas and oil fires rage out of control, press coverage of the Japanese earthquake has quickly settled on the troubles at two nuclear reactors as the center of the catastrophe."  And with that, a U.S. Congressman, a long-time opponent of nuclear power, warmed of "another Chernobyl," and predicted that the same thing will happen here.  He quickly called for immediate suspension of licensing procedures for the Westinghouse AP1000 reactor that had been laboring through the design review procedures at the Nuclear Regulatory Commission in the U.S. for seven years.

So, we soon seem to forget the earthquake and tsunami as something thought to be far more serious, and which starts the serious migration of people around Japan and ultimately off the island.  Indeed, it has been the disaster at Japan's Fukushima Dai-ichi nuclear power plant south of Sendai and north of Tokyo that has caused so much attention around the world.  However, this attention, it seems to me, has not been so much focused on what the Japanese people are experiencing.  Rather, it is on what this means for nuclear power around the world generally, and about how far people can believe what their governments say.

While much of the attention in the United States has been focused on nuclear power plants close to fault lines that present some potential for earthquakes, it appears that the main cause of the disaster was the tsunami.  When the earthquake hit at such a huge magnitude, the affected reactors immediately shut down as they were designed to do, and emergency cooling operations began.  As I understand it, none of the reactors suffered damage that prevented the insertion of control rods.


When Fukushima-1 lost power, the backup diesel generators started up as they were expected to do.  However, an hour later, they were knocked out as a result of the tsunami.  Okay, the tsunami probably would not have hit the area had it not been for the earthquake.  Even with redundant safety systems, the power plants were not able to withstand the multiple traumas of this one-two punch of earthquake and tsunami.  Although there has been improvement in the actual situation in the Fukushima Daiichi nuclear plant, engineers as of 22 March 2011 have reconnected all six reactors to the electrical grid, but are not ready to turn the power on.

With radiation levels heightened, shipments of spinach and milk from the Fukushima area were halted, and  with elevated levels of iodine and cesium in the sea water, there are fears concerning the contamination spreading to the country's seafood which is now being monitored.  And, the U.S. Food and Drug Administration (FDA) announced Tuesday, 22 March 2011, that it was halting the import of dairy and produce products from Japan from the area in which the Fukushima Daiichi plant is located and from which there has been some leakage of radiation.

The Japanese economy, already experiencing some stress, is reeling and three of its major companies, Sony, Toyota, and Honda, have stopped production at plants in Japan because of the shortage of parts from ruined factories in the north.

The truth is that it is hard to know how bad the meltdown at these nuclear reactors will be, even if the worse case scenario would be outcome.  No one predicts that it would be anything like the Chernobyl disaster, even if it were to be a little worse than Three Mile Island.

In the United States, nuclear power currently generates about 20 percent of the nation's electricity with its 102 commercial nuclear reactors, but faces an uncertain future.  No nuclear plants have been ordered since 1978 and more than 100 reactor projects have been canceled.  The Watts Bar 1 reactor on the Tennessee River ordered by the Tennessee Valley Authority in 1970 and licensed to operate in 1996 is the most recently completed reactor in the U.S.  The main impediments to nuclear power in the U.S. are the high construction costs for nuclear power plants, public concern about nuclear safety and waste disposal, and regulatory compliance costs.

In Europe, nuclear power is much more common than it is in the United States.  As of January 2011, there were a total of 195 nuclear power plants in Europe and Russia, and 19 under construction.  Notwithstanding this, European public opinion is divided and a bit reticent toward nuclear energy.  In order to meet the Kyoto Protocol requirements for reducing greenhouse gas emissions, countries were finding it imperative to replace fossil fuel power plants with cleaner energy sources.  Nuclear power was one of the alternative possibilities.  If the European demand for electricity is to be satisfied, the EU cannot eliminate nuclear power as an energy source.  Moreover, developing countries, especially those with new nuclear capability, are not eager to give up the benefits of nuclear power which they believe is required for their demands for electricity to be satisfied.

But, since the crisis at Japan's Fukushima Daiichi nuclear power plant, Germany's Angela Merkel decided to close temporarily seven plants and temporarily reversed the German government's decision on its extension of the life cycles of nuclear power plants, while five states controlled by the opposition Social Democrats (SPD) will challenge in Germany's highest court the government's previous decision to extend the lifespan of nuclear power plants.  France insists that it will continue to rely on nuclear energy to preserve the country's energy independence.

