# Saylor.org's Comparative Politics/Quasi Non-Governmental Organizations (QUANGOs)

NOTE: non-governmental organizations (NGOs), inter-governmental organizations (IGOs), quasi-governmental or quasi-nongovernmental organizations (QUANGOs) are all variations of like-minded organizations

# Legal status of international NGOs: overview and options

Introduction
Although the structure and language of the statutes and constitutions of international non-governmental organizations (NGOs) may bear a very strong resemblance to that of intergovernmental organizations, they are by definition based on agreement reached between nongovernmental parties, whether organizations or individuals - even in those cases where the nongovernmental bodies may represent government interests or function as quasi-governmental organizations. In such cases the statutes have no status in international law, although this situation has been modified in principle since 1 January 1991 when the 1986 European Convention on the Recognition of the Legal Personality of International Non-Governmental Organizations came into force (see Appendix 4.11).
At present however, it is important to stress that from the point of view of international law, international NGOs have no existence as such. They are international 'outlaws'. Thus bodies such as the International Political Science Association (members in 88 countries, secretariat in Canada), the International Association of Legal Science (42, France), the International Law Association (41, UK), the Institute of International Law (43, Switzerland), the International Bar Association (114, UK), the International Association of Democratic Lawyers (83, Belgium), the International Commmission of Jurists (51, Switzerland), the International Association of Judges (31, Italy), and the Inter-Parliamentary Union (107, Switerland), are all 'national' - or, at best, 'foreign' - bodies, from the point of view of both national and international law. They are no different, legally speaking, than bodies such as the American Bar Association or the American Political Science Association, which both have many members outside the USA. Where an organization is 'recognized' by an intergovernmental organization, such as through the consultative relationship arrangements provided by Article 71 of the Charter of the United Nations, it has been argued that such recognition might be interpreted as establishing (rather tenuously) the status of an international NGO in international law, but such interpretations have not been put to the test in any legal proceedings.
Those establishing an international NGO are therefore faced with a choice:
(a) Informal (unwritten rules)
They may avoid defining their relationships in any explicit form and simply create a pattern of informal relationships with various unwritten rules. This may be perfectly satisfactory for the kinds of activity they propose to undertake. In recent years one form this approach has taken has lead to the creation of 'international networks' of various kinds. This form may be deliberately chosen to avoid the administrative and political problems which tend to be associated with more formally constituted bodies. Clearly such bodies do not have statutes which could appear in this volume.
(b) Unregistered contract
The aims and structure of the organization may be defined, possibly in great detail, in written form. This text is then the basis of the agreement between the members of the organization. The text may be elaborated with the advice of lawyers in order to provide for every eventuality. This text is then taken by the members to be the constituting agreement of their organization. Reference is made to it to resolve any difference of opinion concerning what may or may not be done by the organization and its representatives. Such statutes may be elaborated quite independently of any legal system and may be considered by the members as governing the life of their organization wherever its secretariat is established and wherever it undertakes its activities. This is typically true of international sporting organizations which regulate the rules of competition between countries. Such statutes appear in this volume.
(c) Registration in accordance with national law
Whilst an essentially private agreement may be satisfactory in many instances, considerable difficulties can arise when the organization needs to interact as an organization with other bodies. In particular the legal acceptability of the statutes may determine whether the international NGO can act on its own behalf, through duly appointed representatives, or whether it has to rely on individuals to undertake legal acts for it in their private capacity and under their personal responsibility. This applies especially to the handling of funds, opening accounts, contractual relationships with other bodies, responsibility in the event of legal proceedings, etc. An unincorporated association as such cannot sign a contract or own property, though a person or persons may be entrusted to do these things on its behalf. Furthermore, in the absence of any legally recognized form, the state in which the international NGO has its secretariat or conducts its activities may regard the body as contrary to public order. In such circumstances the international NGO may seek registration under the law of a particular state, normally that in which it has its secretariat. This usually requires that the statutes conform to the rules and guidelines defining the acceptability of a body under the national legal provisions for such registration. These of course vary from country to country and may involve strict rules concerning the influence of 'foreigners', on the policies of the organization (proportion of foreigners permissable on the governing board, voting rules, transfer of funds, etc). The majority of international NGOs have statutes of this type, which are therefore typical of the statutes in this volume.
