Regulating NGOs: how another country does it

[Published by the Cambodia Herald on 19 June 2015.]

The discussion about the government’s legislation on non-government organisations naturally raises the question: how do other countries regulate NGOs?

I am not a lawyer and have not much experience in NGOs. But I recently decided to join an NGO (called an “incorporated association”) that is being established in the Australian state of Victoria. This spurred me to look into how NGOs are regulated there.

Because Australia is a federation, laws and regulations that apply vary in specifics from one state to another. However, they will be similar in their overall impact.

It is not compulsory for a non-government group to register as an incorporated association. However, there are important legal advantages from incorporating. For instance, it clarifies that any assets belong to the organisation and are held in the name of the organisation, not the name of an individual. It provides some protection against being sued for members of the association’s management committee if there is a dispute between the association and some outside individual or business. It makes it much easier for the association to apply for public or private financial assistance. And, in many cases, there are exemptions from or reductions in various taxes.

There is a lot of detail involved in incorporating an association in Victoria. Aside from the actual law, which I will leave to the lawyers, there are the Associations Incorporation Reform Regulations 2012. These run to 69 pages, including 24 pages of “model rules”. While there is no legal obligation to adopt these model rules, anyone who has had to seek bureaucratic approval for a document will understand the advantage of doing so. And there is a financial incentive: an application to incorporate using the model rules costs A$33, while an application using the organisation’s own rules costs A$192.

The model rules consist of 77 points and numerous sub-points. They specify that the organisation is to be managed by a committee consisting of at least a president, vice-president, secretary and treasurer, plus possibly other members. According to the model rules, point 45 (1), “… each committee member must become familiar with these Rules and the Act” under which the regulations are promulgated.

If “become familiar with” doesn’t sound very precise, it’s not the only such phrase in the model rules. Committee members are also obligated to “exercise their powers and discharge their duties with reasonable care and diligence” and “in good faith in the best interests of the Association” and “for a proper purpose”. None of these phrases are given any further definition. How much “diligence” is “reasonable”?

The model rules also contain quite detailed instructions about taking disciplinary action against members and settling disputes among members (even possibly involving mediation by the state government-funded Disputes Settlement Centre). When I first read these provisions, I thought them a bit odd: members of an NGO are supposed to be jointly concerned about improving some aspect of society or the world, not about fighting with each other. But, thinking back over the years about newspaper articles on disputes inside Cambodian NGOs, maybe it would be a good idea for the government to incorporate some of those provisions into Cambodian law.

The Reform Regulations 2012, which are compulsory, not theoretically optional like the model rules, require the committee to submit a clear financial statement to the annual general meeting of the organisation. This statement must be properly audited. Failure to have it audited makes the association subject to a fine.

The Regulations contain a list of other things for which an association can also be fined. They include “Failure to display name on business documents etc”, “Failure to display registration number on business documents etc”, “Failure to notify Registrar of change of registered address”, “Failure to lodge particulars of trust, copy of deed etc within 14 days of association becoming a trustee”, “Failure to give member copy of rules or minutes of general meeting within 14 days of receipt of a written request”, “Failure to notify Registrar within 14 days of appointment as secretary”, “Failure to retain financial statements for 7 years after annual general meeting” and “Failure to keep original of a document of which a copy has been lodged with the Registrar for 7 years and, if requested to do so by the Registrar, produce that document”.

But my favourite among the things that bring fines on Victorian NGOs is “Fail to retain certificate referred to in section 94(3), 97(3) or 100(3) for 7 years after signing”. It doesn’t even tell you what document those sections come from, but it’s probably one you would need a legal degree to understand. I could never be a committee member of a Victorian NGO. If the government accused my association of this offence, I wouldn’t have a clue as to whether the charge was true.

I don’t intend to imply that the Victorian law and regulations are particularly onerous. But if the Cambodian government were to translate them into Khmer and submit them to be passed by the National Assembly, I suspect that most or all of the NGOs that have been complaining about the current draft law would say that the regulations from Australia were “even worse”.