As one prominent American politician said several years ago, "we can't let a crisis go to waste, can we."  Just when some were seeing nuclear energy as part of the solution to energy and global warming challenges, along comes Fukushima Daiichi, and what has been called the worse accident since Chernobyl. However, we are told that with many nuclear power plants located along coastlines because as we are reminded by the disaster at Fukushima Daiiche, they are highly water intensive, natural disasters like storms, hurricanes, and tsunami are becoming more common, again because of climate change and global warming.  With the predicted rise in ocean levels as a result of climate change, seaside reactors become even more vulnerable to such disasters.

So with the increased costs of construction, the safety questions resulting from events like the Three Mile Island melt down, the disaster at Cherynobyl, and now the disaster at Fukushima Daiichi, the question of disposal of nuclear waste, the debate is whether nuclear power is worth all these problems.  As we noted in the case of Fukushima Daiichi, the main danger seemed to be from the spent nuclear fuel rods stored in the pools of water as the water level diminished and steam evaporating was carrying the radiation out of the plant.  In the United States, the fuel rods used in the 104 nuclear power plants need to be replaced every three to five years.  About 80 percent of the 63,000 metric tons of used fuel in the U.S. is stored in these pools in or near nuclear plants. The water circulates to cool the rods down and it protects the environment from the radioactivity they emit.  If the water evaporates or drains from the pool, the rods are exposed and this is the problem the Japanese are experiencing at Fukushima Daiichi.

As I was reading The Wall Street Journal on Tuesday 22 March 2011, I was reminded of the recent movie, Departures.  When we read about these kinds of disasters, such as the earthquake in Haiti in January 2010, or the flooding in Pakistan in the late summer and fall of 2010, and now this triple disaster in Japan within the last few weeks, we are overwhelmed and overtaken, I think, by the destructive power of the earthquake or tsunami and flooding, and by the numbers; the numbers of people who died because of the disaster, the number of people injured, the number of people unaccounted for; the number of people that are homeless, and the numbers that represent the cost of rescue, of finding and gathering of those that died, and the cost of rebuilding.  Oh, we see pictures of people crying, of calling out for help, of people who are desperate as a result of their situation, and who show that desperation on their faces.  But as Michael Hammer wrote in his blog post, Japan: making accountability for nuclear risk work into a progressive direction, on One World Trust website, "this live screening of events which spelled death to with some likelihood more than 10,000 people, and this may be grossly underestimated, reduced the even to a dehumanised story which benefited primarily the news channels."

The article, in The Wall Street Journal, focused our attention on something quite different, with the title, After Flood, Deaths Overpower Ritual.  Let me set the scene in Higashimatsushima, a coastal village near Senda in Miyagi prefecture:

   Improvised morgues across tsunami-ravaged northeastern Japan are overwhelmed by the accumulation of the dead, forcing Japanese to consider a practice that hasn't been widespread for decades: burial.

   Nowhere, perhaps, is Japan's vein of conformity as apparent as it is in death: 99.9% of Japanese who passed away in fiscal 2009 were cremated, according to the country's health ministry.  But, the March 11 earthquake and tsunami that shook Japan's people, its industries and its environment have also eroded the certainty of how many thousands of Japanese will be laid to rest.

    In the worst-hit areas, local crematoriums can't incinerate the deceased fast enough to keep up with new arrivals.  There isn't enough Kerosene to burn the bodies, or dry ice to preserve them.  As the government's official toll of dead and missing has exceeded 21,000 people, governments of coastal villages are running out of time.

    Some local governments have started burying the dead in mass graves -- an extreme measure in Japan, where some municipalities ban even individual burials.  Some families are seeking to forestall group burials.  Some families are reported to have hauled away relatives to organize cremations on their own.

* * *

    "The prospect of pulling the deceased from under the rubble -- only to bury them again in soil, without even a coffin -- is just not something I am prepared to do," said Futoshi Toba, major of Rikuzentakata, a fishing village in Iwate prefecture.

But, as this article says, the issue of how to deal with the dead in natural disasters has grown controversial in recent years.  We all remember the 2004 Indian Ocean tsunami in which more than 225,000 people were killed, and which exposed authorities' lack of expertise and capacity to deal with that number of dead.  Do we really remember that part of the 2004 Indian Ocean tsunami story?

