metadata: authors: 0: author: Brown, L. David
1: author: Korten, David C.
docna: 0: docna: Understanding voluntary organizations :
            guidelines for donors
docty: Policy Research Working Paper
subtopic: Labor Markets,Educational Sciences,Energy Demand,Energy and Environment,Energy and Mining,Inequality
teratopic: Poverty Reduction
abstracts: cdata!: Voluntary development organizations have
            demonstrated substantial comparatiave advantage in
            developing countries - especially in their ability to
            innovate, adapt to local conditions, and reach and work with
            poor and difficult to reach populations. These capabilities
            are a function of their values, special skills, small size,
            limited resources, flexibility, and freedom from political
            constraints. Their weaknesses are a function of many of the
            same characteristics - particularly their value commitments,
            small size, independence, and lack of administrative
            rigidity. The authors explain that the strongest Voluntary
            Organizations (VOs) and People's Organizations (POs)
            respond to more than financial incentives. Their strength
            lies in the fact that they are not the same as government
            organizations or businesses. At the same time, they are not
            immune to financial incentives, which if wrongly applied can
            destroy the voluntarism of all but the most strongly aware
            of VOs and POs.
repnme: repnme: Understanding voluntary organizations :
            guidelines for donors
display_title: Understanding voluntary
            organizations : guidelines for donors
listing_relative_url: /research/1989/09/700444/understanding-voluntary-organizations-guidelines-donors
topicv3: Education, Skills Development and Labor
            Market m1326135 1484,Energy and Extractives m1326595 507,Poverty m1326687 695,Education m1327048 470,Jobs m1503931 2670
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Poverty Reduction
origu: Policy Plan & Prog Review Dept
no_of_pages: 46
model_extractions: **Plc,Planning, ndl R{eserc**

# **Pblc Sector Management and Private Sector Development**

Voluntary development organizations have demonstrated substantial comparative advantage - in developing countrics especially in their ability to innovate, adapt to local conditions, and reach and work with poor and difficult-to-reach populations.

These capabilities are a function of their values, special skills, small size, limited resources, flexibility, and freedom from political constraints. Their weaknesses are a function of - many of the same characteristics particularly their value commitments, small size, independence, and lack of administrative rigidity.

In this paper on what makes nongovernment organizations (NGOs) tick, Brown and Korten suggest that it is equally inappropriate to criticize:

* Voluntary organizations for their limited ability to provide routine services to large populations on a sustained, self-financing basis.

* Govemment organizations for their limited ability to innovate and adapt responsively to the needs of many different groups.

* Commercial organizations for their limitcd ability to provide services below cost to persons who cannot afford to pay.

In relating to NGOs, they say, donors should avoid the danger of equating small with simple. Most NGOs are small by donor standards, but are simple neither in their organizational form nor in their development roles. They are particularly complex in the aggregate.

The only thing NGOs have in common as a group is that they are nongovernment and are legally registered as nonprofits. NGOs include market-oriented public service contractors (PSCs), values-driven voluntary organizations (VOs), and memb .r-accountable people's organizations (POs).

Some VOs afe strictly voluntary and work with no budget; others have well-paid full-time professional staff. Their commitments span a wide range, and their participants range from saints to scoundrels.

The strongest VOs and POs spond to a good deal more than financial incentives. Their strength lies in the fact that they are not the same as government organizations or businesses. At they same time, they are not immune to financia! incentives, which if wrongly applied can destroy the voluntarism of all but the most strongly aware of VOs and POs. The issues are complex, the necessary data elusive (Brown and Korten suggest a research agenda), and the potential for damage substantial.

Donors cannot automatically assume that existing staff experience and training prepare them to play a constructive role in helping NGOs become more effective in their essential roles in national and global development.

This paper is a product of the Public Sector Management and Private Sector Development Division, Country Economics Department. Copies are available free from the World Bank, 1818 H Street NW, Washington DC 20433. Please contact Zeny Kranzer, room N-9051, extension 69485 (40 pages).

