In recent weeks a fresh debate has triggered yet again relating to the accountability of our voluntary organisations (VOs) currently registered with the Commissioner for Voluntary Organisations (CVO). This debate emanated from a recent legal notice issued by government in an attempt to put in place a legal framework regulating public collections amongst other issues. All in all, the new provisions are intended to safeguard or rather protect our VOs from falling victim of any abuses in particular that of being used as a vehicle for money laundering.
Whilst appreciating copious calls from a number of players in the sector for the immediate withdrawal of such a legal notice, news of the Financial Crime Investigation Department probing into misappropriation of tens of thousands of euros in charitable donations, could possibly support the CVO’s original intentions in that legal notice.
From a theoretical point of view there are two dimensions to accountability. Primarily, there is internal accountability wherein those entrusted with the running of the VO have to demonstrate good stewardship to their fellow members, who elected them in the first place. That happens once a year during the annual general meeting (AGM) the business of which would be regulated by statute. That same statute would identify what are the duties expected of any treasurer such as the drawing up of an income and expenditure account to be submitted at the AGM. Secondly, there is external accountability wherein those entrusted with the running of the VO have to provide an account of their actions to external parties such as sponsors who, out of trust, donate funds to the VO in the first place. To a certain extent the same information drawn up by the treasurer for internal purposes would suffice here too. However, it might have to be presented in a different format.
It is noteworthy to point out that such external parties do not enjoy the same privilege as members of the VO i.e. that of attending the AGM, thereby, gaining first hand access of information from the treasurer. Neither are they able to ask any questions they might deem fit. Hence, it stands to reason that some form of reassurance has to be put in place so as to ensure that the funds donated do in fact end up being addressed to the scope for which they were originally earmarked. Presumably, there shouldn’t be any disagreement with this latter dimension of accountability which certainly behoves a certain degree of regulation.
I do sympathise that any form of regulation will bring about an added financial burden which at the end of the day has to be borne by the VOs in question. Whilst the regulator would have to weigh in the costs versus benefits of such increased regulation, possibly, the major issue for any VO directly affected by such provisions is that of not having the necessary human resource to deliver the pre-requisites of the increased regulation.
As I had argued seven years ago in another contribution of mine in this same newspaper (Wednesday 5th March, 2014) one feasible solution would be for government to establish a separate VO funded directly by it so as to provide all the necessary technical support to any of the other registered VOs in fulfilling its obligations towards the CVO. Moreover, this separately established VO would also engage in an educational process to train treasurers and other officials in what is being expected out of them. In doing so, as a nation we would not only be strengthening internal accountability but indeed creating a more robust culture that external accountability is, equally, if not more important. The end result will speak for itself given that over time there will surely be improved transparency and better governance by our voluntary sector.
Dr. Ivan Grixti is a senior lecturer in Financial Accounting at the University of Malta