Managing the paradox: NGOs, resource dependence and organisational independence---case studies from Mexico and Portugal.

This study explores the impact of resource relations on NGO independence. Specifically, the research question is: "Can NGOs be resource dependent on the government and remain independent. If so, how. " Most of the non-profit and NGO literatures on this topic suggest a negative relationship between government funding and NGO independence, called here "the piper hypothesis" due to frequent references to the saying "they who pay the piper call the tune. " The piper hypothesis, if true, describes an increasingly critical situation in this time of increasing "partnerships' between government and NGOs. However, in the organisational theory literature, Resource Dependency Perspective (RDP) suggests that organisations can pursue strategies to protect their independence and resist external control. This study explores the independence strategies pursued by NGOs when they receive government funding, drawing on and building upon an RDP lens. Independence is a complex concept encompassing many dimensions of managerial attitudes and organisational behaviour. To explore the piper hypothesis, this study adopted a qualitative research design, comparing NGO case-studies in Mexico and Portugal. Surprisingly, my findings mostly disproved the "piper hypothesis". In both countries, some NGOs that received the great majority of their funding from the government still managed to retain a very high level of organisational independence, suggesting a paradox: NGOs can in some conditions remain independent and non-governmental even when the majority of their resources are of governmental origin. There were various conditions that help explain the paradox. Contrary to common assumptions, proportion of government funding is not equal to resource dependence since NGOs are rich in non-pecuniary resources, which are often overlooked in analyses of NGO resource dependence. Moreover, the government is often not interested or is incapable of controlling NGOs, leaving much room for NGO discretion in partnership programmes. At the same time, NGOs can and do pursue strategies to protect their independence when they receive government funding. These strategies have been mostly ignored in the nonprofit and NGO literatures. One particularly important set of strategies involved strengthening organisational commitment to mission, through strengthening leadership structures and accountability to the grassroots. This set of strategies was ignored by RDP and most subsequent research on resource dependence. These findings have important implications for theory, policy and management. Contrary to much of the literature on NGOs and non-profits, resource dependence on government funding was not a sufficient condition for low organizational independence. RDP provided a useful framework to begin an exploration of why this was so. In fact, applying RDP to understand NGOs was mutually enriching. RDP suggests various independence strategies for NGOs, which have been neglected in the non-profit and NGO literatures. Likewise, examining NGOs suggested new possible independence strategies, which have been ignored by RDP. In terms of policy, government can take various steps to help protect NGO independence. In terms of management, NGOs can and often do manage the paradox of resource dependence and organisational independence, by pursuing various independence strategies. Moreover, since resource dependence can emerge from sources other than funding and because of the importance of organisational independence for NGOs and non-profits, even organisations that do not receive government funding need to take active steps to manage their independence.