The PPR Working Paper Series disseminates the findings of work under way in the Bank's Policy, Planning, and Research Complex. An objective of the series is to get these fmdings out quickly, even if presentations are less than fully polished. The flndings, interpretations, and conclusions in these papers do not necessarily represent official policy of the Bank.

Produced at the PPR Dissemination Certer
.

# Table **of** Contents

|I.|The|NGO: A Residual Category|2|
|---|---|---|---|
||<br>A.<br>|<br>The Lens of Econonuc Analysis<br>|3<br>|
||B.<br>|The Lens of Political Analysis<br>|3<br>|
||C.|The Donor Perspective|4|
|II.|Thre<br>|e Institutional Sectors<br>|5<br>|
||A.<br>|Defining Three Sectors<br>|5<br>|
||B.<br>|Defining Development<br>|6<br>|
||C.|Differentiating Development Roles<br>|6<br>|
||D.|Pluralism and the Voluntary Sector|8|
|HI.|Volu<br>|ntary Energy as a Development Resource<br>|8<br>|
||A.<br>|Special Characteristics of Voluntary Energy<br>|8<br>|
||B.<br>|Voluntary Energy in Public and Commercial Sectors<br>|9<br>|
||C.<br>|Mobilizing Voluntary Energy<br>|9<br>|
||D.<br>|Organizing Around Shared Values<br>|9<br>|
||E.|A Mix of Values and Structures|10|
|IV.|Volu<br>|ntary Organizations and Development<br>|10<br>|
||A.|Service versus Development Catalyst Organizations|11|
||B.|<br>Voluntary Sector Support and Networking Organizations|12|
|V.|Othe<br>|r Types of Social Action NGOs<br>|14<br>|
||A.|Public Service Contractors<br>|14<br>|
||B.|People's Organizations|14|
|VI.|VO<br>|Strengths and Weaknesses<br>|16<br>|
||A.|VO Strengths|16|
||B.|<br>VO Weaknesses|16|
||C.|Rethinking VO Strengths and Weaknesses|7|
|VII.|Imp|roving VO Performance|18|
||A.|Enhancing Technical Capability|18|
||B.|<br>Expanding Scale and Sustainability|18|
||C.|<br>Improving VO Management|19|

Hi
.

|Vm.|Inter|-Sectoral Relations|20|
|---|---|---|---|
||A.<br>|Development Partnerships<br>|20<br>|
||B.<br>|Uneasy Relations between Governments and VOs<br>|20<br>|
||C|Captive Organizations: GONGOs and DONGOs|22|
|IX|Gui<br>|delines for Donor Action<br>|23<br>|
||A.|The Test of Voluntarism<br>|23<br>|
||B.|The Test of Balanced Pluralism|24|
|X|Mod<br>|es of Donor Support for VOs<br>|25<br>|
||A.<br>|Providing Direct Financial Support<br>|25<br>|
||B.<br>|Financing Sector Support Institutions<br>|26<br>|
||C<br>|Increasing Political Space<br>|27<br>|
||D.<br>|Creating Feedback Links from VOs to Donors<br>|27<br>|
||E.|Building Development Partnerships|28|
|XL|A R|esearch Agenda<br>|29<br>|
||A.|Voluntary Sector Development<br>|29<br>|
||B.|Smal; Scale Development on a Large Scale|30|
||C.|Mechanisms for VO/PO Funding<br>|30<br>|
||D.|VO/PO Policy Participation<br>|31<br>|
||E.|Development Partnerships|31|

iii
A Concept Paper Prepared for the World Bank by L David Brown and David C Korten _Institute for Developmen: Research_ The decade of the 1980s has seen a rapid increase of interest in organizations that are non-govermnental and non-profit within the international development community'. These organizations are commanding growing attention as possible alternatives to govermment in addressing the needs of populations otherwise unreached by official development programs.