(d) Operation via a national member
Members of an international NGO may consider it inconvenient to go through the legal procedures of registering or incorporating under the law of a particular country, especially if the secretariat and office holders rotate between member countries every year. Such rotation would then mean that the organization would have to be legally dissolved and then reconstituted in the country to which the secretariat was being rotated. Since such procedures take time, especially if they have to be published in some official journal in order to become legal, this may be quite impracticable. One alternative is then for the administrative tasks of operating the secretariat to be entrusted to the member organization in the country to which the secretariat is being rotated. The legal responsibility is then that of the national member. Since this body would anyway be legally registered in order to conduct its normal business, this avoids the need to register the international NGO in that country. It is then up to the national member to define accounting procedures which avoid any confusion. In some cases all the administrative procedures and costs of the international NGO are simply 'absorbed' into the operations of the national body in order to avoid unnecessary complications. The statutes of such international NGOs would then define the responsibility of the national member handling such administrative tasks. Such statutes appear in this volume.
(e) Separation of legal registration and operational base
Members of an international NGO may consider it unacceptable, as a matter of principle, to formulate their statutes in conformity with the restrictions of the law governing national bodies in the country in which the secretariat is located. They may nevertheless find it necessary to provide themselves with a legally acceptable set of statutes, rather than entrust their operations to a particular member body for whatever period. In such circumstances the organization may register itself in a country which is legally hospitable to international NGOs and then operate a secretariat in whatever country is convenient for operational purposes. In such a case the organization would have two sets of statutes, possibly with only minor differences. Only some countries, such as Belgium, have specific legal provisions for international NGOs to operate in this way. In such a case, when the organization ceased operating in the secretariat country it would be dissolved there and would then fall back on the statutes which permitted it some legal continuity between its operations in successive secretariat countries. Such legal manoeuvres will not be necessary, at least within Europe, if the 1986 European Convention on the Recognition of the Legal Personality of International Non-governmental Organizations (see Appendix 4.11) comes into force. This specifically provides for statutes formulated according to the requirements of one country to be recognized in a second country without further modification.
(f) Negotiated ad hoc agreement with government
In some cases, especially when the laws of the country in which the secretariat is to be established make little provision for the establishment of an association, special arrangements may be negotiated with the appropriate government department of the country. Such an ad hoc 'headquarters agreement' then defines the legal status of the organization for the period during which it is established in that country, and often that of the staff of the organization. The agreement may well be distinct from the actual statutes of the organization although the latter may be subject to review during the negotiation of the agreement. This procedure is modelled to some degree on that adopted when the secretariat of an intergovernmental organization is established in a particular country. It is also possible for even major international associations to come to an unwritten agreement with a government whereby its existence is accepted in a legal vacuum, even to the point of avoiding taxation and social security obligations. This privileged status of course carries its own risks.
(g) Establishment as trust or foundation
Another option occasionally favoured is the formation of a trust or foundation. The law regarding such bodies tends to be more complex in the differences between countries, especially because of the implied focus on the disbursement of funds (5). There are however many similarities between associations and foundations (6). Both are covered, in relation to national legislation, by the European Convention on the Recognition of the Legal Personality of International Non-governmental Organizations (see Appendix 4.11). No legal provision has as yet been made for international foundations, as such and as distinct from NGOs, although the Netherlands and Switzerland are more hospitable to such bodies than other countries. Improvement in the international legal status of such bodies is a current preoccupation of INTERPHIL (International Standing Conference on Philanthropy). The statutes of such bodies are not, at this stage, included in this volume.
(h) Legal status within Canon Law
For the sake of completeness, it should not be forgotten that a completely different approach is open to the many international religious orders. In the case of Catholic orders, for example, these may acquire legal status within Canon Law. Many of these orders function transnationally according to rules which predate, often by centuries, the efforts to elaborate statutes for international organizations (7).
It is somewhat ironical that, despite their own lack of recognition in international law, a significant number of international NGOs have an international tribunicial and a legislative function (8, 9). Also of interest is the regulatory function of many international NGOs, of which the best known examples are those for sports such as football, rugby, and the Olympic games itself, or other games of importance to national prestige, such as chess. Even though some of the members may be government sponsored national representatives, it is within the appropriate organs of the NGO concerned that conflicts of interest are settled. Similarly, the Court of Arbitration of the International Chamber of Commerce is used as a means of settling international disputes in the field of commerce.
Multiple legal forms: a radical solution?
In creating new organizations there need be little sympathy for the niceties of legal status under particular regimes. Nonprofit organizations need to learn from their commercial brethren, the 'transnational corporations' who are also international 'outlaws'.
