In the last decade the nonprofit voluntary sector has emerged as a significant force in promoting social and human development in Pakistan. The contributions made by this sector towards development are considerable and are being acknowledged by all the stakeholders (government, national and international donors) of social development.

Extensive consultations conducted by Pakistan Centre for Philanthropy (PCP) with these stakeholders highlighted the problem that was acting as the chief impediment in their contribution towards sustainable social development in the region. Although these stakeholders were willing to contribute towards the social development of the country however no system existed that would assist them in the identification of credible partners for social development that could be trusted with their social investments.

For the donors both local as well as international this lack of knowledge results in a limited menu of available choices in terms of efficient, effective and credible donees. Representatives of corporate philanthropists and diaspora communities have indicated this lack of information as being the major impediment in their philanthropic activities.

The Government, which aims to support public benefit nonprofit organisations through tax incentives, faces similar problems. For this purpose the Federal Board of Revenue (FBR) also requires a system that will yield reliable information about the NPOs.

A careful review of the existing state of affairs indicated the need for the institutionalisation of a system of objective, transparent and professional evaluation and certification of nonprofit organisations. This system would provide the stakeholders with reliable and updated information about the capacity and organisational effectiveness of different credible organisations. This in turn will not only provide them with a menu of available choices but will also give them comfort and confidence regarding the credibility of the choices given. 

In view of this objective, PCP developed the Nonprofit Organisations Certification Programme, which seeks to evaluate an applicant NPO against well-defined and objective criteria. These criteria cover different aspects of NPOs working such as internal governance, financial management and programme delivery. The certification system adopts a professional, objective and standardised approach in assessing organisational performance in these critical areas thereby portraying an exact picture of the standards of their operations and the true nature of their capabilities.

The Certification regime brings various short-term and long-term benefits for its stakeholders.

Nonprofit Organisations:

• Certification adds credibility to the NPOs as having been evaluated and certified by an independent agency. NPO’s performance, transparency and sense of mission gets acknowledged once it is certified.

• The certified NPOs are promoted through PCP’s data-bases, which assists these NPOs in diversifying their resource base, and accessing enhanced donor assistance.

• It forms the basis for an NPO to claim tax benefits from the Federal Board of Revenue (FBR). Through an amendment in the Income Tax Rules 2002, the FBR has statutorily linked grant of tax exemptions under section 2(36) read with section 61 and clause 58 of II schedule with evaluation and certification by a duly notified certification agency. Certification basically offers a hassle-free and convenient mode of accessing these exemptions. It frees the certified NPOs from the arbitrary and bureaucratic procedures of the FBR.

• An important dimension is capacity building of NPOs. By identifying weak areas and providing professional advice, PCP builds the capacity of NPOs in the course of certification. Additionally, the centre also establishes linkages between specialised capacity building organisations and NPOs to prepare the later according to certification benchmarks.

Donors:

• It provides donors (individual, corporate, diaspora and international) assistance in identifying credible partners for social development. It provides them with a menu of choices; a list of credible organisations, their areas of intervention and above all comfort and confidence about the antecedents of partner organisations.

• It acts as a filtering mechanism saving considerable time and resources spent on sifting through funding applications.

Government:

• Through an amendment in the Income Tax Rules, 2002, the FBR has statutorily linked grant of tax exemptions under section 2(36) read with section 61 and clause 58 of II schedule of the Income Tax Ordinance, 2001 with evaluation and certification by a duly notified Certification Agency. Though FBR has a mechanism of scrutiny and evaluation before tax incentives are allowed, it also needs a reliable system that will yield dependable information based on independent, objective and professional process of evaluation. Thus it facilitates the government in granting tax exemptions (essentially a form of public grants) to only those organisations that have a proven track record of efficient service delivery for the benefit of public at large.

• Government Ministries & Departments and Divisions also require a list of credible organisations they can partner for social sector programmes. Certification provides such a list. It saves considerable time and resources that would be otherwise spent by various government agencies in selecting such partners.

    
For details ...

Certification Process
Certification Standard Operating Procedures

Certification Panel:
It is a five-member body comprising three nominees of PCP’s Board of Directors (not from within the Board) and two representatives from the government (one each from FBR and Ministry of Social Welfare). The panel is an independent body and works in an autonomous manner free from any control of the government or PCP.

The Certification Panel is responsible for conducting the final review of the evaluation report. It acts as the final authority for granting or refusing the certification application of an NPO.  

Grant of Certificate:
If the Panel decides to grant certification to the NPO; a Certificate is issued. However, if the Panel decides to refuse the application of an NPO PCP’s certification unit informs the NPO accordingly. In such a case, an opportunity is provided to the concerned NPO to explain and rectify its position.

In some cases the Panel may also decide to defer the case of the NPO for a period not less than 3 months and not exceeding 1 Year so as to provide the concerned NPO with an opportunity to make up some of the deficiencies and qualify for certification.

Certification Validity:
Certification is time bound i.e. certification of an NPO is valid for three calendar years from the date of certification. At the end of the specified period the organisation has to apply for a fresh evaluation.

Certification Fee:
in view of the various short and long term benefits that certification brings to an NPO, it is imperative that the process be carried out following the highest standards of accuracy and transparency. maintenance of such standards requires high quality human resources and adequate financial resources. since PCPs entire system is geared to facilitate NPOs, organisations are required to pay a small fraction of the total cost (particularly in case of small and medium sized organisations) incurred by PCP per evaluation; whereas, the major portion is picked up by the Centre itself.

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