- The reasons are nunerous, including the following. The search for new options reflects a painful realization that in spite of a few "miracle economies,' such

- • Growing interest among donors and national as Taiwan, Korea, and Singapore, the incidence of govermnents instrengthening the developmental debilitating, dehumanizing poverty persists at unacroles of institutions outside the public sector. ceptable levels in most countries and regions of the South. In country after country the advances achiev-

- The demonstrated capacity of some non-governmental organizations (NGOs) to reach the poor more effectively than public agencies.

- A sharp decline in public development resources, necessitating a search by governments for more cost effective alternatives to conventional public services and development programs.

* L ai o , X i e . -. I * .. *.. **a** "VI-I .=c l

- The fact that NGOs based in the industrial countries mobilize US$3 billion a year in development resources from private sources and manage another US$1.5 billion from official aid agencies.

- An awareness that some NGOs are sophisticated and influenial organizations able to carry out X programs on a national scale and to influence national policies and insitutions.Organizations such as the Bangladesh Rural Advancement Committee (BRAC), Philippine Business for Social Progress (PBSP) and the Pemvian Institute for liberty and Democracy are leading examples.

- .. in r i , :. _
ed through economic modernization have left largp segments of the population behind.

In many countries, the development gains of earlier decades are evaporating in the 1980s. The World Bank's _World Development R :porlt 1988_ reports that poverty in developing countries is on the rise, estimating that the number of people with inadequate diets in developing countries (exduding China) increased from 650 million to 730 million between 1970 and 1980. Decines are reported in life expectancy, per capita calorie supply, and real wages in the 1980s.3 The countries of Sub-Saharan Africa experienced an annual dccline of 2.9 per cent in per capita income from 1980 to 1987. Declines in real per capita income were also experienced during this period by oil exporting and heavily indebted countries.!

It is little wonder that thoughtful development theorists and practitioners are searching for new approaches to dealing with Third World poverty. In this search, a growing number of aid donors and national governments have turned to NGOs as potential instruments for implementing official development projects, especially those intended to channel public resources to the poor.

We share this interest in organizations that are neither governmental nor commercial and in their distinctive potentials for support of national develop. ment. We are concerned, however, that these organizations are too often viewed through conceptual lenses that miss important aspects of their nature. Their developmental roles and performance have most often been assessed through theoretical frameworks developed to assess organizations in the commercial and government sectors. The resulting analysis offers only a partial view that often leads to working with these organizations in ways that diminish rather than enhance their contributions to solving critical development problems. In this essay we will propose a conceptual lens for analyzing such agencies that offers a more complete and accurate picture of their special development roles.

# THE NGO: A RESIDUAL CATEGORY

The labels "non-profit and "non-governmental" (we will use these labels interchangeably throughout this section) say more about what the organizations so classified are not than what they are. The terms define organizations that are residuals of more standard classificadons. A wide variety of diverse, structurally and functionally unrelated organizations fall under the non-profit and non-governmental category, as illustrated in Box 1.

Bringing order to this chaos is a challenge. The World Bank has defined NGOs as 'private organizations that pursue activities to relieve soffering, promote the interests of the poor, protect the environment or undertake community devc!opment."5 This definition emphasizes the development related actvities pursued by these agencies, but offers little help in understanding their fundamental nature.

Prevailing analytic dcassifications reflect the reality that though social scientists from a number of disciplines have studied NGOs, no social science discipline _speciaes_ in the study of this group of organizations, in the sense that political science specializes in the study of governments and economics specializes in the study of market-oriented institutions. Consequently more analytic work has been done and more conceptual clarity exists about the public governmental and private commercial sectors.

When social scientists do turn their attention to the "residual' organizadons, they are inclined to apply analytical perspecdives that have been developed to analyze the other sectors. The following brief characterizations of commonly applied perspecdves seek to capture their essential elements. These perspectives are useful and accurate, as far as they go.

# The _I1n_ of Economic Analysis

The lens of economic analysis has often been applied to explain why NGOs exist and what motivates their behavior. Economic analysis tends to focus on the implications of their non-profit status. Of particular concern to the economist is the question of how the productive efficiency of non-profit organizations differs from that of for-profit and governmental organizations.

