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University of Iowa News Release

 

Sept. 24, 2007

Sidel, colleagues study global forces shaping South Asian nonprofits

Nonprofit organizations in South Asia are being shaped by threats of terrorism and explosive economic growth, as well as by the reaction of governments that recognize their importance but don't fully trust them, according to a new report co-written by a University of Iowa law professor.

"Governments in South Asia are struggling to adapt their systems and their regulation of civil society to the international system and the international economy, as well as to new domestic developments," said Mark Sidel, a professor and UI faculty scholar in the University of Iowa College of Law and a member of the Asia Pacific Philanthropy Consortium that issued this week's report, "Philanthropy and Law in South Asia."

Sidel serves as academic director of the Philanthropy and Law in South Asia research group, which has received funding from the Asia Foundation, Ford Foundation, Himalaya Foundation, Myer Foundation and others.

The 12-member study group met this summer in New Delhi to examine the legal regulations of nonprofits in five South Asian countries -- India, Pakistan, Nepal, Bangladesh and Sri Lanka -- to update an earlier study published in 2004. It found the nonprofit sector of those economies is developing rapidly and governments have often struggled with how to treat them, frequently concerned about their influence in society while recognizing the need of nonprofits to provide social and human services.

Sidel said that many nonprofit regulations now being put in place in South Asia are fairly standard rules that guarantee an organization's legitimacy and maintain its public credibility. These types of regulations define corporate governance, ensure transparency in financial reporting, and limit nonprofit organizations' administrative expenses to a maximum amount of revenue.

But Sidel said that in many ways, South Asian governments are leery of nonprofit organizations and have taken a more active regulatory stance since 2004. He said the governments suspect some nonprofit organizations operating in their countries of being fronts for terrorists or anti-government rebel groups, or to run money-laundering operations.

In Sri Lanka, for instance, the government is worried about nonprofits working in Tamil rebel-held territory in the midst of a civil war. And in Bangladesh, Nepal, and other countries, governments have sought to impose new restrictions on donations to domestic nonprofits from foreign sources, as Diaspora giving to South Asia has begun to accelerate.

In Nepal, where citizens and communist rebels have challenged the government, the report notes nonprofits have been under suspicion and the government has sought to impose new restrictions on them.

Giving from abroad is a special concern for governments throughout the region, Sidel said.

"On the one hand, governments want nonprofits to raise money from outside the country among the global Diaspora of their citizens. But they're also worried this money is having a destabilizing effect in their countries," he said.

At the same time, however, South Asian governments realize that nonprofit organizations play vital roles in helping their societies and economies develop.

"In India especially, economic growth has made a few people very wealthy and created a growing middle class," Sidel said. "But that growth has also left many desperately poor people behind, and governments realize their limited resources can only do so much for them. Nonprofit organizations increasingly fill this gap."

One of those nonprofit sectors helping to fill the gap is the micro-finance industry, which provides small loans -- sometimes as small as only a few dollars -- to entrepreneurs who operate small businesses, usually out of their homes. These anti-poverty initiatives has proved popular, the report notes, as nonprofit micro-financiers have loaned more than $560 million to entrepreneurs in Bangladesh alone.

"Micro-credit is growing rapidly and governments are trying to regulate it because it's become such an important part of their economies," Sidel said. "There's much more regulation of micro-credit institutions than there was five years ago, and the industry largely accepts it because it helps to keep the less reputable organizations at bay."

The entire text of the report, "Philanthropy and Law in South Asia," is available online at http://www.istr.org.

Sidel has published widely on nonprofit law and philanthropy and is serving as a UI Faculty Scholar in 2006-09. He is president-elect of the International Society for Third Sector Research, the international academic association promoting research and education in philanthropy, civil society, and the nonprofit sector. Earlier he managed the regional program on philanthropy and the nonprofit sector for the Ford Foundation in South Asia in New Delhi, and the Ford Foundation's programs in Vietnam. He also served as the Foundation's first program officer for law and legal reform based in China.

STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Iowa City, Iowa 52242-2500

MEDIA CONTACT: Tom Snee, 319-384-0010, tom-snee@uiowa.edu