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The Growing Market for NGO Influence 

Lynn lion 

Florida International University 


"Can NGOs Provide Alternative Development in a Market-Based System of Global Economics ?" 

(lion, 1998) 

T oday, a full ten years after I first asked this question, we still have only partial answers. 

There is no doubt that NGOs are playing in a more significant role in global ODA (overseas 
development assistance). While the reasons for supply of aid are varied, certainly furthering the 
institutional or national strength of the donor is a primary consideration. While NGOs may not 
entirely voice this agenda, NGOs are increasingly linked to the economic and political motives 
behind such aid. Additionally, NGOs' position between governments and economies means 
that they face controls that government recipients of international aid funds do not often face. 
This positions the NGOs in a constrained environment. In this context, NGOs sometimes act as 
agents of state or global economic forces. This article addresses these four points as a means of 
addressing my original question. 

Growing Links to Global and Bilateral ODA 

CICE's focus on NGOs in 1998 was on the heels of what was then a relatively new trend - 
NGOs' increasing role as direct recipients of aid. Historically, some INGOs (International Non- 
Governmental Organizations) had largely been recipients of grants from governments; rarely did 
this apply to local NGOs. 

Global data on NGOs is notoriously lacking and of poor quality, necessitating various authors 
to work around this problem. Writing for the United Nations Research Institute for Social 
Development, Agg (2006) looked at trends in aid to NGOs using Organization for Economic 
Cooperation and Development (OECD) data, though she acknowledges the unreliability of 
the OECD as a source. OECD categories, she reminds us, do not incorporate all NGO funding. 
Nevertheless, the trends are clear. Table 1 shows the percentage of ODA given to NGOs since 
1984. 


Table 1: Percent of ODA directed to NGOs, 1984-2003 


Year 

% of ODA to NGOs 

1984 

0.2% 

1991 

2.3% 

1998 

4.7% 

2003 

5.9% 

Derived from: Agg (2006), p.17. Figure 10. 


In 1984, less than one percent of the ODA was given directly to NGOs. By 2003, the percentage 
had grown to six percent. This translates into a substantial amount of money as shown in Table 
2 . 


© 2008 Current Issues in Comparative Education, Teachers College, Columbia University, ALL RIGHTS 
RESERVED Current Issues in Comparative Education, Vol. 10(1/2): 16-21. 


Lynn lion 


Table 2: ODA dollars to NGOs: 1984-2003 (USD) 


Year 

Millions of USD ODA to NGOs 

1984 

0.8m 

1991 

900.0m 

1998 

1,100.0m 

2003 

2,200.0m 

Derived from: Agg (2006), p. 23, Figure 16 


USAID (United States Agency for International Development) has developed an "NGO 
Sustainability Index" (USAID, May 2007) which track progress of NGO development - a clear 
indication that NGO strengthening is important enough to track and index. How are NGOs faring 
in an environment where they are increasingly funded through international aid? Agg (2006) 
examines the reasons behind this growth and disputes two commonly argued (often heralded) 
notions. First, she notes that governments frequently argue that NGOs are more efficient in getting 
aid to local recipients than are governments (who sometimes contract with NGOs). She finds no 
study that supports this conclusion (Agg, 2006). She examines the "capacity building" notion. 
This posits that, if local NGOs are a more direct voice of local communities, then ODA to NGOs 
might be explained by a desire to build NGO capacity. Agg (2006) along with Fisher and Green 
(2004) dispute this notion arguing, instead, that the relationship between local NGOs and their 
global partners is uneasy, complex and not always advantageous to local NGOs, or their ability 
to speak for local communities. 

Unease in a Global Environment 

Increasing NGO funding has meant increasing integration into a global economic and political 
spectrum, though this is often an uncomfortable fit. Several authors suggest that the need to 
integrate NGOs into a global ODA scenario has caused many NGOs to trade local effectiveness 
for global integration and legitimacy (Agg, 2006; Gilles and Yontcheva, 2006; Mayer and Gereffi, 
2006; Cooley and Ron, 2002; Fisher and Green, 2004; Dolhinow, 2005). Cooley and Ron (2002) 
contend that the increasingly global environment in which NGOs live creates a number of 
constraints. The authors site several specific problems: 

First, NGOs are often required to act as policy agents of donor organizations. Whereas local 
communities may have identified specific needs, these needs do not always coincide with the 
goals of the donor. For example, a local community may need better local health facilities while 
the donor may be motivated by a desire to show immediate health results, such as HIV testing, 
in order to justify their spending and legitimize further funding. Immediate results may conflict 
with long-term institution building and the NGO is left to negotiate between the two. Known 
as the "principal-agent" problem in Economics discipline, the result is that recipient needs are 
mitigated by the actions of the agent (NGO) in order to maintain a relationship with the donor. 

Second, as NGOs increasingly vie for development monies, the international fund-seeking 
environment becomes more competitive. This pervasive focus on bidding for the next grant 
means that the organizations face constant threats of lay-offs and down-sizing. These short term 
grants also means that start-up costs are increased as each grant begins a new cycle. 