_Public_ Goods. One common explanation for the presence of non-profit organizations parallels the economic argument for governments, ie., economists argue that certain "public goods", such as clean tir, can be enjoyed by everyone once they are produced, whether they have paid for them or not. Economists note that there is no economic incentive for an individual consumer to pay for products from which others benefit equally at no cost. This wfree rider problem explains why markets seldom produce public goods, such as clean air, because the use of such goods cannot be restricted to those who pay for them.

Governments, in contrast, can use their power to tax and regulate all citizens to compel shared support for producers of public goods. Provision of public goods is generally considered to be one of

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**:.UOX 1: The VlaiYtlat~** of: RaldualO,S. wpublic goods. In many instances, such as the delivery . .-. . -:.- .>...: of medical or chd care, their sric may bebe m ;:.. ' indisti haberf tos of a for-profit apncy. tResldusr Or9SfIZnuOn* thfo The econlomifc explallatoT for such non-profit :Z0Stt lb -a 5t:;s ~ i~ providers is that when the quality of the service o dG clat ll i Int Y U provided is dfflt to asses consmcrs will prefer lot te ItWy Inch£id :aIns dubs, par, a non-profit provider that has less incentive than a t"chei SSSOCISIIrW noprci*t :onit for-profit firm to take advantage of their igworancec firms hlthdd OSivnlttB, Sl*U5tfMOCIdIi. A vaition of the contract failure argument sugsts unel **lbbor. sharin:ggop** peas that purchasers of services (for example, donors f~s village ate aons 'purchasing" relief assisanc from an NCO) wil ulgu oe s lh prefer non-profits if the services are provided to -ckt t :b tno coi other parties with whom the donor is not in diret btWIWIlSfltal advocacy grOUPS, pow:tS P0~ contact and the donor cannot directy eWaluate milhiary o relgious schools,dvolun. service quality. For example, in development work tsp fireaer , 1 coosum OflSWflOF lve, human donors can feel more confiden **t** hat their resources rights groups, youth c dubs . **icy** anarySis will be used by non-profits to benefit their intended centers,, tenris **ns0clationa** sit QSIlaIISB~ beneficiaries, since it is difficult for the 'owners" of 2lumn1 groups legal aid so,letl~s, Chambrs bit a non-profi **t** o appropriate surpluses. A non-profit COnWIISrC. **iabCx** fiseN, **vlca** ClUbs **uch** -a agency like Oxfam America may be seen by donors Kiwaish **Fnd** Atotauy, looSi development U- as more likely to deliver donations to intended stolatloi@, vteVrans groups. tenants askolarecipients than a for-profit agency that might be tlons, anmlt ShIt9tu. burial soc prae tempted to convert the donations to profits. clleg hopitameiclit , orphans. gesa asylUmS temperane **support** - _Coesuner Con_ Non-profits may also be created group. su-h -as Alctholbc Ainymous by consumers to achieve greater control over the -lelgi parert groups,, private relief Org W~la~ services rendered, thereby insuring quality and owco"rlntch-ommitee, avoiding exploitation by for-profit agencies. Thus '-' commuity COfl~ | marketing or consumer cooperatves may be desigpSt.hnlc associations retires lobby group, and ed to reduce the capacity of middlemen to exploit o aorth. - ;-monopsony or monopoly position<sup>9</sup> ;.Soni **e** xist to serve theiri cwn meibetThe above are a explanatios for the emerates are committd to:those **wh** gence of non-profits as a result of various forms of cannot help t_h...emse. -Soiper W - market failure. Market failure andlyses ask what vices. Others offer mutual support, ngagin niche can be filled by non-profit organizations that publi` educatkn a- a cy or pdv is not served by the for-profit sector. Markets tend chWIIY. Some are cflC :fled Oniy wit:h*:; loto be especially vulnerable to faiures in developing 1 iXEsses. Others ate s:td. to liltIofiSlor countries where large segmcnts of the population 1nternational ConCerns. Some. SUch as Amnes- . lack the basic purchasing power to participate, so ty Internaional.and the Amerlcsn.C1VU UbO a alternative forms of organizaion that are remedies V.Dort pertor4~watch dog ~ .................. ;for market failures may be particrlarly relevant there.

