Gambia has declared that it is withdrawing from the Commonwealth, a “neocolonial institution”, according to the country’s President, Yahya Jammeh. No further reasons were given, but the decision may well be related to the poor relationship between Jammeh and the U.K. He’s accused Britain of backing his political opposition, and this year the Foreign Office criticised Gambia’s human rights record.

Inevitably, the spotlight now shines on an association which grew out of empire and managed to reinvent itself as a values-based club that, according to Jawaharlal Nehru, brought a “touch of healing” to the world.

Since the modern Commonwealth was created in 1949, every former British colony — and some others like Mozambique and Rwanda — has decided to join. This free and equal association has promoted democracy, international understanding and the interests of vulnerable states. Yet, in today’s crowded marketplace of international organisations, the Commonwealth is caught in an existential crisis about its role.

With a tiny budget (less than one per cent of Britain’s Department for International Development) and few resources (a smaller team than runs the U.N. headquarters café), it cannot deliver substantial programmes, instead having to rely on nudging governments to do better. Gambia’s decision signals the beginning of the end for this once great institution.

Only a few member states, essentially Britain and a handful of other developed countries, want the Commonwealth to play an active role in promoting democracy and human rights. The vast majority of members would rather have a quiet body, offering technical assistance here and there and convening an occasional summit.

This divide is clearest in the debate over the holding of the next leaders’ summit, in Sri Lanka this November. The Canadians have been most outspoken of a small group of members, saying that they will not attend unless the Sri Lankan government does more to improve human rights and investigate accusations of war crimes. But most other governments, some of which fear the Commonwealth focusing on their own shortcomings, actively support Sri Lanka’s hosting. Meanwhile, the Sri Lankan government is relishing the idea of taking over the chair of the Commonwealth after the summit.

The departure of Gambia and the fight over the Sri Lankan summit reveal how weak Commonwealth institutions have become. The secretariat is accused of actively dodging any politically sensitive issue, and its reticence to speak out means that the Commonwealth suffers from a very low public profile. A 2009 poll in seven countries showed than only a third of people could identify what the Commonwealth does.

There is also growing frustration among member states, rich and poor. The big donors — Australia, Britain and Canada — provide about two thirds of funding for the official Commonwealth institutions and are unhappy with the lack of political action. Smaller donors also seem reluctant to pay into a club that delivers relatively little direct benefit. When I was head of the Commonwealth Foundation, I spent a lot of my time chasing member governments for substantial arrears and convincing others not to withdraw support altogether.

In reality there is very little benefit these days in membership of this club. In years gone by, Commonwealth sanctions against countries like Nigeria and Pakistan mattered to their leaders. Since then, Zimbabwe has withdrawn and the Fijian government doesn’t seem to care about its suspension. Presumably this is why the seasoned diplomats who run the secretariat don’t want to rock the boat too much, lest more countries jump ship. But this will backfire in the long term and public and donor support will dwindle.

The only way the Commonwealth will thrive is to reassert the moral authority it once had. This may mean more countries withdrawing, but a smaller, more effective Commonwealth is better than one that stays silent simply to keep the club together. (Dhananjayan Sriskandarajah is a former director of the Royal Commonwealth Society.)© Guardian Newspapers Limited, 2013

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