Which brings me back to the movie, Departures, a touching movie that reminds us of the importance of ceremony and Japanese tradition when dealing with the dead.

Departures is the story of a young cello musician, Daigo, who when the orchestra in which he plays is disbanded for lack of funding, moves back to his home town in the northwestern prefecture of Yamagata, which is just west of Sendai and .  Spotting a Help Wanted add in his local newspaper, he excitedly applies for a job in what he thinks is the travel industry.  He arrives at the office for the interview and spots coffins lined up against the wall.  During the interview he learns that what he got into was the ceremonial "encoffination" of corpses prior to cremation.  At first embarrassed by this new profession and unable to tell his wife that he is not working in the travel industry, at least as we think of it, Daigo "develops a deep respect for life in all its variations, and a profound empathy for people trying to make peace with the finality of death.
In some disasters, authorities have rushed to dispose of corpses -- often in mass graves the size of football fields -- "citing fears that the corpses could spread disease or damage the psyche of the survivors if left visible."  Global health officials say that there is little risk of epidemics spread by corpses after disasters, in part, because pathogens don't survive long in dead bodies.

However, the World Health Organization and others have produced "field manuals" in recent years strongly urging relief workers to avoid rapid disposal of bodies, which can create legal complications for families if they aren't able to identify the remains.

So back to Japan, and Higashimatsushima, the village on the coast in the Miyagi prefecture close to Sendai:

   On Monday, Higashimatsushima was preparing for its interim solution -- a grave they said could hold as many as 1000 bodies.  At the edge of town, next to a recycling center, construction-company workers dug holes with earth-moving equipment, hammering metal rods into the ground and placing plywood sheets that would serve as barriers between bodies.

   Officials in Higashimatsushima said that on Tuesday, they would start burying 80 of the bodies it is storing.  The burials in the grave -- two trenches nearly 300 feet long apiece -- are expected to be temporary, with plans to cremate the dead within two years.  The town will need the consent of family members before proceeding.

But, these officials acknowledged that families may be unwilling to bury their dead, but that they did not have any choice in many cases.

 One thing we have seen from Japan's record magnitude earthquake and devastating tsunami on 11 March, with added complication and misery caused by the country's worse nuclear accident triggered by both the earthquake and tsunami, is the high degree of earthquake preparedness by Japan and limits to what the Japanese and international search and rescue teams can achieve in these circumstances.  While the figures may vary slightly as time passes, of the approximately 22,000 dead and missing, fewer than 100 died as a result of collapsing buildings.  Most of the casualties were from the tsunami.  As we saw in news reports in Washington, D.C. area concerning a local Virginia search and rescue team dispatched to Japan, very few people were rescued from the destroyed buildings, and the number of dead found in these destroyed buildings were few. 

Moreover, with well-trained Japanese search and rescue teams as well as the rapid deployment of the Japanese military personnel, little outside help was required.  Indeed, of the 128 countries and 33 international organizations offering assistance, the government of Japan only invited teams from 15 countries.  Gagah Prakoso, a spokesman for the Indonesian National Search and Rescue Agency that sent a team to Japan told IRIN that "Japan relies on its own resources because they are well-prepared.  Even though we have a lot of experience, Japanese rescue workers are better trained and better equipped."

Well, what does all of this have to do with charity and accountability?  According to news reports, the U.S. public was more generous after the Haiti earthquake a little more than a year ago.  The Chronicle of Philanthropy reported on 17 March 2011 that:

Six days after the devastating earthquake and tsunamis in Japan, American donors have contributed more than $87-million for relief efforts, according to a Chronicle tally.  Nearly three-quarters of the total has been raised by one organization, the American Red Cross.

The rate of donations is slower than after last year's earthquake in Haiti and after 2005's Hurricane Katrina [in the Gulf Coast].  Six days after the disaster in Haiti, donors had contributed more than $210-million, and six days after Katrina they had given more than $457-million.

Why?  In one newspaper report in the U.S., it was reported that the president of the American Institute of Philanthropy told the television network, CNN, that "Japan is not Haiti, and it's not Indonesia; it's a developed country with a GDP somewhat similar to our country.  The executive director of the Center on Philanthropy at Indiana University, also told CNN that increased reliance on text and online donations could play a role.  "Giving online and text is good because it is fast, but text giving tends to lower what people would donate.  After giving $5 or $10 dollars [sic], you are probably less likely to go back and write a check for $50 or $100."

