Tracking Trends in Ethiopia s Civil Society (TECS) 1 POLICY BRIEF 6 Impact of the Proclamation and Guidelines on Consortia (Networks)

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Ethelbert Arnold
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Tracking Trends in Ethiopia s Civil Society (TECS) 1 POLICY BRIEF 6 Impact of the Proclamation and Guidelines on Consortia (Networks) Issue: While the Proclamation legalised consortia (networks),

The main issue is whether the Proclamation now effectively defines consortia uniquely as fundraisers for their members, thereby denying them a wider role in promoting an enabling environment for

1 Tracking Trends in Ethiopia s Civil Society (TECS) 1 POLICY BRIEF 6 Impact of the Proclamation and Guidelines on Consortia (Networks) Issue: While the Proclamation legalised consortia (networks), subsequent directives and in particular the 70/30 guideline, have confined their operations. The main issue is whether the Proclamation now effectively defines consortia uniquely as fundraisers for their members, thereby denying them a wider role in promoting an enabling environment for civil society, representation, capacity building, research, information sharing and policy dialogue. Background Whilst gaining a legal identity was crucial for networks, the Proclamation and its directives introduced other conditions: membership of networks was limited to the registration category of members (Ethiopian, Ethiopian Resident and Foreign Charities or Societies) and under the 90/10 rule, networks of Ethiopian Resident and Foreign Charities or Societies, like their members, were barred from specific areas of operation (human rights, justice, democracy, conflict and advocacy etc.). The Guideline on Consortia (1/2009) also set out the permitted activities: supporting members, sharing experience/information, building the capacity of members and addressing the concerns of members to help them attain their goals but networks were barred from implementing projects. However, the 70/30 guideline has proved to be most challenging for networks. This stated that networks are not implementers and therefore do not have operational costs. It also set out their permitted sources of funding as: annual membership fees and a share of the fees raised by the network for its members an amount approved by the general assemblies of networks which is a proportion of the 30% administrative costs of their members. Objectives The main objective of the research was to identify the ways in which networks have adapted to the Proclamation and its regulations and to set out the challenges that 1 The Development Assistance Group (DAG) was established in 2001 to foster information sharing, policy dialogue and harmonise donor support to Ethiopia in order to enable the country to meet the targets set in the Millennium Development Goals (MDGs). DAG also assists in the preparation, monitoring and evaluation of the country s Poverty Reduction Strategy (PRS). DAG currently comprises 26 donor agencies providing development assistance to Ethiopia within the Paris Declaration principles of aid effectiveness and harmonization. Disclaimer: This policy brief is based on research commissioned by DAG members through the Tracking Trends in Ethiopia s Civil Society (TECS) project. The research study was carried out by Atos Consulting. The authors were Gill Long and Regassa Aboma. The views presented in this briefing note are those of the authors and Atos Consulting, and do not necessarily represent the views of DAG members. TECS August

2 networks face in carrying out what they regard as their main activities. The full research paper also provides a summary of the development of networks in Ethiopia and information on the role and functions of networks within an international context, in order to provide a comparison for assessing the impact of the legislation on networks in Ethiopia. Research Methods This was a piece of very rapid research which sought the views of 23 networks (almost 50% of registered networks) over a period of two weeks in May 2013; 19 are national networks while 4 operate regionally. Ten have members from Ethiopian Resident Charities, 12 from Foreign and Ethiopian Resident and one network has only Foreign Charities as members. There was considerable variation in the size of the networks: one has a membership of 360 while the smallest has only 8 members. At the date of the research there were no registered networks with Ethiopian Charities as members, perhaps reflecting the general decline in Ethiopian Charities. Main findings The Ethiopian networks report a number of key objectives: promoting ethics and self regulation, facilitating an enabling environment, networking, fundraising for members, information sharing, representation and capacity building of members. Two phases of adaptation to the Proclamation were identified. The immediate effect of the implementation of the Proclamation was that consortia representing Ethiopian Resident and Foreign Charities had to cease work in the proscribed areas: the promotion of human and democratic rights, the rights of children and people with disabilities, gender, conflict resolution, justice and law enforcement, equality of religions and nations and nationalities. However, this first phase of adaptation also included measures to reduce expenditure as networks were no longer permitted to engage in projects and as a result lost income. Although networks of Ethiopian Resident and Foreign Charities are not entitled to conduct advocacy, a number consider that they still have a role in policy dialogue. A second wave of adaptation followed the introduction of the 70/30 rule. The key problem for networks is that this states very clearly that there are no operational costs for consortia and they are not required to show an admin/operational split. However, there are fundamental contradictions within the legislation: some of the activities which the Proclamation recognises as the legitimate activities of networks, and which networks regard as their operational activities, for example, capacity building and information gathering/ sharing/research, are regarded in other articles of the directive - when applied to CSOs - as administrative functions. In addition, some activities that networks have hitherto carried out, often at the instigation of donors for instance, monitoring and evaluation, are also counted as administrative functions in the general articles of the directive. The only real point of clarity is that fund raising is designated as a legitimate way of raising money for networks. The proportion of the share varies because it has to be decided by the general assembly of the network but cannot exceed 30% because TECS August