Third, this competitive environment has another consequence. As a result of the competition 
between NGOs, some NGO energies are siphoned off into competitive actions such as highlighting 


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The Growing Market for NGO Influence 


competitors' weaknesses and downfalls. Their limited resources are spread thinner in countering 
such forces and building a defense against attacks by others. 

Fisher and Green (2004) add a fourth and a fifth constraint. They proffer that local NGOs typically 
do not have an international base upon which to build their legitimacy as an organization. 
Their ability to demonstrate their viability and effectiveness depends upon their ability to gain 
legitimacy locally, which transmits that legitimacy to global levels. The local environment may 
not always be conducive to such efforts. "For delegates from politically volatile nations, for 
example, negotiating multilateral agreements will likely be low on the list of domestic political 
priorities..." (Fisher and Green, 2004, p. 8). 

The fifth constraint, as articulated by Fisher and Green (2004) is the link to information on a 
global scale. Links between organizations and scientists, academics and policy-makers are easier 
when an organization is transnationally located rather than nationally located. Keeping current 
on complex scientific and policy information is a challenge for local NGOs, who have limited 
links to both the professional networks and the policy trends of global sources. 

Increasing Influence on a Global Scale 

Incorporation into a global network of ODA has meant that many NGOs must learn to operate in 
a new international environment - far from the community roots from which many sprang. Gilles 
and Yontcheva (2006) ask whether ODA monies to NGOs really go toward poverty reduction. 
They develop a model which attempts to predict the amount of international aid targeted to 
NGOs on the basis of recipient country characteristics. These characteristics were poverty level, 
democracy[l], level of militarization!!], living standards, health care, and economic interests 
(imports to recipient country from donor country). Using several different specifications of 
the model, they find that poverty is the only significant and stable explanation for NGO aid 
allocations. 

These results are remarkably robust across regions of the world. Table 3 shows that poverty 
remains the only consistent explanation of ODA to NGOs across all four regions delineated. 

Table 3: Determinants of ODA to NGOs by Region 


Explanatory variable 

Africa 

Western 

Hemisphere 

Middle East 

Asia 

Living standards (life 
expectancy) 


* 

* 


Imports 





Militarization 


* 

* 


Poverty 

* 

* 

* 

* 

Democracy 



* 


Derived from: Gilles and Yontcheva (2006), p. 13, Table 4 


What we learn from the Gilles and Y ontcheva (2006) study is that poverty levels partially determine 
the distribution of monies to NGOs from bilateral donors. There are two possible explanations. 
First, donors may feel that their monies are best spent through NGOs in the poorest of countries 
either because NGOs can access more local avenues for getting to the poorest people or because 


18 Fall 2007 / Spring 2008 


Lynn lion 


they have structural advantages over more traditional ODA organizations. Second, it is possible 
that donors see NGOs as relatively effective actors in programs that are poverty-focused. Whether 
NGOs are effective in addressing poverty issues is unanswered by Gilles and Yontcheva's (2006) 
work. 

Gereffi et. al. (2002) make a strong case that NGOs have become effective actors in at least 
one realm - that of advocating for global certification of environmental and labor standards. 
Contending that their efficacy takes the form of "Manufacturing Shame" (p. 2), the authors 
trace the complex means by which local and regional NGOs have changed the global contents 
for environment issues and labor. They see "voluntary" industry led certification as having a 
weak base - often requiring industry self-monitoring. In the authors' view, NGO influence has 
substantially changed this regulatory content. "The contrast between industry-led certification 
and the NGO variety is stark" (p. 5). Examining forestry and apparel industries as examples, they 
contend that these examples "underscore the growing power of NGOs to compel corporations to 
adopt new environmental and labor standards." (p. 7). 

Mayer and Gereffi (2006) echo this finding. They claim that "fierce pressures" have resulted in 
proliferation of codes of conduct for many industries (p. 8-9). NGO success in this particular arena 
has changed the nature of NGOs working collectively on global issues. "Over time. . . certification 
arrangements became more pro-active and preemptive with NGOs no longer waiting for accidents 
but rather seeking out ongoing corporate wrongdoing" (Gereggi et. al., 2001, p. 3). This changing 
NGO environment has had mixed results. 

NGOs in a Global Environment 

Can NGOs provide alternative development in a market-based system of global economics? 
NGO influence is growing. Yet, NGOs' occasionally uncomfortable relationship with bilateral 
and global donors continues to grow in size and influence. While donor rationale for increasing 
this assistance remains unclear, there is some evidence that it increases most when a country 
has high levels of poverty. NGOs face increasing pressures when they move from entirely local 
actors to a place on the global stage. No longer wholly linked to local community needs, they 
must negotiate viability within a global context that pits them against other local NGOs and 
agendas of local governments. While they receive their legitimacy from local arenas, they must 
nevertheless assure that the agendas of global development partners are attended to, even while 
they lack the informational linkages that would put them on a more equal footing. Even so, they 
have succeeded on a global scale in pushing environment and labor standards toward a global 
norm and causing whole industries to adopt their practices. 

