More transparency required in grant procedures

Moscow 16 April 2014

‘Transparency International – R’ (TIR) has presented the results of its second research study on openness concerning the award of state grants to NGOs


TIR, a centre for initiatives aimed at combating corrupt practices and research into them has published its research into the distribution of government grants to NGOs for 2011-2012. The researchers noted the secrecy attending the selection of administrators,  the allocation of grants and the shortfall in openness and transparency on the part of the NGOs  themselves.

Presenting the report on 16 April at the Higher School of Economics, director of TIR, Elena Panfilova, said that the report was the second in a series and formed part of the ongoing work of her organisation. She recalled that in 2010 a whole range of NGOs had approached TIR with the aim of having standards formulated that would govern the disclosure of information.

The person in charge of the research, Denis Primakov, a senior lawyer at TIR, said that all the work had been carried out at the School’s design and study laboratory within the context of its anti-corruption policy (Pull Up). He emphasised that the report represented merely the opinion of specialists at TIR and there was no intention of damaging the reputations of the organisations or government bodies mentioned. He explained that the main focus of the researchers had been on the indicators relating to the availability of information.He emphasised that this was the cornerstone of the fight against corruption. In addition the researchers studied the issue of NGOs being associated with government agencies; and analysed whether information was openly available about the projects that had been successful in the competitions.

Two competitions were subjected to analysis: one for presidential grants for NGOs distributed via administrators and the other for subsidies for socially oriented NGOs (SONGOs) promoted by the federal ministry for economic development. 107 NGOs were selected and they received grants totalling over 3 million roubles. 69 NGOS were successful in the presidential competition and 32 obtained resources from the ministry. 6 administrators of presidential grants were also successful.

Ivan Ilinykh, an analyst with Pull Up, stressed that the situation regarding transparency as regards NGOs had worsened this year. Of 69 NGOs examined 17 did not have websites i.e. nearly a quarter of their total number. However, some organisations that participated in the last competition had no website and still did not whilst a number that had a site previously did not have one now. Mr Ilinykh emphasised that even those organisations that do have sites do not always maintain them in the proper manner. 51 NGOs did not include copies of their founding documents on their site and in all 7 displayed their reports. As to potential closeness (to government agencies) 32 NGOs out of 69 notified their partnership with state bodies, the federal public chamber or grant administrators whilst 28 count civil servants or members of the chamber amongst their founders.

Anna Koval, co-ordinator of projects for TIR, spoke about the transparency of the administrators themselves. These were considered  from two angles: the completeness of the information about a given competition on their sites and also in their capacity as conventional NGOs that had succeeded in competitions. The researchers explained that only the Public Planning Institute provided all the documentation required as a minimum  for a competition whilst the Institute for Issues concerning Civil Society failed to publish around half of its data. The authors of the report noted some positive aspects: all the administrators published competition outcomes on their sites and the public chamber provided a unified format on its site with standardised information about the competitions.

The administrators did have a problem with transparency. ‘It seems to us that grant administrators need to understand that they are a model for the NGOs to whom they distribute money. If the administrators are insufficiently transparent and do not say enough about themselves, then we might well ask what can be expected of the NGOs that receive grant. It looks as if the grant administrators do not altogether understand the importance of this’, declared Ms Koval.

The researchers observed that the procedure for choosing administrators was opaque. Normally these used 6% of the money allocated to them for preparing for and running the competitions. That 6% amounted to over 3 million roubles, the researchers stressed, and whilst the administrators were legally obliged to account for the money that did not happen. Ms Panfilova commented that money needed to be precisely classified as profit, grant or subsidies.

As to the competition held by the ministry of economic development, the transparency indicators relating to the NGOs had deteriorated in comparison with the previous year according to Pull-Up analyst, Anastasia Ivolga. Only 19 NGOs provided full information on their site about the people who comprised their board and staffed their organisation. 9 NGOs had no information of this kind at all. However, only 9 organisations presented their founding charters. 23 offered no financial reports on their sites and in the case of 12 there were no reports on the federal ministry of justice’s site. Furthermore, a list of the successful candidates was published but without identifying their project.

8 SONGOs count members of the public chamber amongst their founders or chief executives; in the case of 18 these are representatives of government agencies. Ms Panfilova stressed that there was nothing potentially improper in the connection; it was simply necessary to make it known publicly. ‘There is a perception that close association is undesirable per se but it might be altogether neutral. And in the present case it is regarded as being totally neutral; it is simply that a connection exists’, she explained. However, she    did go on to say that any close association could become a problem at any time if there were unwarranted interference or like developments. ‘Today there is no such effect but tomorrow there might be’, said Ms Panfilova.

The TIR specialists recommend that NGOs take steps to be more open in providing information by fully publicising their founding documentation on their sites and providing full information about their management. Furthermore, they are recommended to formulate and adopt a code of ethics. Ms Panfilova explained that what was in mind above all was a procedural code which would help NGOs to avoid potential conflicts of interest.

Furthermore, the specialists considered that NGOs should formulate and adopt mechanisms for resolving potential conflicts of interest and that the ministry of economic development should maintain a register of organisations that had not behaved conscientiously by violating the standards designed to prevent situations arising involving a conflict of interest; and identify their founders. It is proposed that such NGOs be barred from participating in future competitions including any others founded by the same unsatisfactory people.

The specialists also think it necessary for the ministry to make provision for liability to be incurred in cases where NGOs do not report on grant expenditure on their sites or on that of the ministry of justice and for ensuring transparency regarding the process of selecting administrators.

Author: Georgy Ivanushkin

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