U **u** _Private Sector Approaches to Effective Family Planning_ _22_ little is known about the informational deficits of<sup>their constituency, and even less about the return</sup> from IEC activities.

Most NGOs offer more or less the same products<sup>(temporary, principally female,</sup> contraceptive methods), all recruit from the same<sup>target population (women of reproductive age who</sup> are unable or unwilling to pay commercial prices<sup>for family planning services), most do not charge</sup> more than token payments for services and supplies,<sup>few apply client fees to program operations, and</sup> most are nearly totally underwritten by international<sup>donors. Sheltered from the need to be</sup> financially self-supporting, even to the<sup>extent of purchasing commodities, family planning NGOs</sup> have not had to deal with market forces. Indeed,<sup>it may even be said that many compete not for</sup> market share or profits or even users, but<sup>for increasingly scarce donor funds.</sup> The Honduran IPPF affiliate compensated<sup>for a 19 percent decline in its CBD cover2ge,</sup> which had been caused by a 192 percent increase<sup>in its CSM program, by</sup><sup>_increasing_the number of</sup> urban CBD distributors by 24 percent (Janowitz<sup>et al. 1991). A competitive market player would</sup> have reduced the number of urban CBD outlets,<sup>especially since the CSM network was demonstrably</sup> cheaper to operate. One might speculate that the agency<sup>was trying to bolster CBD performance for</sup> fear of losing some of its donor subsidy.

Management capabilities are a widely recognized<sup>deficit of the sector; NGOs lack access</sup> to assistance in developing appropriate management<sup>systems and skills, and donors resist funding</sup> staff development expenses (Brown and Korten<sup>1989). The results of an institutional analysis</sup> recently performed for six Peruvian family planning<sup>NGOs (USAID/Peru 1989) reveal organizational</sup> weaknesses that are probably typical of much<sup>of the sector. The NGOs tended to manage their</sup> internal affairs to satisfy donors' requirements rather<sup>than institutional needs; the larger the number</sup> of individual donors, the more fragmented their<sup>management procedures. Most had logistics and</sup> financial management systems in place, but compliance<sup>was spotty at best and did not measure up</sup> to usual auditing standards. None had implemented<sup>any cost analysis system, and their revenue</sup> generation schemes were rudimentary at best.<sup>The high level of dependency on outside donors</sup> presented a significant obstacle to achieving sustainability.<sup>As a consequence of this dependency,</sup> the NGOs surveyed shared the following management<sup>problems, which affect both their sustainability</sup> and their accountability to their beneficiaries:

- self-centered rather than market-centered<sup>values;</sup>

- i dependence on donor agencies for leadership; . lack of a market strategy; and

- *. tendency to disperse already scarce resources<sup>to cover new zones, instead of</sup> consolidating and strengthening their<sup>existing geographic coverage.</sup>

NGOs are often singled out for donor support<sup>on the grounds that they are cheaper and</sup> more efficient to operate than the public sector.<sup>To test these hypotheses, fixed costs and cost</sup> distributions were calculated for clinics and rotating<sup>medical posts. The analyses suggested that</sup> operating at full capacity, the NGOs in the sample<sup>would in fact be appreciably cheaper than the</sup> public sector (the most expensive fixed cost for an<sup>IUD insertion was US$4 vs. approximately US$12</sup> under Social Security). However, administrative<sup>costs accounted for an average of 35 percent of</sup> fixed costs; this is the weighted mean, the range<sup>being 16-65 percent.</sup> Finally, facility utilization and maximum potential<sup>cost recovery were assessed for</sup> central clinics and rotating medical posts operated<sup>by five NGOs. Results are presented in Table 4;</sup>