The Chronicle of Philanthropy article listed 24 organizations with the amount of money donated indicated, with separate identification of the amount of money donated by text message on mobile phones.  While only a few of these listed donations received through text messages, the amounts were generally not insignificant.  For example, the American Red Cross received approximately $64 million in the first six days, of which more than $2.8 million was contributed by text message.  Similarly, in the first six days, the Salvation Army received more than $2.5 million, of which more than $125,000 came in via text message and $2.3 million online.  On the other hand, Save the Children raised $5.8 million, of which $38,000 came in by text message.

The American Institute of Philanthropy, in a hot topics newsletter shortly after the earthquake and tsunami, wrote:

Many donors understandably feel an urgency to help victims of this disaster, but it may be wise to wait until charities assess what their role will be in these efforts.  As a wealthy industrialized nation, Japan has disaster response measures in place and its government and military will coordinate and provide much of the necessary relief.  The United Nations and the United States government are also mobilizing support for the relief effort in Japan and elsewhere in the Pacific.

According to Oxfam-Japan Executive Director Akiko Mera, "The Japanese state has the means to reach 99% of the population, but there will always be some who need more specific assistance."  Since the government has the means to deal with the immediate crisis, donors may wish to wait and contribute to the groups that are able to assist with the intermediate and long-term needs of surviving victims.  Many people have been displaced or have lost their livelihoods.  Ongoing assistance will be required to relocate and retrain people, and also to provide psychological counseling for traumatized survivors.

On the day of the tsunami, the director of Emergency Response for the International Rescue Committee (IRC), Gillian Dunn, issued the following statement: "Once we know more, including what the Japanese government requests from the international community, we'll be able to better assess a possible response.  Japan is well equipped as a responder, and this may be an instance where aid organizations are not asked to respond in large numbers.  We'll also have to see what tsunami damage might occur in other countries, including small Pacific islands."

Mail which I have received, both through normal postal routes and through email, and reports I have received all suggest that unlike Haiti, this is the pattern in Japan.  The Japanese Red Cross has not asked for financial assistance although other branches of the Red Cross have.  Medicins sans Frontieres (MSF) (Doctors Without Borders) made the decision not to proactively solicit restricted funds for Japan although it is working in Japan.  MSF has said that the need is Japan is not nearly as great as it was in the Haiti disaster.  Felix Salmon of Reuters wrote that while there was a lot of stuff that needed to be done in Japan, money is not a problem.  As a result, he wrote that people should donate to the general fund of an NGO, rather than to restricted accounts for Japan relief.

Perhaps a brief perspective might be helpful.  It might be argued that civil society in Asia, and in Japan specifically, is weaker than those of us in the West might expect.  It seems that most observers would agree that Japanese civil society has emerged from a position of relative weakness vis-a-vis the state.  Japan was typically viewed as a docile society, with people subservient to their corporations and government.  As Japan experienced unprecedented economic growth during the 1950s - 1970s, eventually becoming the second, or third now, largest economy, Japanese civil society remained largely quiet.  It was only in the 1980s, and especially in the early 1990s that Japanese grassroots groups such as NGOs emerged to play an active and important role in the political life in Japan.

As I have written previously, the term "civil society," has been used with considerable ambiguity.  See my posts, Alexis de Tocqueville and Civil Society and Government, Civil Society, Charity, and Public Benefit in November 2009.  Writers who have looked at civil society in Japan have defined civil society as the realm of organized social life that is voluntary, self-generating, largely self-supporting, autonomous from the state, and bound by a legal order or set of shared rules.  It is that intermediate realm between the private sphere and the state and excludes parochial society, such as family, and economic society, such as profit-making business firms.

For much of its history, and indeed modern history, "the lines between public and private, political and personal, formal and informal, official and non-official, government and market, legal and customary and between procedural and substantive are all blurred."  Whereas the political tradition of Europe and the West has been informed by a largely Christian ethic of "rendering to Caesar that which is Caesar's" providing some basis for state/civil society division of labor, the ideological component in Japan is quite different having been informed by a neo-Confucianism which are taken seriously by the state and by the citizenry where there is no identified space between the family and the state.

