Why "Progressives" Oppose NGO Transparency

August 2003

by Jon Entine

Jon Entine asks why “progressives” are opposing NGO transparency

Mike Myers, who soared to fame as the creator and star of the baby boomer spoof Wayne’s World, has made a career as a cultural icon for the shagadellic generation. As Austin Powers, he battles evil, or more specifically Dr. Evil, the nuclear bomb-loving product of the Sixties.

I wonder if NGO activists and social investors, who together have anointed themselves the ultimate-judge-of-social responsibility, appreciate the parallels between Austin Powers’ and their worldviews? According to NGO/social investing dogma, multinational corporations and Western democracies, most pointedly the United States, represent evil incarnate. What the extremist factions of the activist community don’t seem to appreciate is that Wayne and Austin are self-parodies, while some NGOs and activists take their hysteria seriously. Welcome to Ralph’s World.

Why Ralph’s World? That’s the world according to Ralph Nader, the quixotic consumer advocate. Aside from the debacle of his hubristic run for the US presidency in 2000 that guaranteed the election of George W. Bush, and which will forever mar his record as a progressive, Nader-as-gadfly has played a significant role in forcing greater transparency on corporations and the government, and long before it was fashionable. Although a late comer to the campaign for financial transparency, in March he set up a watchdog group, the Association for Integrity in Accounting, with intentions to lobby for “assuring corporate accountability and disclosure”.

It would therefore seem a given that Nader, activists in general and especially social investors would eagerly embrace any movement that would bring more openness and disclosure to public discourse. Think again.

Speaking out

In early June, I spoke on transparency and accountability along with eight others at a conference at the American Enterprise Institute, one of the world’s most influential policy think tanks, jointly sponsored with Australia’s Institute of Public Affairs. Rather than focusing on corporations, however, it examined NGOs and activist groups, including the “socially responsible” investing community. Here was the “sensational” theme of the conference: “While many NGOs have made significant contributions to human rights, the environment, and economic and social development, a lack of international standards for NGO accountability also allows far less credible organisations to have a significant influence on policymaking.” The goal of the conference was to address what standards of accountability could be developed so unrepresentative activists do not “undermine… the effectiveness of credible NGOs.”

That certainly appears a worthy and even admirable subject. How did Nader respond? Within hours of the conference, Nader and a bevy of “socially responsible” apologists issued scathing hysteriagrams, ignoring the call for accountability and transparency and instead resorting to the tired tradition of trashing corporations. “Trying to persuade shareholders to press for more corporate responsibility, in the midst of a corporate crime wave by the managers, is somehow subversive in his mind,” Nader wrote.

Pop ideology

That “mind” he refers to is my mind. Nader’s screech was directed at my paper on the anti-science and anti-progressive turn of the social investment community. Since Ralph did not attend the conference, perhaps he can be excused for misstating the study. In fact, I criticised the nexus of NGOs and social investors whose opposition to many progressive issues, such as agro-biotechnology research, is aggravating world hunger and the economic depravity of the developing world. My article also targeted the short shrift social investors and activist NGOs have given to the issue of corporate accountability. In other words, I was arguing the exact opposite of what Nader stated. Many social activists appear more interested in pop ideology than economic development for the poor and disenfranchised.

Am I overstating the case? I don’t believe so. Joan Bavaria, a seminal figure in the social investing community, issued a similar screed. Years ago Bavaria founded the Boston-based investment firm Trillium Asset Management and later the Coalition of Environmentally Responsible Economies, which goes by the acronym CERES. By conceit, these are respectable organisations. CERES admirably claims to be dedicated to “honest, meaningful dialogue” between corporations and activists on environmental and social practices. And Trillium fills its website with articles such as “Here Comes the Sun” and “Show Me the Money” and promotes an initiative called “Publish What You Pay” that demands increased disclosure so “civil society can more accurately assess the amount of money misappropriated”.

Bavaria, who also did not attend, similarly ignored the proposal that transparency and disclosure should be the operating ethic for all bureaucracies. Like Nader, Bavaria played the zero-sum game. She harrumphed that it was a “fine time” to scrutinise activists considering the alleged wave of miscreant corporate behaviour. Much of her article consisted of snide and tired clichés about the “mansions” and “limos” and “helicopters” that she demagogically equates with American corporations (businesses apparently don’t provide jobs or produce products or services, they just build temples to their excess while she rides around in her “forlorn… beige Honda”).

