Establishing Effective NGO Governance

April 2023 | 4 Min Read

Every organisation, whether it is publicly or privately run, needs governance to function efficiently. Governance is simply a system that provides a framework for managing and controlling an organisation. It identifies leaders and decision-makers and enables them to run the organisation lecally, ethically, sustainably and successfully.

It may sound like an abvious way to run things, but many organisations, including NGOs, fall behind when it comes to effective governance. Here, we'll talk about what good governance looks like in an NGO setting and some guidelines that NGOs should implement to improve their governance structure.

What is good governance in an NGO?

According to the Chartered Governance Institute, there are a number of areas that are indicators of good governance in an organisation, including:

Using clear decision-making processes
Behaving openly by reporting on activities
Actively engaging with stakeholders
Effectively managing risks
Taking responsibility for controlling and protecting assets, including reputation.

For NGOs, these areas are vital, especially when it comes to transparency and power balance.

The Working Group on NGO Governance in Central and Eastern Europe defines good governance in NGOs as: “a transparent decision-making process in which the leadership of a nonprofit organisation, in an effective and accountable way, directs resources and exercises power on the basis of shared values.” NGOs’ priority in their governance must be to serve the public interest, and so they have an important responsibility to divide power and authority and maintain transparency.

Diverse group of volunteers sitting together, wearing matching blue shirts and name tags, attentively listening during meeting

Good governance principles for NGOs

In order to strengthen both their own internal structure and their public image, NGOs can implement a number of principles to improve their governance. This is not an exhaustive list, but it may be helpful for NGOs to begin the process of good governance in their organisation.

Clear mission and objectives

An NGO cannot function effectively if its members are unclear about what they are working towards. An NGO’s mission statement, its vision and objectives are essential documents that should be a priority for leadership to establish and regularly revisit. They should reflect the reasons the NGO was set up in the first place; what it stands for, who it serves and what it wants to achieve.

Transparent leadership processes

An essential part of good governance in an NGO is appointing a board of directors, whose job is to manage the organisation’s planning processes, financial decisions, public engagement, and any other organisational matters. This board should be elected democratically, and this process should be made known to the rest of the organisation’s members, to ensure accountability and transparency throughout. The details of the members of the board of directors should also be publicly available on the NGO’s website.

Annual general meetings

Annual general meetings (AGMs) are an important milestone for a board of directors to come together and discuss in detail how the NGO has performed over the previous year, any issues that have arisen, and plan the pathway for the organisation for the coming year. While board meetings can and should take place more often throughout the year, AGMs are essential for boards to stay on the same page for the most important aspects of managing the NGO.

Awareness of local customs and cultural barriers

International NGOs that work across borders should be aware of cultural norms and beliefs in the countries they operate in and how these may differ from the practices that they are used to. For example, some countries may have a cultural preference for strong singular leadership, and so may be reluctant to separate authority equally among a number of board members. Both NGO boards and donors need to take these customs into account when managing a governance framework and find a structure that suits and applied to everyone.

Promoting good governance in partners and grantees

The responsibility for encouraging good governance in NGOs lies with everyone involved, from board members to partners, donors and grantees. NGO representatives can also work with external parties to encourage them to implement good governance practices. This can be done in a number of ways:

Group and individual discussions: On a direct level, NGOs can engage individual partners and grantees in conversation, either individually or as a group, about governance practices. These conversations can be a space for brainstorming and improvements on the partners’ or grantees’ current governance practices and where there could be space to improve.

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Establishing Effective NGO Governance

Table of Contents

What is good governance in an NGO?

Good governance principles for NGOs

Clear mission and objectives

Transparent leadership processes

Annual general meetings

Awareness of local customs and cultural barriers

Promoting good governance in partners and grantees

Allianz – Committed to Global Health

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