goods. In many instances, such as the delivery of medical or chd care, their sric may bebe indisti haberf tos of a for-profit apncy. The econlomifc explallatoT for such non-profit providers is that when the quality of the service provided is dfflt to asses consmcrs will prefer a non-profit provider that has less incentive than a for-profit firm to take advantage of their igworancec A vaition of the contract failure argument sugsts that purchasers of services (for example, donors 'purchasing" relief assisanc from an NCO) wil prefer non-profits if the services are provided to other parties with whom the donor is not in diret contact and the donor cannot directy eWaluate service quality. For example, in development work donors can feel more confiden **t** hat their resources will be used by non-profits to benefit their intended beneficiaries, since it is difficult for the 'owners" of a non-profi **t** o appropriate surpluses. A non-profit agency like Oxfam America may be seen by donors as more likely to deliver donations to intended recipients than a for-profit agency that might be tempted to convert the donations to profits.

In addition, those who apply the lens of economic analysis commonly note that tax exemptions provide non-profit orgniation with a competitive advantage in market situations and that this advantage in itself motivates their formation Govern. ments are often understadably concerned that many non-profits are nothig more than commercial enterpries that use the bgal form of the non-profit to avoid the tax collector.

the major legitimate functions of government. But some segments of the population may want more of the public good than the government is willing to provide. They can obtain additional quantities through a non-profit agency by conducting a commity dean-up campaign, offering public education, or pressing the government for more action. The action of the non-profit orgnizaion in such instances is explained as a private response to **market** failure.

# **lhe Len of Polltcal ls**

_Corc Fahu_ Many non-profit organiaons produce servces that do not meet the definition of Much as economic aalysis tends to focus on the role of non-profit orgnization in fiing nicbes

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created by "market failure," the lens of political analysis tends to focus on their role in filling miches created by *government failure," particularly m the production of public goods. Political scientists share with economists a concern with the free ler problem as a major rationale for the existen :l of both government and NGOs.

In general the tools of political analysis assign a natural role to NGOs in the provision of public goods that serve the needs of relatively small groups that can be brought together in face to face organizations. The members of such organizations are best able to see the results of their individual contributions and the group is in a position to exert social pressures that minmize the free rider problem."' This focus on the small group leads to a particular interest in the role of NGOs in local development.'<sup>2</sup> Overall, the political analyst finds the main arguments for the existence of NGOs in the reality of social diversity and in otherwise unmet needs for experimentation and flexibility.

unlikely to emerge until the concept has been successully demonstrated, a sort of govermental innovator's Catch-22.

Non-governmental agencies are less subject to such political pressures and thus are able to experiment more easily than governments with politically sensitive programs. The Ford Foundation, for example, can take on innovative projccts that are not politically feasible for the US. government. Likewise NGOs elsewhere may test innovative programs that governments would not undertake until they are proven to be politically feasible. They may also act as policy advocates of these same innovations.

Political analysts have observed that vital nongovernmental sectors are common features of pluralistic and democratic political systems,'<sup>5</sup> and that they are one of the first casualties of a shift to a more authoritarian regime.6 This has important implications for our subsequent argument regarding the distinctive nature and role of these organizations.

# T-he Donor Perspective

_Social Diveay._ Societies are characterized by a wide variety of views of the public good. In the formulation of consistent policies it is normally necessary for governments to make choices among these views. It is difficult for governments to respond effectively to social diversity that results in different constituencies making different or contradictory demands for government services.'3 For example, public policy in the U.S. precludes the teaching of religion in the schools. Those groups that believe strongly that religious teaching should be integrated into the school curriculum have the option of establishing their own schools to accommodate their need.