Such corporations have learnt to distinguish between their legal form in a particular country and the operational form which transcends national frontiers. Nonprofit organizations have given excessive attention to providing themselves with a single legal form, carefully choosing the country in which to do so, and accepting whatever structural compromises this forced upon them.
If organizations can distinguish between their existence as social realities and their existence as legal realities then they can follow, and improve upon, the approach taken by transnational corporations. In some countries it is possible to have de facto organizations which are not legally registered in any way. In this sense the organization's members must depend upon themselves, rather than any legal regulations, to be self-regulating.
The crucial step is to operate from this social reality, creating legal realities of whatever form, wherever it is appropriate. Since in most cases the social reality does not exist for the law, it is only through some legal 'mask' that the organization becomes visible in whatever legal system the organization chooses to operate.
In practice this means that the organization can constitute itself legally in different ways, in different countries, for different purposes. As noted above, transnational corporations can take the form of 'nonprofit' organizations in certain countries if this meets their needs. There is no reason why nonprofit organizations should not take a profit- making form where it suits them. In fact some organizations, even within a single country, choose to adopt a triple form of: nonprofit membership organization; foundation; and profit-making corporation. The only bond between them is a cross-linking directorship that guarantees the coherence of the underlying social reality.
The possibility is in fact analogous to that of multiple passport holders who choose which passport to present when they have to deal with any legal system. Since the legal system can only recognize the piece of paper, this creates no problems. Organizations should consider becoming, in effect, 'multiple passport holders'. If a particular country does not have adequate provision for nonprofit organizations, then set up the organization there as a profit-making corporation. If it requires that only nationals of the country should be on the board, then arrange matters in that way for that country.
Note also that on each occasion that an intergovernmental organization accords recognition to an international NGO, the NGO is in effect being given a separate 'passport' and identity. For such recognition is currently the only mechanism through which international NGOs acquire some very weak form of identity within the framework of international law. Governed as they are by separate treaties, the recognition by one intergovernmental body is legally distinct from that by another. Multiple 'passport holding' is therefore already a reality for some NGOs with multiple consultative status.
It may be argued that provision of national legal status, where it is supportive rather than deliberately obstructive, provides many guarantees, notably in the event of any abuse of power or funds. Whilst this may be of significance within a particular country, it is quite impractical for an organization operating in a number of countries, whose secretariat and accounts may not even be in the country where it is legally registered. In fact, unless the organization is self-regulating, so that abuse is avoided or internally controlled, it is unlikely that recourse to any national legal system would be worth the effort. And there are few documented cases of successful legal pursuit of abuse within international NGOs.
Of course some countries have taken advantage of the absurdities of the international legal system by setting themselves up as 'off-shore havens'. Transnational corporations have been very skilled in using the opportunities that these create. Is it not possible that some countries could similarly set themselves up as 'havens' for international nonprofit organizations? It could offer a lucrative opportunity for an island economy with no other resources -- provided telecommunication links were good. Note that this is primarily a question of financial transfers, not necessarily a question of having a secretariat there. And even then, as Liechtenstein has so admirably demonstrated, even grocery shops are willing to put up a brass-plate indicating that they are the 'headquarters' of some corporation. Why not of an international NGO?
Then there is the question of the name of the organization. Again provided the internal social reality is well articulated, the organization can even adopt different names in different contexts without creating any threat to its identity.
Faced with an unsympathetic international legal system, international nonprofit organizations should be encouraged to explore these possibilities with the aid of sympathetic lawyers. In fact it might be asked why lawyers (and especially international associations of lawyers with a strong social commitment) have not taken the lead in articulating these possibilities. For make no mistake, these techniques are already used by some nonprofit organizations, notably those with something to hide. But an innovative approach to legal status can be taken without engaging in any procedures that might be considered unethical.
Proposals to improve legal status of international associations
Despite the present ambiguity and confusion, international NGOs are in general able to conduct their activities in a reasonably satisfactory manner, at least in those countries which are traditionally hospitable to association action. Many problems arise however where international NGOs need to interact with national authorities, especially those in countries where the NGO is not legally established and where it may wish to extend its activities. Some NGOs, even those with non-controversial activities, are severely hindered in the extension of their activities. This is especially the case with those countries whose legal systems make little provision for association action.
Since the beginning of the century, a number of proposals have been formulated to improve the legal, fiscal and administrative facilities of international NGOs. These are reviewed in some of the following Appendices:
Appendix 3: Commentaries on legal status of international NGOs
This includes various texts explaining the problems and possibilities from different perspectives.