This over-the-top self-righteousness is all too familiar coming from the corporation-bashing wing of the activist community. According to a letter circulated this spring on SRI listserves around the world, social investors in tandem with NGOs are poised to step up their anti-business attacks. “Global corporations are ravaging the natural environment, destroying democratic societies and widening the gap between the rich and the poor,” screeched John Harrington, president of his own “socially responsible” investing firm. He lambasted corporations for controlling “the media, agriculture, energy, financial services and other sectors of our economy”, propping up “authoritarian governments” and undermining civil rights. One might expect this kind of gibberish from a bin Laden acolyte or a Soviet-era Marxist but not from a money manager with “responsible” in his title. Mind you, Harrington is a social investing bigwig, and his call for jihad was published to much approval in Business Ethics magazine. It’s sad, and frankly bizarre, that leaders in the often integrity-challenged activist community can’t rise to the challenge of the cleansing sun of openness in their own backyard.

Here’s a simple question for those who piously claim to support accountability: Do you believe that NGOs and activist organisations should be as transparent in their funding and lobbying as they rightly demand of corporations and governments? After all, the reality is that today NGOs operate as businesses. Like corporations, they compete fiercely for their “customers” (consumers for corporations and activist-donors, including foundations, for NGOs) who, as the source of cash flow, determine what business markets–or social campaigns – will be pursued. The biggest NGO are huge multinationals. Taking just one issue, agro-biotechnology, based on public documents for 2001, anti-biotech activists spent more than US$341 million. Unlike corporations, however, which face demanding disclosure rules, NGOs are not subject to the sunlight that Bavaria and others rightfully deem so essential to ensure the public’s right to know.

When I sent an email to Bavaria asking her whether she supported disclosure for social investors and activists as well as corporations, I was not surprised that she responded with silence.

NGO responsibility

Why is it so critical for NGOs including social investors to fully embrace accountability rather than to use it merely as a tactic to bludgeon “Corporate America”? As the AEI conference acknowledged, most NGOs are essential. Consider Poland. According to a recent study, it has more than 18,000 NGOs, which focus on community development, social services, cultural, and educational programmes that often fall through the cracks in a country with relatively undeveloped government and business sectors. Yet even in Poland, “third sector” NGOs recognised the need for transparency and recently drafted an enforceable code of ethics as part of an initiative to develop and popularise accountability.

Echoing the theme of the AEI conference, genuine progressives are embracing the accountability challenge to combat widespread mismanagement. A Danish study in 1994 found that many “NGOs performed in an unprofessional and irresponsible manner that resulted not only in duplication and wasted resources but, in a few cases, in unnecessary loss of life.” Seven years later the first self-regulated accountability mechanism for humanitarian NGOs, the Humanitarian Accountability Partnership International (or HAP International), became official. “Accounting standards is often just lip service” in the NGO community, noted HAP.

The liberal One World Trust, which believes in a UN-type world government, agrees. It recently examined eighteen NGOs in its first “Global Accountability Report: Power Without Accountability?” According to OWT, “Individuals and communities who are affected by these organisations’ actions should be able to hold them to account. However, few mechanisms have been identified at the global level to enable these stakeholders to exert such a right. The result is a growing sense of disenfranchisement and even a tendency among some groups to resort to violent methods to be heard. These organisations need to become more transparent and accountable.” If AEI had swapped out its summary paragraphs and substituted OWT’s, it would have been condemned by Nader and the like for being inflammatory.

What did OWT find? NGOs including the World Wildlife Foundation, Care, Oxfam and the International Confederation of Free Trade Unions ranked low in online disclosure and/or member control of the organisations. On some issues, they ranked below organisations they have long criticised including the WTO and World Bank and such multinationals as Rio Tinto, Shell and Microsoft. WWF, arguably the most influential green NGO in the world, ranked low on both criteria of accountability and transparency.

The social investment community and the reflexively anti-business extremists that it enables need to look in their Alice in Wonderland mirror: you are in danger of becoming the anti-progressive establishment. According to a study released in late June by SustainAbility, most NGOs are choosing constructively to engage with business and governments to reform market systems, in sharp contrast to the dated confrontational style that Nader still peddles. Over the past decade, activist factions that represent the tiniest slice of the NGO community have turned increasingly alarmist, particularly on development, environmental and science-related issues. Greenpeace, Friends of the Earth, animal rights fanatics, anti-globalisation protesters and the like are moving out of the “idea business” altogether, existing almost exclusively as obstructionists. As a consequence, they paint all NGOs with the grim brush of irrationality and intolerance. That makes it extremely difficult for reformist NGOs to be taken seriously by decision-makers in government and business.

With the public so sympathetic to the movement for reforming bureaucracies of all kinds, apologists are squandering a rare opportunity for legitimising tighter scrutiny of corporations, government – and NGOs.

This is Ralph’s World, and it’s not a place where any truly liberal person would want to reside.

Jon Entine is scholar-in-residence at Miami University (Ohio) and adjunct fellow with the American Enterprise Institute in Washington, DC. Jon is also an award-winning freelance journalist.