CONCEPT OF NGOs IN BANGLADESH

NGO (MGMT 461) Section: 40c Semester: Fall 2012

Submitted To
Mr. Golam Mahbubul Alam Assistant Professor Department of Business Administration Stamford University

Submitted By
Sajib Chakraborty Rakibul Islam
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ID: BBA 040 12 963 ID: BBA 040 12 945

Date of Submission: 21th October, 2012

STAMFORD UNIVERSITY

CONCEPT OF NGOs IN BANGLADESH

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LETTER OF TRANSMITAL

21th October 2012 Mr. Golam Mahbubul Alam Assistant Professor Stamford University Bangladesh Subject: Submission of the class assignment concept of NGOs in Bangladesh Dear Sir With humble submission we want to thank you for assigning use the pragmatic report on concept of NGOs in Bangladesh. We have really enjoyed various stapes preparing the report. We have made strong group works and have also collected data. We things this report enriches our practical knowledge on finance.
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There may be some unwilling mistakes. We thing the mistake in the report will be kindly excused.

With thanks and best regards, Sincerely yours, Sajib Chakraborty Rakibul Islam ID: BBA 040 12 963 ID: BBA 040 12 945

Executive summary

The Government of the Peoples Republic of Bangladesh has established Bangladesh NGO Foundation to support the NGOs, with a view to associate the Non-Governmental Organizations in the process of achieving Millennium Development Goal. The Foundation was established through a Resolution of the Government on 02 December 2004 that was published in the Bangladesh Gazette on 11 December 2004. The FOUNDATION was then registered a non-profit association within the meaning of Section 28 of the Companies Act, 1994 and is established for financing Non-Governmental Organization (NGOs) and other voluntary organizations including Community Based Organizations (CBOs) duly registered under the relevant laws of Bangladesh and working in the country for providing basic social services such as education, nutrition and health, sanitation support, safe drinking water, environmental protection and any other services needed by the poor, the ultra poor, women and children and the ethnic minorities. The Organizations receiving funds from the FOUNDATION shall be known as Partner Organizations (POs).

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Acknowledgement

Prosperous conclusion of any course requires support from various personnel and we were fortunate to have that support, direction, and supervision in every aspect from our teacher, ASA officials and friends. First of all we would like to thank beyond measure grace and deep kindness of the Almighty Allah. We like to express our deep sense of thankfulness to our supervisor of class assignment Mr. Golam Mahbubul Alam, Assistant Professor, Stamford University for him frank encouragement as well as guidance in preparing this report. We acknowledge our gratitude to Ms. Quazi Munira Rahman, Customer Development Manager for her help and valuable suggestion from time to time and for being our supervisor in the host organization in achievement of our internship program as well as preparing the report. We also show our utmost gratitude to all the officials of ASA Limited. The speed and helpfulness of the officers really helped us in obtaining the necessary information in time.

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Table of Contents
SERIAL NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14
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PARTICULARS Introduction History Definition of NGO Reasons of emergence of NGOs in Bangladesh ASAs Position in Bangladesh Operational area of ASA in Bangladesh Performance ASA International Spreads in 10 Countries Products & Performance Activities Functional of NGOs in Bangladesh Advantages of NGOs Disadvantages of NGOs Development of NGO in ASA

PAGE NO 7 8 9 10 10 11 12 12 13 15 17 18 18 19

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Statistical impact result of ASA Income through Income Generation Activities (IGAs) Recommendation & Conclusion Bibliography

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Introduction
ASA has emerged as one of the largest and most efficient Microfinance Institution (MFI) in the world and has been working relentlessly to assist the poor since its inception in 1978. The major drive behind ASA is to gradually eradicate poverty from society. During its early years, ASA undertook various development programs like awareness building for social action, training local birth attendants, capacity building of journalists, etc. In the mid-80's it introduced new programs working in the sector of health and nutrition, education, sanitation, etc. It was at this stage that ASA introduced microcredit as a pilot project. From its hands on experience in the field, and by evaluating the impact of development assistance, ASA realized that financial solvency, to a great extent, is what the poor need to bringing positive changes in their lives. In 1992, this paradigm shift led ASA to focus solely on microfinance as its tool in fighting poverty. ASA wanted to evolve its operations to become self-reliant and move away from depending on donor funding and grants - ASA's Microfinance Model gradually transformed itself to become the globally renowned "ASA Costeffective and Sustainable Microfinance Model." Following this model, ASA became self-sustainable within a short span of time and the organization declared itself a "self-reliant MFI" in 2001.