Appendix 4: Proposed international conventions
The texts of conventions proposed at various times since the beginning of the century are presented. Some are more ambitious than others. None of these conventions has been ratified.
Appendix 5: Other conventions indicative of related possibilities
The texts of a number of conventions concerning the establishment of intergovernmental organizations, the privileges of internationally protected persons, the establishment of corporations at the European level, and the freedom of association, are presented because a proportion of their articles indicate possibilities, or raise issues, which merit reflection in considering any future legal status of international associations and their personnel.
Appendix 6: National law and international associations
At this time, the only specific arrangement which exists to provide legal status to international NGOs is that resulting from the Belgian law of 25th October 1919 ('Law granting personal civil status to international associations with philanthropic, religious, scientific, artistic or educational objectives), as modified by the law of 6th December 1954. The text of this law is presented here, together with the relevant French and Swiss laws for comparison.
This collection of texts and documents presents many initiatives over the past 80 years. It does not however include those initiatives specifically focussed on the tax treatment of non-profit organizations, namely the 1971 Draft Convention on the Tax Treatment in respect of certain Non-Profit Organizations proposed by the International Standing Conference on Philanthropy (10), or the 1972 Recommendation (No. 656) of the Council of Europe. The latter emphasized the differences between the tax treatment applicable and invited 'the member governments to study the possibility of removing the judicial and fiscal obstacles to an increase in international activities by non-profit organizations, with a view to promoting European solidarity'.
The initiatives presented in the following Appendices do appear to be bearing fruit in the current initiative of the Council of Europe (see Appendix 4.11) and in the proposals for the European Community (see Appendix 4.12). This is arguably more a consequence of the pressures towards the integration of Europe into a single economic unity rather than a genuine response to the conditions of organizations operating across the more usual type of national boundaries. There is also the possibility of conflict between the potential openness of the European Convention (see Appendix 4.11, Art. 7) and the EEC-limited focus currently envisaged for the Community proposals (which make no mention of posssible implications for ACP and other associated groups of countries).
After 80 years, it remains to be seen whether such proposals come into force in Western Europe and whether they prove satisfactory in practice. It is regretable that any success will have been bought at the price of limiting application to a single region and possibly to those categories of association fulfilling special criteria. At this point in time it is unclear whether the current initiatives will offer opportunities for effective discrimination against certain types of organization, if only by privileging those more closely associated with the economic aims of the EEC. The harmonization of approach may, for example, deprive international associations of the privileges they currently enjoy under Belgian law (see Appendix 6.1) for no provisions have been made in these proposals for the status in European countries of international associations which are not specially concerned with Europe or European priorities. The very success of these proposals may effectively discriminate against such bodies, even when they have their headquarters in Europe. Unfortunately no intergovernmental effort has yet been made to recommend a more enlightened approach to the status of associations, whether national or international, outside Western Europe.
For more information, please go to: http://www.laetusinpraesens.org/docs/statapp1.php
Notes
1. Union of International Associations: Yearbook of International Organisations. München/New York/London/Paris, K G Saur, 1996/97, 33rd edition, 4 vols / 1 CD-ROM.
2. Office Central des Associations Internationales: Annuaire de la Vie Internationale. Bruxelles, 1910/1911, 2652 p. (Publié pour l'Union des Associations Internationales)
3. Amos J Peaslee et al (Ed): International Governmental Organizations: Constitutional Documents. The Hague, Martinus Nijhoff, 1974-1979, 5 vols, 3rd ed.
4. P G J Kapteyn et al (Ed): International Organizations and Integration: Annotated Basic Documents and Descriptive Directory of International Organizations and Arrangements. The Hague, Martinus Nijhoff, 1982-1984, 5 vols, 2nd ed.
5. The Hague Conference on Private International Law: Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition. Proceedings of the Fifteenth Session (see Explanatory Report by A E van Overbeeck), 1984. (back)
6. R David et al. (Eds). International Encyclopedia of Comparative Law. New York, Oceana Publications, 1971- (see Vol. XIII, Chapter 9A on Foundations) (back)
7. Leo Moulin: Aux sources médiévales de la transnationalité; l'exemple de l'Ordre de Citeaux. In: Forum Mondial de l'International aux Transnational. Bruxelles: Union des Associations Internationales, 1982, pp. 270-6. (back)
8. J J Lador-Lederer. International Non-Governmental Organizations and Economic Entities. Leyden, A W Sythoff, 1963 (back)
9. J J Lador-Lederer. International Group Protection; aims and methods in human rights. Leyden, A W Sijthoff, 1968 (back)
10. INTERPHIL. Projet de Convention européenne sur le régime fiscal de certaines organisations sans but lucratif. INTERPHIL, 1971 (back)
11. Keith D Suter. The International Status of Human Rights Non-governmental Organizations (with particular reference to intergovernmental organizations and international law). Published for the International Law Association, Australian Branch, by Butterworths, 1978. (back)
NOTE: the following is a case study of a NGO providing educational services in Bangladesh.

