Possible effects of the PVO Amendment Bill on NGOs

Posted on 03 December, 2021 at 16:01

The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic. More often than not, we are resistant to change, and instead of adapting, we waste so much time on wishful thinking, that circumstances had remained the same. The perception of loss affects us before we realize the benefits of change. The PVO amendment bill has posed disconcert and alarm in the NPO sector as organizations make an attempt to see where they fit in and what it means for the future of their organizations. Where do organizations stand in the plight of this bill? Does change come about with the need to re-strategize and shift focus? The proposed PVO amendment bill brings about a significant need for organizations to shift focus and realign themselves to suit the requirements of the bill. However, you don’t embark on a journey without an understanding of the road map. For better planning and strategy, organizations need to have a sound understanding of the amendment bill and be able to deduce its implications. Like it’s said, a sum can be put right: but only by repeatedly going through it and working it afresh from that point, never by simply going on! Now let’s zero in on the implications of the PVO amendment bill on NGO operations. These include • Financial management systems • Board governance and recruitment • Resource mobilization • Stakeholder and partner engagement Financial Management Clause 4 which amends section 9 (1) makes the provision for the Registrar to collect fees for the registration of private voluntary organizations. The registration fee for PVOs has not yet been gazetted but organizations should be wary of this when they prepare their budgets to ensure that they factor in an estimated amount in their budgets that relates to PVO registration. In addition, Clause 8 makes a provision for a new section 22 which is directly related to the requirements of the FATF and one of the key highlights alludes to the Minister and RBZ Financial intelligence unit conducting vulnerability assessments. Organizations need to take cognisance of the following; • For risk assessment purposes organizations will be required to keep proper books of accounts • Proper auditing and internal control of funds will require close control and attention This brings about an even greater need to employ grant management policies or boards, need for regular auditing as per policy documents, need for financial management skills as well to properly handle and trace funds to avoid accusations of money laundering and terrorism practices. Board Governance Clause 7 repeals and substitutes Sections 21 and 22 of the existing Act. It makes provision for the suspension of an executive committee of a PVO by the Minister. The Minister has broad discretion to control a PVO through replacing a PVO’s executive committee members with provisional members. Since the Minister at any point can suspend the executive committee of a PVO, this implies • Loss of direction from the main goal of the organization • Decreased efficiency due to failure to adapt to change by both the staff and appointed trustees, setbacks as the new board will need to be kept afloat about operations • Rise of agency problems (likelihood of conflicts between appointed trustees and funding partners) where funding partners may feel appointed trustees do not entirely represent their interests well. Resource mobilization Clause 2 amends the existing Section 2 of the PVO Act. Highlights include; -the inclusion of the definition of “funds or other assets” -insertion of Section 2(3) stating that the Minister may designate an organisation as high risk -insertion of Section 2(4) on fundraising by Trusts not registered as PVOs The funding base of NGOs is most likely to shrink because of the uncertainty that is brought about by the PVO amendment bill. Donors and funders will become more skeptical and reluctant to fund organisations because of fear of the unknown. The power given to the Minister to appoint a designated PVO as “high risk” implies that the appointed PVO can stop operations and for this reason, funders become wary and would rather hold back their funding thus shrinking the funding base of NGOs. This means organisations should be warier of the following factors; • PVOs should consider making better use of the grants that they still can receive. Efficient use of financial resources should be more emphasized, as a number of funders will be expected to pull out. • Need to generate own funding, NPOS should become more innovative and implement projects that will raise enough internal funds for continued operations in a sustainable way • There will be a need for internal training and control on resource mobilization, especially if the organisations had depended on funding for as long as it was established Stakeholder and partner engagement Clause 5 makes provision for the creation of an offense where a private voluntary organisation is involved in supporting or opposing a political party or candidate in relation to the offense created in the Political Party (Financing) Act. Organisations now need to pay more attention to who they choose to support, collaborate, and or partner with. An example could be, organizations that support the involvement of women in politics may be creating an offense as this may be deemed as political involvement according to Clause 5 of the bill. This provision takes away the freedom of association and shrinks the civic space Conclusion NGOs should take into cognizance the implications of the amendment bill on their operations and therefore should; 1. Join the network of CSOs in giving input on the Amendment Bill 2. Keep their pulse on the developments on the Bill 3. Have internal analytical conversations on how the Bill will affect your strategic focus 4. Do scenario mapping on possible outcomes and their effects on your organisation 5. Foolproof financial management systems 6. At a Board level, have candid conversations on the implications of the Bill on operations, liability, and accountability 7. Start considering the PVO Registration process