CGF ARTICLES, OPINIONS & EDITORIALS
Governing organisations on equal basis: Non-profit organizations (NPOs) (2012-08-22)
February 19,
2015 3276 3276 
There’s a proverb that says, “what’s sauce for the goose is sauce for the gander” - this expression can also generally be interpreted to mean “what’s good for the male is also good for the female.”
Whilst this proverb refers largely to gender-equity based issues, it could also apply to the manner in which corporate governance principles should be equally applied in the context of business, no matter its type, size or value.
Rather interestingly, since the launch of the King Report on Governance for South Africa 2009 (King III) which became effective on 01 March 2010, a Cape Town based non-profit group has claimed growing support on behalf of a Civil Society Working Group -- called the Working Group -- to disregard King III for non-profit organisations (NPOs).
The Working Group suggests the King III provisions are impractical for NPOs and by their own admission “recognised the need for South African civil society to formulate and adopt its own distinct code, rather than (to) be regulated by government or corporate sector codes”. To this end, they have now introduced their own draft code, which notably is devoid of many of the King III provisions and is known as the Independent Code.
Whilst the intentions of the Working Group may have been good; and even with their claim that they have “consulted hundreds of NPOs across the country”, one wonders why yet another code for governance is necessary when a far more thorough set of governance guidelines have been assembled by the local and international subject matter experts originally convened for the King III Commission and the writing of King III.
Expectedly, a lot of confusion has set in with the introduction of the Working Group’s new draft Code. One needs to seriously consider the implications such a Code will have upon corporate businesses, including other major donors of NPO funding when a new set of governance codes is introduced, which according to the Working Group is completely different to the recommendations of King III, and very much reduced of its criteria as compared to King III.
Besides the fact that some of the larger NPOs asset base is as large as those of private and even listed companies, corporate funders and donors of NPOs need assurance that their donated funds are being used responsibly, and that strict measures of governance are in place for accountability purposes. By suggesting a ‘lesser’ governance code as introduced by the Working Group is better suited for all NGOs -- who are estimated to tally around 150 000 organisations -- is surely a fast way to discourage future funding and is frankly speaking, irresponsible and unfair to NGOs in the long run.