# Madrasas and NGOs: Complements or Substitutes? Non-State Providers and Growth in Female Education in Bangladesh

by Mohammad Niaz Asadullah and Nazmul Chaudhury

## 1. Introduction

Despite the need to provide public services in hard to reach poor areas, governments in many part of the developing world are stymied by fiscal and institutional constraints (World Bank 2003). Even if it is possible to find the public funds to hire and post public sector teachers and doctors in poor rural villages and urban slums, the efficacy of such public provision is often severely compromised. For example, absenteeism of service providers is a major problem in many rural areas (Chaudhury et al 2006). Even if the providers bother to show up, the quality of their services in terms of impact on schooling and health outcomes is often weak. One possible way of circumventing bureaucratic inertia and government capacity constraints is by contracting-out services to NGOs and private providers (Chaudhury and Devarajan 2006). Cambodia has had some success with this approach. For example, despite considerable international donor funding in Cambodia to resurrect the public health care system in the aftermath of the reign of the Khmer Rouge, delivery of health services by the public system continued to suffer from severe institutional failures (e.g., high levels of doctor absenteeism, widespread pilfering of medicines). Recognizing that these structural problems would be difficult to address within the bureaucratic confines of the public sector, the Health Ministry took a pragmatic decision to hand over health system management in several districts to NGOs backed by public financing. Rigorous evaluation has shown that districts managed by the NGOs are much more successful in improving health services (and health outcomes) than districts run by the government.
In Bangladesh, domestic NGOs have taken the lead in providing services in underserved sectors. Bangladesh has some of the largest and most dynamic education and health NGOs in the developing world. Some have evolved to multi-service entities, such as the Bangladesh Rural Advancement Committee (BRAC), which successfully runs specialized schools for formerly out-of-school children, has an extensive system of health clinics, and provides micro-credit to the poor (besides running chicken cooperatives, handicraft boutiques, commercial lending operations, etc). BRAC is now the largest provider of education services after the government in Bangladesh. BRAC runs over 40,000 non-formal schools which cater to school-drop outs from poor families or operate in villages where there’s little provision for formal schools. The board-base support for NGO activities in Bangladesh is because of their pro-poor service delivery. NGOs like BRAC not only perform the traditional role of providing the rural poor access to credit, they are heavily involved in the provision of various public goods such as health and education. While the government has not contracted-out the services of these major NGOs, they have allowed them to operate without too much interference--as long as they refrain from explicit political activity (for example, one NGO, Proshika, was sanctioned by the government for being too closely associated with the opposition party). In fact, the major NGOs have resisted any explicit contractual arrangements with the government. They are to some extent contracted-out by the international donor community (particularly bilateral donors) which provides considerable funding directly to major NGOs. Some of these NGOs might not be able to function at full capacity if there is a significant reduction in donor funding.
There are very few studies comparing the performance of NGO schools and other educational providers1. A notable exception is Sukontamarn (2005) who uses data on BRAC schools from Bangladesh and examine the impact of the entry of NGOs in primary education on female enrollment2. Sukontamarn finds that the entry of BRAC schools significantly increases girls' enrollment as compared to boys. Cohorts which are exposed to BRAC schools have higher probability of enrollment and the effect operates mainly through female students. However, besides this, we are not aware of any other study on the relative performance of NGO schools in Bangladesh. Most importantly, there is no study which has examined the potential spillover effects of NGO schools on other outcomes such as female participation in secondary schools. Bangladesh has recently achieved the remarkable fit of gender parity in secondary enrollment. Therefore, understanding the determinants of growth in female enrollment is extremely important for other countries who are trying to fulfill the MDG target of closing gender gap in secondary education.