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This model, that has been practiced and perfected in the field by ASA, has proved effective in making a branch self-reliant within 12 months. Any MFI that adopts this model for operations becomes sustainable within the shortest possible time. It has been adopted by many MFIs around the world to get result within the shortest possible time. As of June 2008, ASA has successfully extended its outreach in Bangladesh through 3,324 branches and its 25,125 staff works relentlessly to serve more than 7.13 million clients in 72,204 villages.

History
At the end of Bangladeshs War for Independence in 1971 the country went through a very complex social and political upheaval. The country needed major infrastructure reconstruction but the overall situation was not suitable for conducting nation building activities. Indeed, the country was faced with instability in the political, social, cultural and economic fields. The main political constraints were frequent agitations, political unrest and numerous changes of governments, which were too inexperienced to keep the political situation stable. In such circumstances, policy formulation or planning for development was difficult. Moreover, the traditional bureaucratic administrative structure, which followed a top-down approach for development, was not connected with the actual socio-economic reality since the institutional structures could not reach the downtrodden people. With this as the backdrop, a new kind of organization emerged that focused most of its work in the development sector. Some of those national and international organizations, called NGOs (NonGovernment Organizations), started different programs to help the poor to introduce positive changes in their lives.
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Following the philosophy and the needs of the times, ASA was established in 1978 to materialize these goals through different kinds of development programs.

Definition of NGO
The NGO-sector has often been described as extremely diverse, heterogeneous and populated by organizations with hugely varied goals, structure and motivations. It is therefore not an easy task to find a common definition of the term "non-governmental organization". It cannot be based on a legal definition given the wide variations in laws relating to NGO activities, according to which an NGO may have, for instance, the legal status of a charity, non-profit association or a foundation. The term "NGO" can nevertheless be used as shorthand to refer to a range of organizations that normally share the following characteristics: employees and engage in revenue-generating activities they do not distribute profits or NGOs are not created to generate personal profit. Although they may have paid

surpluses to members or management; usually formal

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NGOs are voluntary. This means that they are formed voluntarily and that there is

an element of voluntary participation in the organization; NGOs are distinguished from informal or ad hoc groups by having some degree of

 document

Or institutional existence. Usually, NGOs have formal statutes or other governing

Setting out their mission, objectives and scope. They are accountable to their

members and donors; NGOs are independent, in particular of government and other public authorities and

of political parties or commercial organizations; NGOs are not self-serving in aims and related values. Their aim is to act in the public arena at large, on concerns and issues related to the well being of people, specific groups of people or society as a whole. They are not pursuing the commercial or professional interests of their members. Though these common characteristics can help describe the notion of the term "NGO", it must be borne in mind that their size as well as their scope of activities can vary considerably. Some NGOs consist of a rather limited number of persons; others may have thousands of members and hundreds of professional staff. In functional terms NGOs can focus on operational and/or advocacy activities. Operational NGOs contribute to the delivery of services (such as in the field of welfare), whereas the primary aim of advocacy NGOs is to influence the policies of public authorities and public opinion in general.

Reasons of emergence of NGOs in Bangladesh

There are some specific reasons that have fostered the emergence and growth of NGOs in Bangladesh. The specific reasons are: 1. Tradition of voluntary activities 2. War of Independence 3. Dissatisfaction of Donor Agencies 4. Unsuccessful Government Efforts
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5. An increase in Foreign Aid 6. Successful in sector Development

ASAs Position in Bangladesh

ASA benchmarks itself against its peer NGO MFIs in Bangladesh on a continual basis - this is both to reorient it to better serve it clients and to keep itself relevant in the Bangladesh development context. According to the Annual Microfinance Statistics of Bangladesh (Volume-19, December 2006) published by the Credit and Development Forum (CDF) there are 611 NGO MFIs in Bangladesh (including ASA). ASA's standing in the sector is as follows: 611 NGO MFIs Members Cumulative Loan Disbursement Loan Outstanding 16 million US$ 8,171 million US$ 1,076 million ASA 5.16 million US$ 2,593 million US$ 309 million % 32% 32% 28%

