Aiding NGOs Fails – Competition for Funds Limits Effectiveness

Aiding NGOs Fails – Competition for Funds Limits Effectiveness

Dirk-Jan Koch, Netherlands Ministry of Foreign Affairs, 2009, Aid from International NGOs: blind spots on the aid allocation map, p. 19

However, the view that NGOs have a clear focus on the poor has also been challenged. Research has shown that the claims of reaching the poorest of the poor have been exaggerated. Many case studies have shown that even if NGO interventions reach the poor, they usually do not reach the poorest of the poor (Steering Group 2002). For example, Sharma and Zeller show that NGOs services in Bangladesh “are located more in poor pockets of relatively well-developed areas than in remoter, less-developed regions” (Sharma and Zeller 1999, p. 1).

NGOs may however be reluctant to work in the poorest countries as they have to secure financial survival. According to the principal-agent model of Fruttero and Gauri (2004), the dependence of NGOs (the agents) on external funding (from official back donors as principals) tends to drive a wedge between organizational imperatives related to future funding and charitable objectives when making geographic choices. Principals have incomplete information on NGO projects, while future funding of agents depends on perceived success or failure of current projects. To demonstrate success, NGOs are as a consequence inclined to minimize risk, which weakens their incentive to operate in the poorest environments where failure may jeopardize future funding.
NGO COMPETITION FOR FUNDS CAUSES THEM TO FOCUS ON THE EASY CASES TO SHOW RESULTS

Dirk-Jan Koch, Netherlands Ministry of Foreign Affairs, 2009, Aid from International NGOs: blind spots on the aid allocation map, p. 20

In a similar vein, the so-called marketization of aid is supposed to have unfavorable side-effects which bias the allocation of NGO aid towards recipient countries offering “easier” environment (Cooley and Ron 2002; Fowler 2000; Lewis and Wallace 2000). The notion of marketization includes that NGOs increasingly have to compete for government and private funding. With the renewal of funding becoming less secure, however, NGOs may turn more risk averse and allocate aid strategically, by targeting recipients where success is easier to achieve. The poverty orientation of NGO aid may thus be undermined by increasing pressure from co-financing governments to demonstrate project-related poverty impacts. This may appear counter-intuitive at first sight, but there is casual evidence to this effect. According to Bebbington (2004), increased intervention of the Dutch government into co-financed NGO projects in the Andes raised concerns with the NGOs that they might lose funding unless being able to demonstrate immediate project-related poverty impacts. Visible results are easier to achieve when projects address transitory forms of poverty, which may induce NGOs to shift attention away from the neediest recipients.

Aiding NGOs Fails: Not Gap Fillers

Dirk-Jan Koch, Netherlands Ministry of Foreign Affairs, 2009, Aid from International NGOs: blind spots on the aid allocation map, p. 22

However, NGOs may be unwilling to accept the role assigned to them by official donors, arguing against a scenario in which NGOs were to focus on the “left-over” countries of bilateral aid (Borren 2007), or in which “NGOs are seen as subcontractors who can be hired at will to clean up the institutional mess, after which Big Aid can move in and achieve nice results under conditions of good governance” (Monteiro 2007, p. 2). In addition, in cases where extreme adverse governance conditions prevail and where dictators forbid NGOs, interventions and international NGOs, if any, are likely to be limited in scale.
AIDING NGOs NOT AN EFFECTIVE WAY TO REACH DIFFICULT POPULATIONS

Dirk-Jan Koch, Netherlands Ministry of Foreign Affairs, 2009, Aid from International NGOs: blind spots on the aid allocation map, p. 39

On the other hand, this chapter indicates that NGOs do not complement official aid through engaging in so-called difficult institutional environments. Rather, NGOs tend to replicate the location choices of official ‘back donors” from whom NGOs get part of their funding. This casts doubt on the notion of autonomous NGO behavior. Moreover, NGOs appear to follow other NGOs so that aid becomes clustered, further adding to the divide between so-called donor darlings and donor orphans. Donor darlings of international NGOs such as Tanzania , Kenya, Malawi, and Sri Lanka, Zambia and Uganda, received more than US$100 million annually, whereas countries such as Cote d’Ivoire, Congo-Brazzaville, Guinea, Yemen and the Central African Republic received significantly less than $US10 million annually. Finally, NGOs prefer recipient countries with common traits related to religion or colonial history, which appears to demonstrate the importance of NGO-specific missions in geographic choice processes.

Aiding NGOs In Yemen Fails

Dirk-Jan Koch, Netherlands Ministry of Foreign Affairs, 2009, Aid from International NGOs: blind spots on the aid allocation map, p. 163

This research found that international NGOs are not disproportionately engaged in countries with low levels of governance. It challenges the view held by many international aid agencies and academics that international NGOs enjoy a comparative advantage in difficult institutional NGOs can play an important role in countries with better levels of governance, for instance to support the voice of marginalized groups, but ideally could focus more of their service delivery efforts in countries where aid cannot be channeled through the government. Such targeting is, according to this research, not yet sufficiently taking place. Consequently, countries like Cote d’Ivoire, the Central African Republic, Yemen and Nigeria do not receive any support through government channels and are neglected by international NGOs. This situation necessitates policy discussions and maybe a policy response.