Once the backbone of the reform movement and a potential force for change, Indonesia's vast NGO community now faces charges of corruption, incompetence, radical leanings-and a new government less tolerant of those not under its wing, reports the Far Eastern Economic Review.  In July, Parliament passed the Law on Charity Foundations.  Among its rules:  donations above $70 must be publicized and new foundations must be ratified by the Justice Ministry, which can withdraw the license of any foundation it regards as a "threat to public welfare."

An American aid worker laments that "the drafters are being like Big Brother." Red tape is costly to cash-strapped NGOs. And, says Riza Primahendra, spokesman for micro-credit NGO Bina Swadaya, "the law can be misused by the bureaucracy, big business and the military."

However, the deterioration of goodwill towards aid organizations is not sudden, the story notes.  Since the 1997 Asian financial crisis, NGOs have grown to number hundreds of thousands. Every week dozens pop up-and disappear. But as overnight operations multiply, so does fraud.

World Bank consultant Sri Kuntary says she's tried to contact applicants for a district development project, only to find "they disappeared."  With them went public trust in NGOs, says researcher Haryanti Samekto.

Donors are taking note, especially after a $2.4 billion government social safety-net program backed by multinational donors was widely accused of misuse by the time it ended in mid-1999.  In April this year, the World Bank cancelled the second tranche of a $600 million adjustment loan, another safety net for the poor, after the government failed to meet conditions.  It was replaced with a $400 million soft loan.

No strangers to scams, seasoned development workers say creative accounting in Indonesia is especially expert. And the line dividing government and NGOs has blurred. When an aid project is contracted out to an NGO, or requires third-party monitoring, some officials see an opportunity and establish - perversely - government-operated NGOs, or GONGOs.

Industry players agree that the donors should screen grant applicants more thoroughly, and some are. Other bodies are less frugal and less strict. Private foundations with deadlines are regarded as the freest with their funds. "Sometimes the aim is to get the money out the door so they can keep their foundation," says an aid consultant. Donor countries also tend to be less rigorous.

Richard Holloway, of the United Nations' Partnership for Governance Program, explains that oversight occurs once governments decide to support civil society groups and "there is pressure from the parliaments to give out the money."  Once disbursed, the money gets lost.

But the bureaucracy, however imperfect, remains a vital partner. "If you want to fight corruption, you don't necessarily steer away from places where there is corruption," says World Bank country director Mark Baird.