February 7, 2019

The challenge for civil society

"The strength of civil society institutions needs to be built up as a balancing force between the state and market institutions... Let us not be supplicants for leftovers from the government or corporate tables."

5 min read

The public arena can be conceptualised as a triangle whose three vertices are civil society, the market, and the state. Civil society began with primordial social groupings such as the family, the clan, the tribe, and as humans engaged in settled agriculture—the polis or the nagari.

Though civil society arose before them, the market and the state which came later, slowly gained greater primacy. Thus, the triangle became inverted, with civil society at the base and the state and the market at the top. This is because both the state and the market were strengthened by creating single-purpose institutions.

Instead of underlining their for-purpose nature, civil society institutions were denigrated as nonprofit or non-government organisations.

In general, state institutions were aimed at maximising power, while market institutions were aimed at maximising profits. Civil society institutions (CSIs), in contrast, were usually built for social purposes and instead of underlining their for-purpose nature, they were denigrated as nonprofit or non-government organisations. That those phrases are ridiculous can be seen when civil society actors begin calling state and market institutions ‘non-social organisations’!

If the 21st century has to avoid the folly of the reassertion of the state in response to the excesses of the market, the strength of the CSIs needs to be built up as a balancing force between the state and market institutions. This is the single most important reason for CSIs to exist and play a robust role.

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The need for robust civil society institutions

1. Civil Society Institutions are essential for ‘restoring sanity’ to state and market institutions, whenever either of them crosses a line. They influence political change and the enactment of pro-consumer or pro-user and pro-environment laws to control market players. CSIs are practice fields for democracy—they have been at the forefront of struggle in the freedom movement, as well as in constructive work and social reform. It is only because of CSIs that India has transformed itself from a feudal society.

2. CSIs are early warning mechanisms, which are able to detect and amplify perturbations on the ground, among the people, and alert society, the state, and the market to take corrective action. They thus play an important stabilising role in the polity and economy.

3. CSIs are the biodiversity reserves for preserving a vast variety of ideas and beliefs. They are incubators for innovative approaches to resolve problems which neither the state nor the market have been able to crack—such as guarding civil liberties, or the lack of basic services to the majority. They can promote innovation which decentralises power or reduces profits while increasing welfare. This will never be done by state or market institutions.

A crowd protesting at Jantar Mantar - civil society

CSIs are practice fields for democracy—they have been at the forefront of struggle in the freedom movement and social reform | Photo courtesy: Wikimedia Commons

Challenges with making CSIs more effective

The process of influencing both state and market institutions, to retain and sharpen focus on the issues of the socially disadvantaged, and on the environment, would require CSIs to be more effective. But CSIs have their own problems too.

Discussions about CSIs in India in recent times are focused on issues such as an increasingly oppressive state that has been arresting activists, raiding CSIs, and curbing sources of foreign funding while imposing onerous reporting and operating conditions; the rise of the right wing which questions the very legitimacy of the CSIs, just as the left was doing in an earlier generation; and the increasing marginalisation of civil society with respect to all three spheres of our lives—political, economic and social.

Many CSIs are seen as corrupt, and personal fiefdoms of charismatic founders.

A large number of CSIs are seen as ‘self-appointed do-gooders’, not accountable to any constituency other than their donors. Many CSIs are seen as corrupt, or at least venal, and as personal fiefdoms of charismatic founders who continue in leadership positions long after their passion for the cause has died. Jobs in CSIs are seen as employment of last resort, to be abandoned for a position in a company or a government agency as soon as an opportunity arises.

Overcoming these challenges

For CSIs to counter all these criticisms, they need to take a number of decisive steps. Some of these include:

  • CSIs need to increase their membership or user-ship base and become accountable to them. They also need to become more democratically governed, participatory and accountable.
  • CSIs should have boards in which a majority of directors are from among those that they strive to organise or serve. Board members must have term limits, ideally not exceeding three consecutive terms of three years each. Similarly, the CEOs of CSIs should also have term limits, ideally again no more than two terms of four or five years each. Additionally, there may be a few independent directors representing broader public interest. CSI directors together must pay attention to mission validation and mission compliance.
  • CSIs can evolve multiple sources of funding, primarily based on member contributions and user fees, and leverage these proportionately with grants from the government’s tax revenue and a share of the corporate social responsibility funds. All of the other sources must be linked to what they raise from their members or users, with an upper limit per member which is fairly low, so that the number of members, not the total amount collected from a few rich ones, matters.
  • CSIs must accept and practice the highest standards of financial reporting and disclosure and hold themselves open to public audits, social audits, impact assessments and so on. These should be available on their websites for all stakeholders. CSIs should adopt and enforce a code of conduct and ethics which makes them acceptable as legitimate and well-meaning actors.
  • CSIs could work towards attracting the best of talent, but those who get employment in CSIs must first perform at least three years of voluntary service with just a living wage stipend, working with poor or disadvantaged communities in rural or urban low-income areas. CSI staff can thus be more connected with their members/users and become more adept in their chosen fields of work, be it grassroots action or policy advocacy. CSI staff should be remunerated at levels which make CSI careers comparable to government and corporate careers. This can be achieved gradually over a period of time.
  • Market institutions need to be held accountable for their acts of omission and commission which have enormous social and environmental consequences, not just economic or financial. All economic legislation and attendant regulations were to be subjected to detailed scrutiny in terms of their social and environmental consequences and fairness to consumers/users and the wider community. The state institutions which were given this responsibility however, have not proved too adequate and worse, are often collusive with market forces. To perform this task effectively, a new form of CSI, namely a consumer union or a user association should be formed for every major category of product or service, provided by any market institution, including state owned businesses. This will require an enabling law.
  • Companies must have at least two board members, one male and one female, who are from CSIs. Banks, insurance companies, utility companies and companies in the health, education and training sectors must have at least one third of their board members from CSIs. Corporate Social Responsibility (CSR) spending requirement of two percent of profits, should be split 50:50, with one percent to be spent by CSR foundations established by the respective companies and the second one percent to be given to unrelated party CSIs to undertake various other programmes.
  • All industry associations and chambers of commerce must be registered as nonprofit CSIs. They can be used as consultative forums for non-business CSIs working on social or environmental issues of relevance to the respective industry association.

This is a very ambitious list and it will take long for market institutions to concede this space to CSIs. But the best of them will see that it strengthens their long-term prospects substantively. Many large corporations which changed their attitude towards environmental activists and began a dialogue with them, found that moving to cleaner methods of production was actually more profitable in the long run.

The task of civil society is cut out. Let us not be supplicants for leftovers from the government or corporate tables, but instead, hold a preetibhoj with the people and invite the state and the market representatives to attend on our terms.

This is an edited excerpt from an article that was published in Seminar 713, January 2019. You can find the original here.

Copyright Seminar Publications; reproduced with permission courtesy Seminar.

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Vijay Mahajan-Image
Vijay Mahajan

Vijay Mahajan is CEO of the Rajiv Gandhi Foundation and Director of the Rajiv Gandhi Institute for Contemporary Studies. He founded PRADAN in 1982 and the BASIX Social Enterprise Group in 1996. Vijay has co-authored the book The Forgotten Sector and has written over 60 articles. He is also the chair of the Consultative Group to Assist the Poor (CGAP), a global microfinance forum. He is an alumnus of IIM-A and IIT-Delhi, and a mid-career fellow at Princeton University, USA.