Bangladesh provides a unique setting to study the impact of primary, NGO-run schools on female enrollment in secondary schools for another reason. There are a large number of Islamic faith schools or madrasas for whom, like NGO schools, altruistic motivations are the principal determinants of location decisions. On one hand, both serve children from socially underprivileged families. On the other hand, they have conflicting ideologies and are known to target different gender groups. In other words, madrasas oppose NGO activities and have historically educated boys. For instance, registered madrasas in Bangladesh during the 1980s were predominantly boys-only with only 7% of the total enrolled students being female. However, this has changed in over just one decade. By the year 2000, 46% of the students in registered secondary madrasas in the country were girls.
Such dramatic feminization of registered secondary madrasas has been attributed to introduction of a conditional cash transfer scheme which target female students in secondary schools and madrasas. Female enrollment has increased more than five-fold since 1994 when the conditional cash transfer scheme was introduced. However, the last two decades has also seen a rise in NGO schools at the primary level and given the current controversy over madrasa reform, knowledge of any externalities arising from NGO schools is extremely important from policy point of view. In this study, by way of documenting the process of feminization of madrasas, we examine the impact of BRAC schools in the context of the recent rise in female enrollment in government recognized secondary madrasas.
To test for the presence of such externalities, we study the impact of NGO schools on secondary female enrollment growth in unions, an administrative unit bigger than village but smaller than sub-district3. First, we show in the context of regional growth in secondary (grades 6-10) female enrollment that the number of madrasas in a union is positively associated with growth rate even after controlling for sub-district fixed effects, initial enrollment level and various characteristics of registered secondary educational institutions. Next, we test how female enrollment growth in secondary madrasa is affected by the presence of BRAC schools. We find that madrasas located in unions with greater the number of BRAC schools have higher enrollment growth, once we correct for endogeneity of the number of BRAC schools in the union.
Our findings point towards a new explanation for the recent boom in female enrollment in the madrasa sector. More importantly, they yield a new policy measure to reform madrasas in Muslim-majority countries. Traditional religious primary schools in a community may become redundant with the opening of NGO schools. But the positive effect of BRAC schools on female enrollment growth, we argue, represents a form of vertical externality: Bangladeshi regions with higher stock of BRAC schools have higher number of girls who are future entrants to secondary schools. This, combined with the introduction of a female secondary stipend (FSP) scheme, may have stimulated secondary school madrasas to open their gates to female students.
The rest of the paper is organized as follows. Section 2 provides a comparison between the current government system of education and the system used by BRAC. Section 3 discusses the data and methodology. Section 4 presents the main results and section 5 concludes.

## 2. Background

The Bangladeshi education sector is characterized by presence of different types of schools which vary significantly across primary and secondary level. At the primary level, there are 11 types of schools. There are currently 37,000 government primary schools and 6000 registered madrasas in Bangladesh. Government schools are concentrated mostly in urban centers, resulting in a lack of educational access to the majority of children in the country who live in rural areas. This has motivated NGOs to set up schools so that children living in under-provided areas can acquire education.
Today, there are over 400 NGOs in Bangladesh today involved with providing basic education. The number of NGO schools has increased four times since the early 1990s and now comprised 8.5% of the educational system in Bangladesh; most of these NGO schools are widely considered to be more effective than government schools.
BRAC is the largest NGOs in the country working on primary education and account for 76% of all NGO primary schools. The Non-Formal Primary Education Program of BRAC started in 1984 with only 22 pilot schools. BRAC’s education program began in rural areas where there were no alternative education options4. Today there are more than 40,000 BRAC schools covering 50,000 out of 84,000 Bangladeshi villages.
BRAC schools have a number of hallmarks. First, they cater to children who have never attended school as well as those who have dropped out of government or other schools. Similar to madrasas, BRAC (instead of the child’s family) bears most of the educational expenses5. A majority of the students in BRAC primary schools are from the poorest 20% of the population. Second, 70 percent of children attending BRAC schools are female. Third, 97% of teachers in BRAC schools are married women and come from the same village where the school is located.
Today, BRAC schools are regarded by many as a success story. First, BRAC students are found to have higher test scores when compared to students from government primary schools (Sukontamarn, 2005). Second, 90% of students who complete their primary schooling though BRAC continue into secondary education. Third, BRAC schools have been instrumental in retaining female students from poorer families in school (Sukontamarn, 2005).
At the secondary level, on the other hand, there is no NGO school. Rather, education is provided by government schools, aided schools and madrasas. According to government census records for the year 2003, there are 8,406 institutions at post-primary level against 17,389 secondary schools constituting approximately 26% of all post-primary education and 32.5% of all secondary educational institutions respectively. Madrasa enrollment accounts for 15% of total PPE enrollment6. Most madrasa education takes place in rural locations and rural learners account for 90.9% of madrasa enrollment, compared with around 77% in mainstream education.