This changing environment has taken its toll on NGOs. In an excellent article tracing the NGO 
influence in grassroots organizing along the US-Mexico border, Dolhinow contents, "As NGO 
funding becomes more competitive, NGOs often find they must follow donor agendas in order to 
keep their funding. As NGOs push the more fundable project they move away from community 
needs and closer to the neoliberal interventions preferred by many donors" (Dolhinow, 225, p. 
559). 

Fisher and Green (2004) call this phenomenon, "disenfranchisement" and link it to myriad global 
forces. "Even though these civil society actors are connected transnationally, their geopolitical 
status - and the power associated with it - comes from their specific national context" (p. 10). These 
authors propose a theory of disenfranchisement based on three factors. "Endogenous resources" 
refers to the limited resources of NGOs, such as human resources, knowledge of English and 


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The Growing Market for NGO Influence 


a politically stable environment. "Transnational connectivity" refers to their ability to link into 
global networks of experts and like-minded organizations. "Geopolitical status" refers to their 
ability to derive status from the status of their home country within a global context, such as 
political influence and natural resources. 

While this may explain some of NGOs' challenges in adapting to their changing environment, 
it does not go far enough in helping us to understand how NGOs fundamentally change when 
placed in this global environment. As NGOs derive their increasing strength and influence from 
global donors, they move away from a primary focus on voicing the needs of local communities 
and, instead, increasingly become the voice of the donor. Dolhinow (2005), examining a specific 
case of small communities on the US-Mexico border, finds that NGOs tie residents "to the 
neoliberal state through their position in civil society, often propagate dominant neoliberal 
discourses of leadership and activism, and at times reinforce dominant and marginalizing forms 
of social governance" (p. 575). 

This leads us back to global market influences. Mayer and Gereffi (2006) trace this new global 
environment to three market characteristics. First, the flow of goods and production across 
borders are no longer tied to local government capacity. Markets can move based on foreign 
direct investment derived from outside forces. Second, in face of less local government influence, 
regulation on a global scale is generally weak except in the case of markets. Only markets have 
really strong global structures such as the IMF, the WTO and the World Bank. Each is fairly well 
funded and managed by widely adhered to regulations. Labor, environment, development and 
humanitarian global organizations lack these substantial resources (the ILO, UNESCO, WHO for 
example). Third, government regulatory capacity within developing countries is overwhelmed 
by global market forces. Thus, local governments frequently bow to global economic forces to 
set local standards and regulations. In their view, this global market environment limits NGO 
effectiveness in promoting global standards and regulations. 

While NGO growth and, in some cases, influence has been growing since I first posed the question 
of market influence on NGOs, a changing environment has meant that the powerful NGOs are 
increasingly linked and constrained by global forces - especially those imposed by market forces. 
Their ability to be the voice of global social movements has increased but, at the same time, they 
do so by weakening their links to local communities. They do not yet have the transnational 
resources or links to compete on the same ground as traditional development actors. Neither can 
all but the smallest devote themselves entirely to voicing the needs of the poorest communities. 
While their place within a global development context is growing and increasingly powerful, 
there remains a question as to whether they continue to effectively voice the needs of the world's 
poorest populations. 

Notes 

[1] . Taken from the 'Political Score' based on an index called Overall Polity Score of the Country 

Indicators for Foreign Policy (CIFP) developed by the Canadian Department of Foreign Affairs 
and International Trade. 

[2] , Ratio of military personnel as a percentage of labor force (World Development Indicators). 

References 

Agg, C. (2006) Trends in government support for non-governmental organizations: Is the "golden 
age" of the NGO behind us? Civil society and social movement programme paper 23. United Nations 
Research Institute for Social Development. 


20 Fall 2007 / Spring 2008 


Lynn lion 


Colley, A. & Ron, J. (2002). The NGO scramble: Organizational insecurity and the political 
economy of transnational action. International Security 27(1), 5-39. 

Dolhinow, R. (2005) Caught in the middle: The state, NGOs, and the limits to grassroots organizing 
along the US-Mexican border. In N. Laurie and L. Bondi (Eds.) Working the spaces of neoliberalism. 
Blackwell. 

Fisher, D. & Green, J. (2004). Understanding disenfranchisement: Civil society and developing 
countries' influence and participation in global governance for sustainable development. Global 
Environmental Politics 4(3), 65-84. 

Gereffi, G., Garcia-Johnson, R., & Sasser, E. (2001). The NGO-industrial complex. Foreign Policy 
125, 56-66. 

Gilles, N. & Yontcheva, B. (2006). Does NGO aid go to the poor? Empirical evidence from Europe. 
IMF Institute Wp/06/39. International Monetary Fund. 

lion, L. (1998). Can NGOs provide alternative development in a market-based system of global 
economics? Current Issues in Comparative Education, 1(1), 42-45. Available at http:/ /www.tc.edu/ 
cice. 

Mayer, F. and G. Gereffi (2006). Economic globalization, private governance and the rise of the 
state. In N. Woods (Ed.), Making global self-regulation effective. Oxford: Oxford University Press. 

United States Agency for International Development (2007). 2006 NGO sustainability index for 
Central and Eastern Europe and Eurasia. USAID. 


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