Third Sector Organisation Governance in Indonesia: Regulations, Initiatives and Models

In the last few years in Indonesia, as the discourse on good governance became widespread, the third sector that provides goods and services to people and places not reached by the first and the second sectors, has realised the need for good governance in order to gain the trust of society and donor agencies. Most LSMs (Lembaga Swadaya Masyarakat/self-reliant organisations) in Indonesia, the largest group of third sector organisations (TSOs), rely largely on foreign donors (Baswir, 2004; Saidi, 2004), and have to comply with the foreign donor agencies’ requirements for transparency and accountability (Jani, 2004). In reality though, there have been reports of mismanagement and lack of transparency in funds management. In addition, there is a lack of professionalism and social credibility of the LSMs because many people have taken advantage of the liberal political environment of the recent years and formed LSMs in order to secure project funds available from the donor agencies (Halim, 2004; Jani, 2004; Mustofa, 2004; Saidi, 2004). It is for these reasons that many well-established LSMs have been active in formulating and developing their own governance principles. Co-operative organisations have also been undertaking vigorous discussions on governance.