3 this is deemed to be the administrative costs for the project for which they have raised funds. Once this split of administrative costs is agreed, this is reported to the Agency and along with the network work plan, becomes the legal document against which the networks have to report. It is not clear whether networks are entitled to raise funds in their own right for the activities that are considered to be the legitimate function of networks (as set out in directive 1). The evidence from the research suggests diverse practice. Some networks have raised funds for what they regard as their operational activities whilst others have not done so because they have viewed this as a possible contravention of the law. The research demonstrated widespread confusion and diverse interpretations on the part of the Agency. Limited to raising income from membership fees and the share of funds raised for members, most networks have taken austerity measures. These have included reducing administrative costs such as rents, telephone, vehicles, cutting staff and redesignating work to those remaining and also asking member organisations to carry out some activities hitherto regarded as network functions, such as capacity building, training and monitoring and evaluation. The majority of networks interviewed now designate fundraising as a key activity. As the chart below shows since 2009, increased numbers reported static or decreasing funds until the projections for The dramatic rise in projected income illustrates the income that networks believe they have to raise in order to survive. It is of course not yet clear whether these targets will be realized. Interviewees were critical of what they see as the Agency s attempt to redesignate networks as fund raisers with no clear mandate for what they regard as their legitimate operations: capacity building, monitoring and evaluation, research and information sharing and representing members. The regulations regarding networks and especially the 70/30 have had an impact on the membership of networks and the relationship with donors. Several interviewees reported that members are increasingly reluctant to pay membership fees because these count for CSOs as administrative costs within the 70/30 guideline. Although networks can increase their own viability by raising more funds for members, CSOs are also reluctant to give up a share of the admin costs to the network. It may also be questioned whether CSOs are able to effectively administer projects on less than the designated 30%. Some may be tempted to do their own fundraising. TECS August

4 Trends in funding ! projections for 2013! Increase! Static! Decrease! About 75% of the sample supplied membership figures. Overall these show there has been a slowing down in growth of membership of networks since 2010 and year on year ( ) larger numbers reporting static membership. The research also showed a changing relationship between donors and networks as a result of the legislation. Some interviewees mentioned that they had lobbied donors to channel funds via the network to ensure their survival but that donors still expected networks to be engaged in supervision of implementation of projects, monitoring and evaluation and policy work. Comments were also made about donors now opting for channeling their money via pooled funding systems (for example, the EU Civil Society Support Programme and the World Bank s Social Accountability Programme) rather than via individual donors. Despite the confusion over the 70/30 ruling, the majority of the sample (17) had successfully renewed their licences in 2013, 4 were in the process of renewal and 2 had another two years before re-registration was due. However, overall the networks believe that their position has been eroded by the Proclamation and are resentful of being designated as fund raisers and denied recognition as having a separate and distinctive functions within civil society. Comments were also made to the effect that networks are not good at working together to make meaningful dialogue and advocacy with the government. Conclusions and recommendations International practice suggests a number of legitimate functions for networks: Promoting an enabling environment for civil society Advocacy: using the evidence of member organisations to consult with government on development issues and to contribute to policy development Carrying out research and information gathering amongst members to inform policy development Capacity building for members Information exchange, experience sharing and knowledge transfer among members TECS August

5 Quality control/regulation, monitoring and evaluation Fund raising Most networks in the sample are carrying out all or some of these activities but see the impact of the Proclamation and its regulations as having redefined and limited their role to that of fundraisers. The research also revealed widespread confusion amongst networks about how the legislation is being implemented. Further research will be needed to determine whether the predictions of networks regarding the limitations on their role and subsequent reductions in activities and the targets set in terms of fund raising will be realized. Overall the research suggests that a significant shift is taking place in the role and functions of networks with potential risks and ramifications for a number of different stakeholders. The risks for networks themselves is that they will cease to grow as members become reluctant to hand over membership fees (which count as admin) and a share of funds raised for projects when services such as capacity building, representation of members and advocacy diminish. For donors there is a value for money risk as networks pass on to members activities such as capacity building and monitoring and evaluation which they may be ill-equipped to handle. In such circumstances donors may well turn to consultancy firms and academic bodies to build the capacity of Ethiopian civil society. For Government at Federal and regional level there is also the risk of losing links with civil society through networks and therefore the scope for improving policy and service delivery to hard to reach groups. Recommendations for Government/Agency A separate guideline for networks that recognises their legitimate operational activities. Consultation with the Agency on guidelines to allow networks to fulfil their designated aims and functions. Training for Agency officers to improve their understanding of networks and the implementation of guidelines. Consultation on the role that networks can play in improving policy and practice to promote achievement of the GTP. Recommendations for networks TECS August

6 Improved consultation and collaboration amongst networks to promote an enabling environment for civil society and to take forward dialogue with Government. Improved consultation and collaboration amongst networks to present evidence on innovation and best practice to inform policy and promote achievement of the GTP. Recommendations for donors Improved understanding of the legal constraints facing networks and therefore the way in which funding is best channelled to achieve development objectives. Prepared by the TECS team. For information, contact For further information, please read TECS research report: The Impact of the Proclamation on Charities and Societies Consortia, Draft Report June 2013 TECS August

Tracking Trends in Ethiopia s Civil Society 1 POLICY BRIEF 1 CSOs and Income Generation Activities (Guideline 07/2004 EC)

Tracking Trends in Ethiopia s Civil Society 1 POLICY BRIEF 1 CSOs and Income Generation Activities (Guideline 07/2004 EC) Issue: civil society engagement in income generation could contribute towards greater