situations, including exerting influence over decisions with and through POs as a means of benefiting the of other agencies -- public and private - that affect poor may find that investments must first be made them. An increasing number of the more visionary in their institutonal development. Such developmenVOs see this work as part of a larger commitment tal investments are usually best made through VOs. to democratizing the economic and political strucGovernmenl efforts to promote the development tures oi their societies.? of POs usually produce something quite different. POs are training grounds for democrati **c** itizenAn organization may be formed, but its leadership ship and institutional building blocks for the demowill more likely be accountable to the government cratization of otherwise authoritarian societies. They than to its members, and its existence is likely to are a means of broadening the distribution of depend on a continued flow of government patronPOs are training grounds for democrati **c** itizenAn organization may be formed, but its leadership ship and institutional building blocks for the demowill more likely be accountable to the government cratization of otherwise authoritarian societies. They than to its members, and its existence is likely to are a means of broadening the distribution of depend on a continued flow of government patronpolitical and ecenomic power that most development age. catalyst VOs believe is an essential step to more In many countries it is becoming dear that for broadly-based development participation. They create village level POs to become truly effective as an demands for greater responsiveness to grassroots economic and political force they must be federated concerns, providing the collective bargaining power into larger structures that give their members a that can enable landless people, smal farmers or political voice and provide services that strengthen urban squatters to negotiate on more equal terms the participation and bargaining power of their with the representatives of government bureaucracies members in the modern economy. This federating or wealthy private corporations. process has been occurring in Latn America, often Self-reliant cooperatives, landless associations, through the leadership of the POs themselves (See irigator associations, burial associations, credit clubs, Box 6). In Asia, VO leaders are increasingly enlabor unions, trade associations, elected local governcouraging the POs they have assisted to form ment councils, and political interest groups with federated structures (See Box 5). accountable leadership are aU examples of POs. POs offer important opportunities for instituSome POs might also be classed as VOs, if shared tionalizing sources of credit, production inputs, values are the primary basis on which they acquire marketing services, technical support, education, resources and the commitment of their members. health and other essential services in ways that However, POs by definiton exist to serve their insure accountability and responsiveness to the members, while the distinctive nature of a VO is people served. The development' of such support usually found in its commitment to values that structures becomes an important concern of the transcend its members' immediate interests.

POs offer important opportunities for institutionalizing sources of credit, production inputs, marketing services, technical support, education, health and other essential services in ways that insure accountability and responsiveness to the people served. The development' of such support structures becomes an important concern of the development catalyst VO.

POs are commonly difficul **t** o classify according to our resource acquisition scheme, because of the mixed basis by which they acquire their resources. Take the example of a cooperative, an important form of people's organization. The cooperative may have highly motivated member leadership that volunteer **s** ubstantial uncompensated time to insure the success of the enterprise. The members of the meat funds. cooperative may be committed to shared values of cooperation that cause them to direct their business to their cooperative even when better prices are available elsewhere. At the same time these same members may grant their leaders the authority to impose penalies or levies (taxes) on membership, largey self-supporting much as citizens in a democratic society vest this authority in their government. Yet successful cooperatives are generaly highly market-oriented in their external exchange transactions. A number of studies of NGO development roles deal almost exclusively with POsO This represents a recognition of their special importance. The problem is that in most Third World countries strong POs able to help their members broaden their economic and politcal participation are relatively rare. ITe donor that chooses to work directly The differences between the catalyst VO and the P0 have important implications for their funding that are commonly overlooked by donors. We argued earlier that it is neither realistc nor appropriate to expect VOs engaged in performing temporary catalyst functions to become self-financing, unless donors are prepared to provide endowmeat funds.

By contrast, a strong PO is normally expected to survive as a permanent instituton senrvig imporo tant functions for its members on an on-going basis. It is therefore necessary and appropriate that the P0 work seriously toward making its activities and locally sustanable. Any external funding should be consistent with this outcome, primarily supportng capacity building, and pcssibly capital investments Excessive outside generosity in subsidizing POs to provide routine services and to cover their core oosts will crcate dependence and work to the detriment of the organization over the long term.

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