Food for Thought: The Myth of NGO Superiority

Is donor funding to NGOs spent more efficiently than direct bilateral aid?  Peter Nunnenkamp, writing in the German development journal D+C, has his doubts.  In an article titled The Myth of NGO Superiority, Nunnenkamp writes:

"NGOs are often believed to provide well-targeted aid. They are said to be particularly close to the poor, as many of them directly cooperate with local target groups, circumventing recipient governments with a reputation of corruption. Accordingly, the argument goes, they are better aligned to poor people’s needs, and suffer from less leakage. Moreover, it is said that NGO aid is less distorted by donor governments’ commercial and political interests, such as export promotion or political alliances."

Looking at somewhat limited data - the allocation of Swedish and Swiss NGO funding as against bilateral aid, and a one-year sample of data from other OECD donors - Nunnenkamp draws the following conclusions:

"NGOs from all donor countries taken together have a strong tendency to replicate the aid allocation of official backdonors. This indicates the limits to autonomous decision-making of NGOs that depend on government funds. Moreover, NGOs tend to follow their peers, probably in order to control risks by hiding in the crowd. In any case, NGO aid is clustered, and NGOs are deepening the divide between so-called donor darlings and aid orphans.

All in all, our findings point to NGO aid not being a panacea for providing better-targeted aid and boosting aid effectiveness. In contrast to what one might expect, NGOs seem to prefer to keep a low profile. They did not try to distinguish themselves from state aid agencies by outperforming the latter in terms of focus on the neediest, or by entering uncharted waters where ODA is likely to fail."

Hat-tip to the European Interagency Security Forum, which forwarded this article along to its email list.

[Image from Swedish International Development Cooperation Agency website]