Operational area of ASA in Bangladesh

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Performance
ASA always stands ready to empower national small and emerging NGOs so that they are able to play a vital role in poverty alleviation. ASA provides these partner NGOs with skilled manpower, technical support and also with loan funds under soft terms. Under this program, ASA has 34 partner NGOs all over the Country. ASA ensures soft loan funds from the donors to the local organizations. It is due to ASAs earnest efforts that CORDAID-Netherlands has been extending financial support to 12 partner NGOs. Through this, ASA also tries to ensure its assistance to poor people of the remotest areas of the country. All of the partners NGOs are also building their capability to get access to other funds. ASA has been working relentlessly to reduce poverty since its inception in 1978. The formal banking sector in developing countries, like Bangladesh, does not typically provide financial services to the poor. This sector concentrates on large loans to the upper class, thereby completely excluding low income groups. The microfinance movement, however, has shown that there is a thriving market among the poor when financial products cater to their specific needs. The poor are a quite active group in any economy. ASA has shown that their needs can be met while at the same time making the providing institution profitable as well. At the end of 2007 ASA's Operational Self Sufficiency (OSS) was 175.51%, Financial Self-sufficiency (FSS) 121.44% and rate of loan recovery 99.32%.
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ASA International Spreads in 10 Countries

ASA International will spread its activities in 10 countries in Asia and Africa under the Catalyst Microfinance Investors (CMI) Greenfield program. ASA President said this in a workshop of the District Managers of ASA held at ASA Tower Conference Hall at Shyamoli, Dhaka on 3 May 2008. President of ASA Md. Shafiqual Haque Choudhury was present as the Chief Guest at the function. In his speech the Chief Guest said, ASAs activities have reached the international arena and was becoming popular throughout the world. In this respect, ASA employees should attain efficiency and aptitude up to international standards. The ASA President stressed on administrative reforms of ASA to boost quality and efficiency of employees and strengthening the district structure. Newly appointed ASA Deputy President Sabiuddin Ahmed was also present at the program. Mr. Sohel Mahmud Sager, EVP, Md. Enamul Haque, EVP and Mr. Susil Roy, EVP spoke at the function. Directors and high officials of ASA were also present at the occasion. Sixty four District Managers of ASA participated in the workshop.

Products & Performance

As an innovative institution ASA has multidimensional products all of which were developed based on the needs of its clients. The micro loan products include:

Small Loans for female clients Small Loans for male clients Small Business Loans Small Entrepreneur Loans (SEL) Supplementary Loans and Business Development Services (BDS) Loans for Hardcore Poor

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Short Term Loans IT Loans

Cumulative disbursement for all these loan products from ASA's inception up to December 2007 is around US$ 3,600 million. ASA maintains savings programs and members security funds (Mini Life Insurance) with the view to helping the poor absorb unexpected shocks of calamities/disasters. Members are allowed to withdraw their savings whenever they require and interest is provided on their deposits. As of December 2007, the savings balance (savings and security deposits) of ASA's clients was around US$ 131 million. ASA also provides its clients with one time donation for medical treatment of serious ailments and surgical procedures - including cancer, acid burns, cardiac operations, backbone surgery, brain surgery, kidney damage, cesarean delivery, etc. Client do not need to deposit money to receive this assistance all of ASA's clients are automatically eligible for this. The budget of this assistance program in 2008 is around US$ 700,000. Globally, ASA's peers and industry experts recognize ASA as having the fastest growth with most efficient, sustainable, and cost-effective day-to-day operations. Hence, the international microfinance community has been choosing ASAs TA expertise since 1993. ASA successfully met TA demands for 13 MFIs in 7 countries who have experienced high-growth after receiving assistance from ASA. ASA also assisted another 40 MFIs in 16 countries through exposure visits and strategic advice. UNDP selected ASA as the International Technical Service Provider (ITSP) under the MicroStart Project through an international bidding for Philippines in 1998 and for Nigeria in 1999. ASAs past TA projects prove its success in maximizing MFIs potential for efficiency and scale. ASA continue to work with developing MFIs in scaling to capacity and reaching the poor who currently have no access to financial capital.
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ASA delivers both on-site and off-site assistance ASA staff takes part in directly in implementing programs and helping build local capacity ASA offers professional expertise on cost-efficiency and on fast scaling with simple operational policies and procedures while remaining focused on low-income households.

