Driven by concerns to demonstrate ‘value for money’, bilateral donors and major Northern development agencies are becoming more selective in the types of organisations and activities they will fund and the types of account keeping they demand from recipients. New requirements are forcing small non-governmental organisations (NGOs) in developing countries to change the way they work. They might be becoming more efficient, but are they also losing their ability to respond to the needs of the communities they serve?

Research from the University of Natal examines the influence of donors on South African NGOs. It shows how the concept of the ‘aid chain’ can be used to track the flow of funds and also the transmission of ideas, standards and management practices.The research is linked to a wider DFID-funded study, co-ordinated by Tina Wallace at Oxford Brookes, examining the impact of UK funding streams on organisations and projects in the UK, Uganda and South Africa.

Interviews, field visits and programme documents from forty organisations working in South Africa highlighted new donor-recipient tensions and conflicts between donor’s strategic concerns and local NGO priorities. The author reports that many NGO managers:

• suspect donors do not read reports as they receive little feedback from them
• regard many reporting requirements as needlessly time-consuming
• resent donor pressure to attend ‘capacity-building’ courses which may take little account of their existing organisational procedures or management experience
• feel obliged to use the logical framework approach (a management tool linking inputs to outputs to objectives) regardless of potential incompatibilities with participatory, experiential and people-centred development
• feel pressured to participate in networks and umbrella groups by donors who fail to realise that the members of such groups often lack any commonality of purpose and maintain their own ideological stances and political allegiances
• think some donors naively promote advocacy without understanding that local organisations may have competing policy objectives and that political processes may not be pluralistic, transparent and open to debate or reform.

They are also troubled by new financial procedures, particularly the trend towards ‘retrospective’ or ‘invoice-based’ financing. Since funds are only released upon approval of submitted invoices, only large organisations with sufficient capital to pay for projects up-front can access donor support.

‘Core funding’ is becoming a dirty word as donors say they are only willing to pay ‘project’ costs. NGO managers who have not acquired the writing skills to ‘bury’ core costs within project proposals complain that key functions are no longer funded. Organisational development, experimental pilot approaches and long-term impact analysis are being abandoned. Many see the rejection of core funding as indicative of a patronising Northern assumption that giving discretionary funding to a developing country NGO will automatically lead to wastage or corruption.

Financial uncertainty is forcing many South African NGOs outside the donor loop to diversify income sources. They are redefining their relationships to the state and the market, taking on government contract work, selling services to the private sector and charging user fees. Some have had to downsize and depend on short-term contract staff while others are experimenting with their legal status and turning into ‘non-profit’ companies.

Procedures designed to enhance control, accountability and effectiveness carry costs. The selective incorporation of some organisations and development interventions into the international aid industry whilst other issues and groups continue to be neglected is alarming not just to South Africans, but to all who are concerned about the democratisation of development.

Source(s):
‘Management standards and development practice in the South African aid chain’ by Lisa Bornstein, Public Administration and Development, no 23, pp 393–404, 2003
‘From management standards and development practice in the South African aid chain’ by Lisa Bornstein, CSDS Working Paper, No. 33, 2001 Full document.

Funded by: Nuffield Foundation

id21 Research Highlight: 13 February 2004

Further Information:
Lisa Bornstein
School of Development Studies
University of Natal
Durban 4041
South Africa

Contact the contributor: BornsteinL@nu.ac.za

University of Natal, South Africa

or
School of Urban Planning
McGill University
815 Sherbrooke Street West
Suite 400
Montreal
Quebec H3A 2K6
Canada

Tel: +1 514 398 4077
Fax: +1 514 398 8376
Contact the contributor: lisa.bornstein@mcgill.ca

McGill University, Canada

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'Accountability relationships between Northern NGOs and Southern NGOs: The Case of Save the Children Fund in Southeast Asia'

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'The European community International Development Programme & support to civil society organisations. Discussion paper on the direct funding of Southern NGOs'