As a result, Japan's week civil society is derived from cultural aspects in Japan.  Three aspects of the Confucian tradition are important in this respect.  First, there is respect for hierarchy and authority.  Second, there is an emphasis on conformity to group interests rather than individual needs.  And, third, there is an emphasis on order and stability.  These values legitimized social hierarchy and state authority in Japan, emphasizing citizens' obligations and responsibilities rather than individual rights, and as a result, deterred challenges from citizens' organizations.

Another cultural aspect of Japanese society is Japan's lack of what we think of as the Christian tradition in the West.  Unlike Western and some developing countries, Japan does not have this Christian tradition based on volunteerism and charity.  Social welfare was provided by individuals and/or the state, not by churches.  As a result, the Japanese people relied on the state in times of difficulty.  Social welfare, although limited, was provided to the needy, albeit in a limited fashion mainly through incorporated associations under strict control of the state.

During the 1950s -1970s, civil society to the extent it existed in limited form, was governed by the Uniform Civil Code which was promulgated in 1896, and specifically Article 35 which provided for the establishment of profit-oriented organizations, but was silent with respect to non-profit bodies.  Such bodies were denied legitimacy and existed as informal groups.  Civil society, limited as it was, and allowed to emerge, was kept under the strict control of the bureaucracy.

The term, nongovermental organization, like the term, civil society, was conceptually vague, but as used in Japan, referred to nonprofit organizations in Japan engaged in overseas aid programs, such as development assistance and emergency relief.  By standard political science definitions, these were what we would call International NGOs or INGOs.  The term, nonprofit organization, or NPO, in contrast, referred only to nonprofit organizations engaged in domestic activities in Japan.  This distinction is important, and for our purposes helps to explain why so few NPOs outside Japan were involved in the relief efforts in Japan as a result of the 11 March 2011 Earthquake and tsunami, as well as which ones were able to participate in the charitable work in Japan.  Examples of this expansion of NGO activity in the late 1970s and early 1980s included the establishment of Save the Children Japan in 1986, followed by CARE Japan and World Vision.  In 1989, Greenpeace Japan was launched and in 1992, Medicins sans Frontieres (MSF), and 1999 Oxfam Japan.  These are some of the 13 outside groups that have been permitted to operate in Japan as part of the earthquake/tsunami relief, and which have raised money for that effort.

Public attention to civil society dramatically and abruptly surged in Japan in the wake of the Great Hanshin-Awaji Earthquake in Koby in January 1995 which took the lives of more that 6,400 people.  More than 1.3 million volunteers and a large number of NGOs converged on Koby to offer relief and assistance to the victims.  With so much sudden awareness on social capital and the value of volunteers and NPOs, the government and political parties sought to find ways to facilitate these volunteer activities.  Thus, the so-called NPO law (officially the Law to Promote Specified Nonprofit Activities) passed the Diet in March 1998 providing new impetus for further growth of civil society in Japan.

There are currently 440,000 CSOs that have obtained corporate status or government registration.  The religious corporations were the most prevalent with 183,000 followed by political, labor unions, small business cooperatives. registered NPOs, social welfare organizations, and the like.  There are an additional 300,000 neighborhood associations, most of which have questionable legal status.

An article, Civil Society in Japan, published in the journal of Inter Faculty, by the Graduate School of Humanities and Social Sciences, University of Tsukuba, Tsukuba, Japan, one of the conclusions reported from the study was:

As a tradition has developed in pre-modern times, Japan has a thick layer of voluntary associational activities, with a history of human relationships with society that are based on trust.  With the Meiji Restoration after the defeat of World War II, while individual structures may have become disconnected, they also passed on a well-developed sense of organization.  Since he Meiji Restoration through the post-war growth era, Japan's goals have revolved around modernization stances that have focused on catching-up process.  Therefore, Japanese civil society has kept a developmentalist structure.

Maybe this is why we have seen such a difference between the relief efforts in Haiti after the January 2010 earthquake, and the relief efforts in the case of the Pakistan floods of July and August of 2010.

Now, our attention is diverted from Japan to some ill-defined war in Libya.  It seems that we have forgotten about earthquakes and tsunamis in the Pacific, although we continue with our periodic worries about radiation and what is going on at the Fukushima Daiiche Nuclear Power Station and how it affects public policy regarding nuclear power.

One lesson of which we might be reminded is that the decisions made on this side of the grave are the most important decisions anyone can make.