Activities

ASA requires decentralized branches to adhere to the policies and procedures outlined in its stream-lined manual, thus ensuring quick service and close monitoring throughout the institution.

ASA TA drastically reduces overhead at middle to head office levels. ASA TA reduces repayment delinquency and systematizes accountability for all tiers of the institution.

ASA TA targets financial viability with borrowed funds/capital. ASA TA demands transparency at all levels of operation. ASA TA implements viable strategy and cost-efficiency into the institution. ASA TA helps an institution start simply and grow rapidly. ASA TA relies on simplified and standardized service procedures, minimizing decisionbased errors made by less experienced staff. It also adheres to quick, streamlined problemsolving in the field.

ASAs broad TA experience covers the following fields

Institutional development Planning

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Operational procedure (locality & client selection, group formation, disbursement & collection)

Necessary training to the staff and to the trainer Establishing new model branches and upgrading the existing branches Overall management (member, staff, office, etc.)

ASA has emerged as one of the largest, cost-effective and financially sustainable MFIs in the world. This success can be attributed to the inherent willingness of all ASA staff to experiment with innovative and simplified management systems.

Fig: Cost per taka (money lent)

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Functional of NGOs in Bangladesh

1. Credit 2. Women development 3. Non-formal education 4. Employment generation 5. Income earning through enterprise development
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6. Capacity building in planning and management 7. Occupational skill training 8. Productive asset 9. Political participation 10. Health and nutritional knowledge

Advantages of NGOs
1. Capacity to promote local participation 2. Capacity to work with other agencies 3. Capacity of unique understanding of local institution and socio-cultural 4. Capacity to act quickly 5. Work with flexibility 6. Capacity to take risk and experiments 7. Capacity to innovate and adapt 8. Operate on low costs 9. Capacity to facilitate local resource Mobilization and ensure local development 10. Capacity to advocacy

Disadvantages of NGOs
1. Limited reliability 2. Limited self-sustainability 3. Limited technical capacity
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4. Lack of broad programming content 5. Limited ability to reach the poorest segment of the society 6. Inability to scale up activities 7. Dependency on donors 8. Paternalistic approach 9. Centralized operations 10. Limited size, scope and thus impact

Development of NGO in ASA

ASA IT Unit is responsible for developing and maintaining ASA's IT infrastructure and consists of two teams - Development and Implementation. Development Team focuses on software system development - including introducing new versions to keep pace with the dynamic nature of ASA's operations. The Implementation Team is responsible for maintaining hardware & software systems, providing helpdesk services and introducing new systems to the end user - this includes roll out coordination and training.

Software Development

Highly skilled in-house software development team consisting of:

o o o

Business analysts Software developers Quality control specialists

Industry standard process oriented software development methodologies:

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o o

Spiral model Working towards CMMI

Documentation in every stage of the software development lifecycle:

o o o o

JIRA: Task management, planning and budgeting SVN: Source code control Confluence: Documentation control Rational Rose: Architectural design document control

Present State

Branch automation software development and implementation

o o o

Version 1.0 beta: January, 2007 Version 2.5.0: February, 2008 Version 2.7.0: June, 2008

LAN within central office, dialup connectivity to District Offices and no connectivity to branches

Central office internet connectivity is purchased from ISP Central server room holding mail server, development server, network server and other network equipments for central office only;

Statistical impact result of ASA

Business Capital
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ASA implements its microfinance programs with the objective to reduce poverty of the poor and make them self-reliant. Along with the savings and credit amount, members business capital has increased gradually through years. According to the findings of the study the business capital of 3,269 (85.13%) members have increased, but it was negative in the case of 571 (14.87%).

