The NGO Scramble: Organizational Insecurity and the Political Economy of Transnational Action

Authors argue that many aspects of IO and INGO behavior can be explained by materialist analysis and an examination of the incentives and constraints produced by the transnational sector’s institutional environment. The main argument is that when placed in competitive, market-like settings, nonprofit groups are likely to behave like their for-profit counterparts.
They suggest that dysfunctional organizational behavior is likely to be a rational response to systematic and predictable institutional pressures. In many cases, uncooperative local actors will take advantage of the transnational sector’s perverse incentives to further their own opportunistic agendas.
Powerful institutional imperatives can subvert IO and INGO efforts, prolong inappropriate aid projects, or promote destructive competition among well-meaning transnational actors. Attempts by IOs and INGOs to reconcile material pressures with normative motivations often produce outcomes dramatically at odds with liberal expectations.
They advance two theoretical propositions;
1) The growing number of IOs and INGOs within a given transnational sector increases uncertainty, competition, and insecurity for all organizations in that sector. This proposition disputes the liberal view that INGO proliferation is , in and of itself, evidence of a robust global civil society.
2) The marketization of many IO and INGO activities – particularly the use of competitive tenders and renewable contracting – generates incentives that produce dysfunctional outcomes. This claim disputes the popular assumption that market-based institutions in the transnational sector increase INGO efficiency and effectiveness.
Their Kyrgyzstan case shows how reliance on one-year renewable contracts by Western donors created incentives for contracting INGOs to downplay government subversion of economic reforms, withhold information about ineffective projects, and tolerate bureaucratic opportunism.
Their second case shows how inter-INGO competition in DRC undercut the collective action necessary to protest misuse of refugee aid.
The final case draws on events in wartime Bosnia, showing how inter-IO and INGO competition empowered local military commanders seeking to resist international efforts to protect POWs.
In 1992, the total amount of assistance to the developing world channeled through INGOs was 8 billion, representing 13 percent of all development assistance.
Increased reliance on competitive contract tenders has stimulated further INGO growth, because as the number of tenders increase, so do contractors’ ranks.
Donors seek to fund projects, not administrative overhead, hoping that this will push INGO contractors to rationalize procedures, demonstrate effectiveness, and slash overhead.
Cumulative technical assistance from the EU to the former Soviet states totaled 2.8 billion from 1991 to 1996; U.S assistance from 1992 to 1997 totaled 11 billion. Most of these disbursements funded projects implemented by well-known for-profit multinationals such as Arthur Andersen and KPMG.
The more that nonprofit groups attempt to secure and maintain contracts under market-generated pressures, the more they will copy the structures, interests, and procedures of their for-profit counterparts.
In 1995, the U.S government contracts constituted 62 percent of CARE-USA’s total revenue and 54 percent for Save the Children-USA.
Principle-agent problems;
a) Principal-agent problems, competitive contract tenders, and the presence of multiple principals exacerbate INGO insecurity and create organizational imperatives that promote self-interested action, inter-INGO competition, and poor project implementation.
b) If contractor-agents were to be entirely truthful about implementation problems, they might hurt their chances of contract renewal and threaten their own organizational survival. They conceal abuses and failures.
In Kyrgyzstan, 55 percent of bills under consideration in the spring of 1998 were either formulated or drafted by IOs and INGOs acting as technical assistance providers. The bills’ final text diverges significantly from the original donor-drafted versions. Kyrgyz parliamentary committees, the assembly, the president’s office, or some combination thereof have all amended the reform laws to protect their interests.
In Goma, DRC refugee camp, refugee relief agencies focused on taking more contracts rather than providing relief. Meanwhile those camps were used as bases. MSF of Belgium avoided Goma contracts and replaced its operations with an advocacy campaign pushing for limits on the Hutu militant camp presence.  According to MSF secretary general, “food represents power, and camp leaders in Goma who control its distribution divert considerable quantities towards war preparations.”
In Bosnian war in 1991, ICRC signed agreements with Bosnian republic, Croatia and Yugoslavia. So,ICRC had a clear mandate under the Geneva Convention over protecting POWs. UNPROFOR was in Bosnia because of a UNSC resolution. The ECMM, had been sent there only on the European Community’s say so, and thus had less international legal backing. The UN and ECMM inspectors were poorly trained, rendering their efforts far less effective.
Both UNPROFOR and ECMM provided specialized prison inspection training, and neither regarded prison visits as a core function. UN and ECMM staffers typically did not insist on full access and confidential interviews, and thus could not guarantee that the information they received was accurate.
Authors’ model suggests that more organizations should create multiple-principals problems, empowering local military commanders to subvert external monitoring. This is what happened in Bosnia.