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The ‘third sector’ comes of age

Imagine the challenges facing people in an isolated Latin American community who decide to organize and carry out a local improvement project.

Like countless other fledgling NGOs, the group must rely almost entirely on its human capital and has little knowledge of government agendas, legal rights and procedures, fundraising, or any of the other formal dimensions of its relationship to society. Nevertheless, this modest NGO can make a difference where the government has failed to provide services.

In many countries, this would be the end of the story. The NGO might survive for many years within its small sphere, but it would not grow beyond it. In order to expand, the group would most likely have to obtain full legal status and meet a wide range of complicated regulatory requirements. In some countries, the regulatory framework might actually discourage such a group from participating fully in public life.

Conversely, this young NGO might be lucky enough to operate in a country where the government supports informal organizations, enabling them to grow and ultimately become part of the national development program.

Born out of the decline of authoritarianism and spurred by the winds of democracy, civil society in Latin America and the Caribbean has had a spontaneous and explosive emergence. No one knows the precise number of civil society organizations in the region today, but they are thought to exceed a million. More than half of them are engaged in humanitarian and social services that overlap with those provided by governments. Others work to monitor government administration in areas such as fiscal transparency, inclusion, environment or human rights. There are organizations that do admirable work with a handful of volunteers and scant resources, and others whose facilities, staff and financing are comparable to large government agencies.

Hamper or enable? Now that NGOs have become such an ubiquitous part of the public sphere, many countries are attempting to define exactly how these organizations should be regulated and what guidelines should be adopted to make their relationship with the state more productive. Janine Perfit, a specialist in the IDB’s State Governance and Civil Society Division, is helping to define how the Bank can assist its member countries in making these determinations. First, she argues, the Bank must have a detailed sense of what civil society organizations are proposing themselves. “The work of civil society organizations goes beyond the sphere of private activity to public activity, and it is important to create a regulatory framework that defines its scope,” says Perfit.

Today, enormous regulatory differences from one country to the next have major implications for the work of civic associations. “The situation of NGOs in Latin America and the Caribbean is out of balance,” says Venezuelan lawyer Antonio Itriago Machado. “Some countries have governments that exert powerful control and others allow a great deal of freedom.” Such is the case in Venezuela, where, according to Itriago Machado, both a seven-year old child and a new NGO can obtain legal status in half an hour.

In other countries, the difficulty of obtaining legal status is used to restrict access to official funds and institutional cooperation. Governments can manipulate these legal mechanisms and thus marginalize groups or sectors that they perceive as threatening. Indeed, in many countries laws concerning civil society date back to the era of military dictatorships. “Civil society does not cease to reflect the historical process that gave birth to it and of which it is a part,” comments Peter Sollis, an IDB specialist in this area. “This region has had a deeply polarized political past and, in general, a democratization process that is still in its infancy.”

This reality has produced a situation in which formal and informal NGOs coexist in most of the region’s countries. Those with the resources to obtain legal status do so, but more than half of the civil society organizations in Latin America and the Caribbean are believed to be informal associations.

How to regulate. Some experts believe a combination of formality and informality is not necessarily a bad thing. “This border has to remain open and flexible,” argues Giancarlo Quaranta, president of Gruppo CERFE, a nonprofit research group based in Rome. “Otherwise,” he says, “the enormous wealth of the informal sector can be lost under prematurely imposed regulations.” One of the risks in isolating the informal sector, according to experts, is to encourage a lack of responsibility with regard to the standards of transparency and accountability that apply to formal institutions. Those who advocate a more regulated approach to the legal status of NGOs, such as Colombian lawyer Rafael Mateus Hoyos, argue that this “guarantees permanence over time, so that the informal organizations can survive the persons that created or managed them.”

However, the debate over formality versus informality is only one of the challenges facing civil society in Latin America and the Caribbean. On a practical level, NGOs that deal with governments are hindered by complicated and time-consuming bureaucratic procedures, arbitrary and inflexible rules, and the need to deal with numerous, uncoordinated entities in different government ministries.

Through various projects, the IDB has worked for many years to help create legal environments that make it easier for NGOs to have a productive and cooperative relationship with their national governments.

Other obstacles. Civil society faces other kinds of obstacles besides legal roadblocks. Research commissioned by the IDB reveals a widespread perception that restrictive, opaque and contradictory regulations make it difficult for NGOs to obtain funding. Civil society groups also complain of the meager tax incentives available to civil society organizations, and of the general lack of alliances with the government and the private sector.

But just as significant as these legal impediments, according to most civil society organizations, is a sociocultural environment that fuels mistrust and indifference. People’s limited understanding of the role of civil society results in an absence of popular support for a more favorable regulatory framework, and this lack of regulatory framework, in turn, creates a mistrust of civil society organizations. “One of the major discoveries we have made is that there is a legal-social block,” explains Marina Cacace, a specialist with CERFE who headed the team that conducted the IDB studies. “It is like a vicious circle: the laws affect social reality and in turn social reality affects the laws.”

In short, civil society needs to gain the trust of both governments and citizens. The right to association and participation demands responsibility, democracy and transparency as a counterpart. “Accountability by nongovernmental organizations is key to eliminating the climate of mistrust where it exists,” according to Cacace. “There is also the issue of less-than-democratic methods that many civil institutions use to elect their leaders. All of this has to do with self-regulation, or the degree of openness and responsibility that these organizations hold themselves to internally.” One way to address these problems is to foster so-called ”secondary NGOs,” such as networks and associations that set standards and provide guidance for their members.

A road to follow. IDB officials believe that any attempt to address the needs of Latin America’s complex and dynamic civil society organizations must be based on an accurate understanding of local conditions.

A survey of five countries that were the object of the IDB study enabled CERFE to offer a rudimentary snapshot of the situation. As each country has its own unique conditions and is in a different phase of democratic development, the same rules cannot apply to each one of them, according to the study. Two general concerns, however, are the obstacles to government alliances and access to funds. CERFE concluded that without eliminating red tape and decentralizing government agencies, access by civil society to resources would continue to be difficult.

Legislative initiatives will be effective only if they are backed up by a series of innovative supporting policies. “Both government officials and the leaders of civil society groups need special training,” says Cacace. “Many times the laws are adequate, but they are interpreted narrowly or erroneously.” The indispensable work that civil society performs would benefit a great deal from the recognition and support of the people, for which CERFE has proposed public awareness campaigns. On the international front, the adoption of a charter of principles concerning civil society would have the dual effect of bolstering domestic policies and strengthening cooperation between countries.

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