There is an important stylized fact about the secondary madrasa sector in Bangladesh. More than 90% of the registered secondary madrasas in Bangladesh today admit girls and half of the students enrolled in these schools are girls (Asadullah and Chaudhury, 2007).
This ‘feminization’ of the secondary madrasa system in Bangladesh is a recent phenomenon. Female enrollment boom in religious schools has been driven by the conversion of formerly all-male, un/registered madrasas into registered centers for coeducation. This reflects the confluence of two hybrid (supply and demand side) conditional cash incentive schemes. First, the government took over responsibility over teacher pay in madrasas conditional upon formal registration and introduced of modern subjects (math, science, etc). Then the government introduced the FSP project which allowed rural females to go to any registered school (public, private, religious) of their choice (payment was conditional upon enrolling in secondary school). Furthermore any type of school participating in this project received government funding depending upon the number of females enrolled in the school. This additional incentive induced many formally all-male madrasas to open their gates to female students.
The modernization scheme originally initiated in the early 1980s has succeeded in converting a large pool of orthodox, all-male madrasas which previously operated with own funds and eschewed teaching of modern subjects. Secondary madrasas therefore grew in numbers in Bangladesh in two distinct phases. The modernization scheme of 1980s saw a surge in numbers between 1980 and 1994. In post-1994 years, growth was driven mostly via enrollment of female students and allegedly by transforming formerly all-boy madrasas into centers for co-education. This feminization of modernised madrasas in Bangladesh dispels the common view that the rise of the religious education sector is explained away only by a lack of public provision7.
These features of the religious education system in Bangladesh provide important policy leverage in harmonizing schooling outcomes among students from diverse educational backgrounds. This scenario is at stark contrast with other countries in South Asia with large Muslim populations (and elsewhere), where most religious seminaries are of traditional orthodox types, predominantly single-sex (boys only), and still untouched by any significant changes in curriculum. Therefore, understanding the nature and process of female enrollment growth in madrasas is important to correctly inform the current debate over madrasa reform in other South Asian countries such as India and Pakistan.
Although the importance of the FSP scheme in feminizing the madrasa sector is wellacknowledged, relatively less is understood about the nature of growth of female enrollment in madrasas. Given that these secondary madrasas mostly rely on primary schools and primary madrasas for the supply of new students, it is of policy interest to examine whether female enrollee of madrasas come from secular education sector, in particular NGO schools which promote secular values, cater to children from poorer households and has an explicit agenda to empower rural women. Table 1 presents data on the type of primary school attended by grade 8 students in a sample of 221 secondary schools and 94 madrasas drawn from rural Bangladesh8. 9% of the female secondary students attended NGO schools for primary education which is consistent with the fact that BRAC schools predominantly educate girls. More importantly, madrasa and school girls are equally likely to have attended NGO schools for primary education.
The finding that NGO school graduates make up for a significant fraction of secondary school students today is an important finding: it suggests that a good number of female students who studied in NGO-run primary schools continue into secondary education.
But the fact that NGO school graduates today penetrate madrasas and schools pari passu is important considering the fact that madrasa and NGO schools pursue conflicting ideologies and just a decade ago secondary madrasas were seldom open to female students. As a matter of fact, greater NGO school activities could have created pressure on nearby secondary madrasas in the community which have historically catered to boys only to open up and absorb female students. Prospect for such vertical externality is high because NGOs and Islamic faith schools both serve marginalized communities where provision for state aided education is relatively scarce. Despite similar motives, NGOs and Islamic schools in Bangladesh operate in different levels of the education system.
NGO schools are exclusively concentrated in the primary sector whereas the registered madrasas operate in both primary and secondary sectors9. Therefore, while BRAC run schools compete with primary madrasas for students, their presence in the community can create significant externalities for secondary madrasas. Moreover, given that BRAC schools primarily cater to female students, any potential spillover effects on religious schools will have to operate through enrollment of female students in madrasas. If so, evidence of such externalities has important policy implications as promoting female education and closing gender gap in secondary enrollment is a key MDG target.
To formally, test this proposition, we need data on enrollment in madrasas across villages with and without NGO schools along with information on when the NGO school was set up. In the absence of such data, we test this proposition by looking at female enrollment data (aggregated at school level) and see how this correlates with the presence of BRAC schools in the community. This is discussed in the next section.

