Foreign aid to local NGOs: good intentions, bad policy

by James Ron, Kendra Dupuy, and Aseem Prakash

(Originally posted by openDemocracy, republished under a Creative Commons license)

The US elections are now over, but crucial foreign policy decisions remain on the table. Foreign aid was hardly discussed in the US presidential elections, and neither Romney nor Obama said whether American assistance should still be funnelled through non-governmental organizations (NGOs).

This neglect is unfortunate, given the current global backlash against externally supported NGOs. The time has come for western and international donors to reconsider the way in which they support human rights, democracy, gender equality, and other liberal causes in the developing and former Communist world. Supporting liberal NGOs can be useful, but it must be done carefully and modestly, lest it undermine the same agendas it seeks to promote.

Here’s the background. 

For years, it was received wisdom in western and international donor circles that aid to local civil society in the developing and former Communist world would promote democracy and other liberal ideals. In some cases, that has been true. In others, however, foreign aid has provoked a real backlash.

Today, many governments, and some citizens, are enraged by foreign-funded NGOs, and are mobilizing conservative ideas and policies to strike back. In these cases, international assistance to liberal NGOs has become part of the problem, rather than part of the solution.

Consider Russia, where new, anti-NGO legislation is ringing alarm bells at home and abroad. If NGOs want to engage in political activities, a broad category that includes any attempt to change state policy, they must now register with a special agency before receiving foreign money, declare themselves “foreign agents,” engage in onerous reporting, and prepare for unannounced audits. To drive the point home, Russia recently ordered official US aid workers to leave the country and stop funding local NGOs.

In Israel, similarly, legislators have debated rules close to Russia’s, and may yet turn them into law. In Canada, a former bastion of liberal thinking, the government has bitterly protested foreign-funded environmental groups, claiming, as always, that they undermine national sovereignty.

Other examples include Ethiopia, a darling of the western aid community, and India, often hailed as the world’s largest democracy. In Africa, according to our research, over one-third of countries, since 1995, have passed new laws, or tightened old ones, restricting foreign aid to NGOs and/or limiting the work of international groups.

Why this backlash?

Both democratic and authoritarian governments are increasingly incensed at western donors’ attempts to reshape local politics and values through NGOs. In some cases, they have successfully mobilized conservative politicians, social movements, and organizations, many of whom are angered by the very same thing.

Governmental opposition matters, because the local NGO community is highly dependent on foreign money. States can easily twist the screws by blocking – or threatening to block – the aid pipeline.

Hold on, however. Aren’t developing and former Communist countries too poor to support a local NGO community? Isn’t external aid utterly necessary?

In some cases, yes. In other cases, however, the answer is no.

Israel, for example, is a relatively rich country, but over 90% of its local human rights activities, according to a scholarly survey, are funded from Europe and America. And according to our survey of 235 human rights workers from 61 countries, local experts’ median estimate of rights groups receiving substantial foreign aid is 75%. There is no statistical correlation, moreover, between these estimates and country wealth, as measured by per capita GDP.

Some countries, in other words, are sufficiently wealthy to support local NGOs. And most countries have a strong charitable tradition of some kind. The problem, however, is that the kinds of issues that liberal NGOs work on don’t attract many donations from local individuals, communities and businesses in the developing world. This makes local NGOs vulnerable to cut-offs in aid, and exposes them to governments arguing that local NGOs are agents of foreign forces.

How did this happen?

During the 1990s, many countries experienced a dramatic upsurge in voluntary activism, and international donors understandably responded with enthusiasm. Donors’ goals, for the most part, were laudable. The money was meant to help local NGOs promote democratization, markets, gender equality, good governance, and respect for human rights.

In some cases, this support helped an already-vibrant civil society grow stronger. In other instances, however, money from the outside turned civil society into a vulnerable, externally oriented community.

Over time, many local NGOs became top-down groups nourished from abroad, rather than local products of a popular, grass-roots civic movement. Understandably, foreign-supported NGOs began to adopt the issues, language, and structures their foreign donors wanted, rather than those preferred by local people.

Few realize that while foreign aid gives NGOs the wherewithal to operate independently, it also undermines their incentives to generate local revenue. Like governments afflicted with the so-called resource curse, foreign aid to NGOs reduces the need to raise money locally. Why raise small sums at home when so much more is available abroad?

Tragically, plentiful foreign aid also promotes “briefcase NGOs,” fake groups that exist only on paper and provide few services. In one recent study, surveyors discovered that some 75% of registered NGOs in Uganda’s capital, Kampala, did not really exist. According to our research, there are reasons to suspect that a similar rate obtains in Ethiopia.

More worryingly, foreign aid inadvertently undermines NGOs ties to local populations, handing angry governments an opportunity for successful crackdowns. In 2010, for example, the Ethiopian government’s new anti NGO law, the Charities and Societies Proclamation, blocked foreign funded groups from working on Ethiopian human rights and democracy. Shortly thereafter, most briefcase and rights groups disappeared, while most surviving NGOs stopped working on human rights altogether.

The Ethiopian public, sadly, proved unable or unwilling to help. Closure of 90% of the country’s 125 local rights groups prompted few popular demonstrations, and not many ordinary citizens offered financial support.

Some Ethiopians didn’t demonstrate or contribute because they feared government retaliation; Ethiopia has become very repressive of late. Others, however, were unmoved by local NGOs’ plight. As one report argued, Ethiopians have come to view NGOs as entities who give them money, not as groups needing their help. Many Ethiopians will help family and strangers in need, and some will donate their time, money, and effort to charitable causes. Local NGOs working on liberal causes, however, are generally viewed as something for outsiders, rather than Ethiopians, to support.

Generous foreign funding of local NGOs is a classic example of good intentions causing perverse outcomes. International solidarity is a wonderful idea, and the notion of transferring resources from North to South for good causes is morally attractive. The mechanics of doing this properly, however, are far more complex. Creating or sustaining local NGOs from outside, with little local support, is bad public policy.

There are always exceptions, but civil society should, ideally, remain a bottom-up affair. Outsiders can help, but they should do so carefully and sparingly, lest their embrace prove lethal.

You can’t buy love, and you can’t buy a vibrant civil society either.

1 comment to Foreign aid to local NGOs: good intentions, bad policy

  • nihil obstet

    The NGO growth was fueled by the neoliberalism — “The era of big government is over.” “Government can’t do anything right.” — which infected liberals as much as conservatives. NGOs have always had a problem with accountability and structure, and serve as a useful release valve for efforts that might otherwise put pressure on governments to do right.

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