The Limits and Risks of Regulation:

Publication date: Tuesday 17 October 2006

Calls for greater accountability by non-governmental organizations (NGOs) have come from many quarters in recent times, some motivated by legitimate and important concerns, and some not. This paper examines one of the tools often cited for promoting accountability -- the use of law -- as recommended by one particular document -- the World Bank's Draft Handbook on Good Practices for Laws Relating to NGOs.

While the Bank did not ultimately finalize the document, this story intertwines a debate on a number of key issues regarding NGO accountability in relation to international law and human rights, universal rights and standards, versus the specificity of the political context. It illustrates and clarifies not only the limits of legal regulation under international human rights law, but also the challenges more generally to using law to address accountability concerns in diverse, complex and sometimes difficult circumstances. Finally, it raises questions on the role of international institutions in promoting these kinds of standards, and demonstrates how contested they are.
With the growth in the number and role of NGOs in client countries in the early 1990s, the World Bank recognized the potential importance to the success of its efforts of constructive contributions by NGOs to development activities and sought ways to encourage more effective participation of NGOs. One of the issues identified as undermining NGO contributions in many countries was an operational environment, including laws, that was overly restrictive. Thus, in 1995, the Bank undertook a project entitled 'Developing Global Standards for NGO Laws' that focused on the legal aspects of enabling environments, the centerpiece of which was the production of a handbook that would provide suggestions of global standards for the development and improvement of laws and regulatory systems for NGOs. The stated purpose of this effort was to promote a more supportive legal environment for NGOs that would also make them more transparent and accountable: 'In order for the Bank to be able to work effectively with NGOs, and to benefit fully from the contributions they can potentially make to successful development, it is essential in any particular country in which the Bank works that the NGOs that are or might be involved in projects financed by the Bank be freely established and operate without undue constraints; that such NGOs be independent of the government; and be transparent and accountable.'

The envisioned handbook was produced, ultimately entitled the Draft Handbook on Good Practices for Laws Relating to Non-Governmental Organizations (hereinafter Draft Handbook), the primary draft of which was issued in May 1997 as a discussion document. The Draft Handbook proved to be controversial and in the end, some five years later, the Bank decided that it was not an appropriate tool for it to use.

The account of the World Bank's road to this conclusion illustrates the nature and complexity of NGO accountability issues that are still relevant, particularly regarding the role that law should, and should not, play in this effort. Many of the mechanisms currently proposed to increase accountability are much the same as those put forward by the Draft Handbook, and there is often a conflation of concerns related to NGO credibility, legitimacy and representativeness with accountability issues.
This paper will recount, at least from an outsider's (and critic's) point of view, the history of the Draft Handbook. It will discuss why the Bank, a large international development finance organization, decided to give attention to these issues; the nature of the Handbook project, both as originally conceived and as it developed; key aspects of the Draft Handbook's approach to regulation, particularly as it related to NGO accountability; selected criticism of the Draft Handbook's text and the Bank's response; and finally, some lessons that might be drawn from this experience.

This is the full version of this article, the edited one is part of the recently published book: NGO Accountability: politics, principles and innovations . The book will be launched in an international seminar will take place in The Hague on the 6th and 7th December. More details will be announced later in this site.