THIRD SECTOR GOVERNANCE AND ITS CONTRIBUTION TO CIVIL SOCIETY Associate Professor Jenny Onyx Director CACOM (Centre for Australian Community Organisations and Management), University of Technology, Sydney

The third sector comprises all those organisations that are non government and do not distribute profit The third sector includes all those ancient and traditional organisations that have evolved throughout history to find collective ways of solving human needs Manila October 2002

It includes NGOs, religious institutions, service and welfare organisations, sporting organisations, leisure, professional, and advocacy organisations Together they represent the energy and interests of the people and the basis of civil society They are separate from the state and from business, but they often work in partner-ship with both Manila October 2002

It is also the source of new ideas and solutions to social problems Civil society is the source of advocacy and democratic voice and as such “people power” can call a government to account as no other sector can It is also the source of new ideas and solutions to social problems The organisations that together comprise the third sector are the primary arena for the development of social capital Manila October 2002

SOCIAL CAPITAL The third sector is the primary arena for the development of social capital. Social capital can be defined as “those features of social organisation, such as trust, norms and networks that can improve the efficiency of society by facilitating coordinated actions” Manila October 2002

Groups and communities with high levels of social capital have numerous interconnections between members and high levels of trust Like other forms of capital, social capital can be realised in tangible outcomes Social capital also has the advantage of increasing iteratively. A store of social capital facilitates coordinated action which in turn increases the store of social capital Manila October 2002

Social capital belongs to the group or community rather than to an individual The development of social capital requires the active and willing engagement of citizens working together within a participative community Where there is a dense network of third sector or voluntary organisations, there is also stable government and a healthy economy Manila October 2002

GOVERNANCE To achieve quality outcomes, organisations need to be well governed. But what does good governance refer to? There are quite different ideas about what third sector governance, or good governance means. Manila October 2002

Nonetheless, they all need to address some common principles of good governance A means for identifying the goals and future direction of the organisation A means for making specific action- oriented decisions A means of implementing decisions A means of accountability for those decisions and actions Manila October 2002

Model One A Corporate View of Governance The first is the corporate model. It refers to the capacity of the Board and manage-ment to drive the company forward within a framework of effective accountability (Pricewaterhouse Coopers) There are a number of assumptions in this notion of governance. Let’s look at some of these. Manila October 2002

It assumes that the organisation is performing a set of actions on behalf of an external set of shareholders or stake-holders. It is the task of the Board of Management to set the mission of the organisation, and to determine the broad strategic direction that the organisation is to take. The manager is then accountable to the Board for the successful operationalisation of these strategic directions. Manila October 2002

The organisation is an objective entity that follows basic scientific laws. Therefore the organisation should be controlled. The manager makes the organisation more efficient and effective The organisation is concerned with the achievement of specified objectives. The objectives are concrete, specific, practical targets established to achieve the organisation’s larger mission Manila October 2002

Management is a technical process As much of the work of the organisation as possible is routinized. Work follows formal procedures and rules The work of the organisation is normally carried out by specialized division and hierarchy Workers work for money, that is for short term self interest. Labour is a rational exchange of labour and obedience for adequate wages (and perhaps opportunities for promotion) Manila October 2002

Model Two A Traditional Model of Governance Traditional Asian perspectives may produce quite a different approach to governance. Here there is an emphasis on the values of respect for the elders and for tradition. Manila October 2002

Within this model of governance, the leader obtains their position by traditional means. There is not usually a democratic election of the leader, or an independent process of advertise-ment and selection by merit. Good governance involves the responsible and ethical carriage of authority by the elder or patron. Manila October 2002

There is no direct or written form of accountability. The purpose and direction of the organisation is based on traditional values and assumptions. In return for their loyalty, the patron or leader is expected to support and protect the interests of the members. There is no direct or written form of accountability. Manila October 2002

Model Three The Democratic Model of Governance Participatory democracy requires a form of governance that involves the people in an open and participatory manner. Manila October 2002

A democratic form of governance requires some form of consensus of equals and transparency of process. The requirements of good governance concern the genuine participation of all stakeholders in decision making. Manila October 2002

Some Problems and Solutions Conflict and struggle for power is almost inevitable. Specific dispute resolution processes are required, and a mutual commitment to the achievement of common goals. Effective workplace mediators or coaches mediate power across hierarchical ‘barriers’ and facilitate networks that traverse work roles and narrow sectarian interests, in the interests of the common good. Manila October 2002

Some Problems and Solutions….. cont. The challenge is to establish processes which genuinely empower the individual and which mobilize social capital itself. It requires the provision of appropriate information in a timely manner to provide the basis for effective decision making by the stakeholders involved. And the mobilization of local resources: financial resources but also local knowledge, trust, and the voluntary labour of their members. Manila October 2002

Some Problems and Solutions….. cont. New solutions may be generated by the combined creative energies of the contributing parties. Accountability mechanisms need to be trans-parent and open and understandable to all The form in which accountability reporting is framed is also important. Such reporting should meet the following requirements: Manila October 2002

Some Problems and Solutions….. cont. prepared in a readily understood, user-friendly language and format to include specification of agreed performance indicators as well as financial parameters of income and expenditure the organisation’s mission, target objectives and performance indicators have been negotiated to the mutual satisfaction of all stakeholders the report is lodged in a public place that is easily accessible to the constituent community Manila October 2002

There are advantages to each model. DISCUSSION What is the appropriate form of governance for Asian third sector organisations? There are advantages to each model. Manila October 2002

The corporate model of governance enables maximum flexibility and control over the direction of the organisation by a small group of people. It provides a legal form and accountability mechanism, which minimizes the possibility of corruption The traditional model of governance emphasizes the values of respect and civility, which are important in maintaining a national consensus. Manila October 2002

The most effective model of governance for the purposes of developing social capital and a strong civil society is the participatory democratic model. However it is the most difficult and complex in terms of the governance tasks. Manila October 2002

We live in an imperfect world of inequality and conflict We live in an imperfect world of inequality and conflict. Social capital provides a glimpse at least of a new paradigm of hope. But we cannot build social capital effectively unless we can establish unique forms of governance that are appropriate both to the independence of civil society but also that maintain some of the traditional values of Asia. A more careful understanding of social capital, power, governance and the mechanisms of accountability, and how these interrelate, are a useful next step in that process. Manila October 2002