Best Practice Model: The Philippines Council for NGO Certification

The Philippines Council for NGO Certification (PCNC) is one of the most interesting developments in NGO regulation in recent years. Innovative and far sighted, it is proof that developing countries can be world-leaders in regulation.

The role of the PCNC is not that unusual. It is an accreditation body, established to identify those NGOs that meet best practice standards. Those that achieve these standards are eligible for additional tax benefits beyond those automatically given to all NGOs. This model is found in many other countries in Asia, Europe and Africa.

What makes PCNC such an interesting model is that the PCNC is itself an NGO. It is authorised by the Department of Finance to certify NGOs which then receive additional tax benefits.

PCNC’s NGO status brings many significant advantages which government run accreditation bodies lack. The most important of these advantages is credibility. Governments do not understand best practice in NGOs as well as NGOs themselves do. An accreditation system designed and implemented by NGOs is more effective, and therefore more credible to all stakeholders.

Furthermore, all government operated accreditation systems are open to criticism, often well-founded, that they institutionalise government favouritism. In other words, accredited NGOs receive special benefits not on merit, but because they are of a type which is politically favoured or, even worse, are well-connected. This criticism has undermined the credibility of a number of accreditation systems worldwide.

As a result it is the opinion of many international experts on NGO law and regulation that the NGO-led model as pioneered in the Philippines is the best model for an NGO accreditation agency.

The PCNC model has generated much global interest and has been discussed in numerous academic journals. It has prompted at least one imitator in the Pakistan Centre for Philanthropy, and a number of other countries are known to be considering the model.


The following report encapsulates the survey findings of the research on the perceptions of poverty and the effectiveness of poverty alleviation programs in the government and non-government sectors in the Philippines. The key objectives of the study were to find out Government and NGO managers’ definition of poverty and the poor, the poverty models that guide the Government and the NGO poverty alleviation programs and strategies, and the way Government and NGO managers perceive the effectiveness and impact of their poverty alleviation programs. The significance of the research lies in the implications of its findings on policy formulation at the local level to address poverty in the Philippines. The study included an opinion survey, an overview of the eight operating poverty models on which the various alleviation programs are based, and the key poverty assistance services, among other insights from the survey. Through the survey, the study primarily addressed the following key research questions:

1. How do government (GO) and non-government (NGO) Poverty Alleviation Program (PAP) Managers define ‘poor’?

2. What poverty models do these PAP (Poverty Alleviation Programs) managers use as a basis in planning their programs?

3. If the data on poverty attitudes were allowed to group themselves, what data-driven attitude categories or poverty models will emerge?

4. How do the GO and NGO PAP managers see the effectiveness and impact of their PAPs in their specific target areas?

The study dealt with the strategic issue of how anti-poverty program managers can gain a good and sound understanding of the true operative causes and consequences of poverty in their target areas. It was found out from the survey that the PAP (Poverty Alleviation Program) managers do not properly understand the true operative causes and consequences of poverty, but only insofar as their PAP’s specific target area is concerned. By having too many “models” of poverty causes and consequences, these PAP managers are not able to focus their poverty reduction strategies in the right direction. Perhaps, their PAP’s mission locks their strategies too prematurely to a predetermined poverty model that may not capture the true priority that their PAP needs to address when implementing their programs and activities in their target poverty area.

According to the study, the answer—or at least a good, tested answer—is to start by really understanding the target beneficiaries, instead of forcing them to fit within certain poverty models.


As a part of worldwide MicroStart program in the Philippines UNDP-MSP launched a 6-month Preparatory Assistance Phase in September 1998. Prior to it, the total outreach of MFIs operating in the Philippines was so insignificant that most of the underprivileged people remained out of the microcredit umbrella. As a result, the vicious circle of poverty remains intact in spite of taking various steps by the government. In fact, for lack of sufficient resources of the poor to fight against poverty, poor remain susceptible to poverty. In this backdrop, the expansion of microcredit outreach has been one of the imperatives in the Philippines.  In the beginning of MicroStart in the Philippines, the total capacity of MFIs could cover only 500,000. At least 5 million families were living below the poverty line. In this perspective, the Philippines required an overwhelming operation of microcredit, which could play a catalystic role in improving poverty situation and surmounting poverty line.

Virtually MicroStart in the Philippines is a tripartiate program involving UNDP, PCFC and ASA, which represent respectively donor agency, governmental counterpart of the Philippines and technical assistance provider. In the beginning ASA involved three different local sectors naming NGO, co-operative and rural bank and selected 14 local partners out of them. After getting the preparatory assistance phase finished, ASA launched its next phase in June 1999, which involves a three-year implementation program. As a part of this phase, ASA imparted training to 150 management and field level people of 14 local partners, exposing the operational techniques and prospects of microfinance, which made them well groomed for microfinance operation, Under the close supervision of ASA consultant, a real journey was embarked on in August 1999 through adopting necessary arrangements of loaning and savings.

In the first four months of its inception of operation, 5,060 out of 6,278 savers borrowed P18.5 million. The rate of recovery of the mentioned period was 100%. Thus, ASA carried on the process of delivering technical assistance with a purpose of creating sustainable MFIs within initially stipulated three-year period. By the end of December 2000, MSP has completed one and a half-year of its operational journey. In the first year period, emphasis was given on Pilot Program to acquire knowledge regarding how to exercise and transplant ASA’s model.

After the completion of one year, the process is going on to integrate the pilot projects in the mainstream and adopting best practice and strategic changes.

According to earlier report, the expansion of outreach was not at all satisfactory because of loan crises and termination of the membership of end beneficiaries. Report of December 2000 presents another feature that almost 80% of target of outreach expansion of pilot branches. The savings accumulation is 90% of baseline. Current loan disbursement or investment is 117% of baseline. Notably, these quantitative reports of performance include the performance of only pilot operations.

In comparison with COOP and Rural Bank, NGO enjoys the highest degree of outreach expansion. Although, COOP suffers from on-lending fund and difficulty from democratic decision making process. But for lack of loan the NGO faces setback. Otherwise, it could have shown more growth rate. The growth of CBU facilities in RB is the highest among all.

In loan facility, NGO reflects the highest growth possessing 161% as against 157% of Rural Bank and 65% of COOP. In statistical report, it is clear that NGO sector is the most promising compared with others to extend CBU and loan facility to the end beneficiaries.

In respect of financial and operational viability, report says, 8 partners are financially viable but others are operationally viable. Rural Bank is efficient in terms of viability.

Unlike the other cluster, profitability is not primary concern for NGO. Those partner which seemed to be dieting as per earlier report within one year period achieved financial viability.

Massive expansion for MSP seems to be unrealistic due to scarcity of fund. Even some partners are trying to survive amidst serious liquidity crisis. In spite of such situation, at least five partners namely CCT, SCFI, NORFIL, Miladee, WIFE are advancing steadily. Although pilot projects have already been parts of mainstream and it is going to have an institutional shape, the future of MSP is overcast by the shortage of fund.


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