Income through Income Generation Activities (IGAs)

Clients use their loans in various income generating activities (IGAs). Through its implementation, they have been successful in increasing their income during the last years. The findings of the assessment reveal that about 3,352 (87.29%) out of the total 3840 clients have agreed that their income have increased. Only 488 (12.71%) said that they have failed to increase their respective incomes. Findings of the assessment reflect that in 2005, their monthly income on average was Tk.4778/-. The amount increased in 2006 and became Tk.6,731/-. Next year, in 2007, the amount of income further increased and stood at Tk.10,384/-. From the data it was found that their income has increased by Tk.1,953/- and Tk.3,653/- in 2006 and 2007 respectively.

Asset Increase
The Clients were asked whether their family assets have been increased or not. About 49.95% informed that they could increase their landed property; about 57.71% said that the number of their domestic animals increased and 41.88% reported that they could increase their ornaments.

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Future plan of ASA

District office automation for monitoring/audit reports Central office automation for management reports Central data center for backup and disaster recovery Consolidating one single web based software solution for end to end usage and real time reporting

ASA international system development and implementation At the end of Bangladeshs War for Independence in 1971 the country went through a very complex social and political upheaval.

The country needed major infrastructure reconstruction but the overall situation was not suitable for conducting nation building activities. Indeed, the country was faced with instability in the political, social, cultural and economic fields.

The main political constraints were frequent agitations, political unrest and numerous changes of governments, which were too inexperienced to keep the political situation stable. In such circumstances, policy formulation or planning for development was difficult.

Moreover, the traditional bureaucratic administrative structure, which followed a top-down approach for development, was not connected with the actual socio-economic reality since the institutional structures could not reach the downtrodden people.

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With this as the backdrop, a new kind of organization emerged that focused most of its work in the development sector. Some of those national and international organizations, called NGOs (Non-Government Organizations), started different programs to help the poor to introduce positive changes in their lives.

Following the philosophy and the needs of the times, ASA was established in 1978 to materialize these goals through different kinds of development programs.

HISTORY At the end of Bangladeshs War for Independence in 1971 the country went through a very complex social and political upheaval.

Recommendation & Conclusion

The NGO in Bangladesh are recognized as a very powerful and effective agent for positive social change. The NGOs are responsive to the needs and problems of the beneficiaries at the grassroots level and act as catalyst for positive social change. The NGOs share the important common goals with government which include poverty alleviation human resource development, womens development etc. The present world increasingly realizes the role of NGOs and identifies the NGOs as the most efficient channel of development.

1. The current legal framework for NGOs in Bangladesh is outdated, confusing, and in need of complete revision. Not only does it tend to focus attention and money on issues that are relatively unimportant the foreign funding of a few NGOs by legitimate multilaterals and bilateral donors it also does not impose high enough standards of accountability and transparency on the vast majority of NGOs that receive no foreign funds but that do affect the public interest. With the apparent shift toward more domestic funding for Bangladeshi NGOs, the current regulatory system seems improperly focused. 2. The fiscal framework for NGOs in Bangladesh is not supportive enough of the sector. While income tax exemption is available, there are virtually no provisions for deduction of corporate or
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individual contributions to NGOs. This is inconsistent with good international practice. In addition, the taxability of income generating activities needs clarification, and the law should then be consistently applied to all NGOs. 3. There are currently no provisions in law clearly dealing with the issue of political activities by NGOs. This needs to be remedied by adopting rules that clearly forbid public benefit NGOs (PBOs) from engaging in partisan political activities. On the other hand, the rules on political activities should also clearly permit PBOs to engage in a wide range of democratic development activities, such as voter registration, issue advocacy, etc. 4. The effort to reform the current legal and fiscal framework for NGOs in Bangladesh should be undertaken by a Law Reform Task Force. This Task Force should be comprised of NGO leaders (including top officials from the two apex bodies), government officials from ministries with a strong interest in NGO activities, parliamentarians, lawyers, and academics. It should be housed in a neutral secretariat and have a small staff. Technical assistance to the Task Force to structure and inform the process could continue to be provided by the International Center for Civil Society Law. 5. As a part of the legal and fiscal reform efforts, the information technology (IT) capacity of government agencies charged with NGO oversight (including the proposed PBO Commission) should be strengthened and modernized.

Bibliography
www.guardian.co.uk/.../internationalaidanddevelopment.bangladesh www.fact-archive.com/.../ASA_(NGO) www.asa.org.bd/program_partnership.html
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www.catalyst-microfinance.com/.../Pop_up_ASA.html

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