## 3. Data and methodology

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## 4. Results

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## 5. Conclusion

Nongovernmental organizations (NGOs) play an increasingly important role in the delivery of public goods in developing countries. Although this role is well acknowledged in the development literature, relatively less known is the potential externalities that arise from independent NGO interventions in the form of impact on the formal, conventional providers of public services such as state and state-aided private bodies.
We test for the presence of such externalities for Bangladesh where different types of service providers are present in the education sector. Alongside for-profit schools, there exist BRAC schools and madrasas that arguably charge relatively minor fees and serve economically marginalized children and isolated communities. Given that BRAC schools operate exclusively in the primary sector as opposed to madrasas (that have a greater presence in the secondary sector), any effect of BRAC schools on secondary madrasas would be taken as an evidence of a spill-over effect on the latter.
Externality effect of NGO intervention is studied in the context of the recent feminization of the madrasa sector where a previously predominantly all-boys religious education system opened up to girls. First, we find that Bangladeshi regions that had more registered madrasas saw a higher growth in enrollment of girls in secondary grades (holding number of secular secondary schools constant and initial enrollment) during 1999-2003. Regions that had more “converted” madrasas also experienced higher enrollment growth. This correlation holds even for the sample of older, pre-existing religious schools and hence corroborates the hypothesis that madrasas have encouraged greater female participation in secondary education rather than selectively emerging in regions where households have responded to the stipend scheme by sending daughters to schools. These findings highlight the previously undocumented role played by religious schools in removing gender disparity in rural Bangladesh.
Next, we explored to what extent feminization of secondary madasas is driven by the presence of BRAC schools in the union by using madrasa level enrollment data. We found that madrasas located in regions with larger number of BRAC schools saw a greater growth in female enrollment where presence of BRAC schools in the union is treated as endogenous. The effect of BRAC schools remains even when we use an alternative measure where we replace the number of BRAC schools by the number of female students enrolled in BRAC schools.
Such externality effect on madrasas is unusual but not surprising considering the fact that both BRAC schools and madrasas are inspired by non-profit motives and target relatively poorer regions15. Entry of NGO schools, which only operate at the primary level, therefore can put pressure on secondary madrasas in the community which usually cater to boys, compelling them to open up to girls -- greater NGO activities can have unintended consequences in the form of a positive, complementary spill-over effects. Our finding therefore not only provides a new explanation for the rise in female enrollment in religious schools in Bangladesh, it also highlights yet another policy rationale to support and promote the type of targeted services delivered by NGOs in the rural areas.
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Footnotes
1 In general, evaluation of the performance of national NGOs is rare. As pointed out by Barr and Fafchamps (2005), there have been very few quantitative evaluations of entire countries’ NGO sectors so that little is known about the motivations and performance of NGOs in general. Existing published research on Bangladeshi NGOs (e.g. Gauri and Galef, 2005; Fruttero and Gauri, 2005) is largely descriptive; they do not test relative performance of NGOs with other service providers.
2 Additional evidence on quality of BRAC schools is also provided by Asadullah, Chaudhury and Dar (2007). Studies on the relative performance NGO schools for other countries include Arif and Saqib (2003) and Khan and Kiefer (2007). Both studies utilize sample survey data from Pakistan.
3 Administratively the nation is divided into 6 divisions, 64 districts, 400+ sub-districts (upazilas), 4000+ unions and cluster of household (mouzas). A union on average comprises of 15 villages. A mouza may or may not be greater than a village but is always smaller than a union.
4 However, since 1992 BRAC additionally began constructing schools in urban slums.
5 Whilst BRAC bears majority of the expenses, the cost of maintaining the classrooms are the responsibility of the community. Communities are involved in deciding locations and schedules of schools as well as providing labor and materials to build schools.
6 In contrast, Madrasas in Pakistan account for less than 1% of total school enrollment (Andrabi et al., 2006).
7 The relevance of this hypothesis for Pakistan is also questioned by some researchers (e.g. see Andrabi et al., 2006).
8 The survey was conducted in the year 2005 in 60 rural unions. For a detailed description, see Asadullah et al. (2007).
9 There are about 6000 primary registered madrasas as opposed to 8404 secondary madrasas in Bangladesh.
15 This finding is similar to that of Khwaja et al (2007) who find an externality effect of public schools on the emergence of private schools in rural Pakistan. The authors find that private schools were set up in Pakistani villages that have had government schools because ample local supply of public schools graduates made it feasible for private entrepreneurs to set up low cost private schools.
Reference
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