This role of non-profit organizations is considered particularly crucial in political systems where - the people are sovereign but diverse with competing and sometimes contradictory wills. The response of the NGO, of course, is not limited to providing the desired services. It might also engage in policy advocacy and political action in support of its preferred policy.

_Egimeti and Fe.dbifily._ A widely recognized failure of large-scale government bureaucracies is their inflexibility and conservatism. Bureaucratic rules and attention to procedures can be justified for reasons of equity and accountability. But these institutional characteristics do not encourage flexible or innovative responses to novel problems. Furthermore many governments have considerable difficulty introducing innovations before a degree of political consensus has been achieved. Such consensus is While the lens of economic analysis focuses primarily on economic efficiency and incentives, the political analyst emphasizes the political and institutional role of NGOs. Development donors have commonly chosen to view NGOs through the lens of economic analysis, asking how the efficiency and reliability of NGOs compare with that of private contractors or - government in the provision of specified services in preference to applying the lens of the political analyst. The lens of the political analyst raises issues that donors have generally preferred to ignore in their desire to avoid being accused of meddling in the internal politics of the countries they assist.

Consistent with the choice of the economist's lens, development donors have generally concerned themselves primarily with NuOs that might assume roles in the implementation of specific development projects or in the transfer of financial resources, ie, with NGOs engaged in roles that would otherwise be assumed by governments, private contractors, or other organizations with well defined and understood roles.

Donors have been less attuned to the more distinctive contributions of NGOs in a dynamic society. This is an important oversight. These distinctive but neglected contributions include. their roles as innovators and advocates; their contribution to the balance of power between the state and civil society essential to a dynamic economy and a participatory political system;'<sup>7</sup> their ability to tap otherwise inaccessible social energ3r, and their capacity to link with one another to become self-

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organi2zng systems responsive to a range of human neets.

We agree with the growing list of observers who have concluded that the most important development roles of NGOs are organizatonal and political rather than fnancial and economic '<sup>9</sup>

# THREE INSTITUMONAL SECTORS

It has been relatively rare in development cirdes to treat NGOs as constituting a sector with a distinctive identity and features of its own.m This is in fact appropriate, as the diverse collection of organizations classified as NGOs does not define a sector in a way that is very meaningfuL

# Defining Three Sectors

It may be more helpfut to define the three institutional sectors as: government, commercial, and voluntary. Each sector so defined has distinctive and conceptualy meaningfut characteristics.

The term "voluntar refers here to actions taken by the free will of the actor. We will argue that voluntary organizations ("'VOs) represent a distinct class of organizations that depend on energy and resources given freely by their members and sr-.porters, because they believe in organizatio.4 missions, not because of political imperatives or econo,mic incentives.

Conceptually we can define the three sectors in terms of the three primary options available to organizations to mobilize the resources on which their function depends: coercion and legitimate authort in hierarchical systems, negotiated exchange in market systems, and shared values in consensus-based systems. Table I summarizes some of the differences between the three sectors so defined. These differences will be discussed in more detail below.

Government organizations mobilize resources through the mechanisms of authority and legitimate coercion, consistent with govermment's primary role of preserving social order and social controL This patten of resource mobilization is particularly evident in the power to tax or the power to draft an army, requiring individuals to provide resources in spite of their preferences to the contrary.

Commercial organizations carry out their tasks of producing goods and services through the mechanism of exchange. They offer financial incentives to gain access to the materials, information, and human resources required for their activity.

Organizations in the voluntary sector, in contrast, mobilize resources and social energy through the mechanisms of shared values and expectations. - Most people have some basic values interpersonal, religious, poli':ca -- that are so deeply held that they will guide behavior even in the face of countervailing coercivc sanctions or %naterial incentives These values can be invoked to mobilize voluntary contributions of labor, cash or kind to activities that give expression to these values. In the context of coliective action the contributor is rewarded both by the satisfaction of reaffirming commitment to passionately held personal beliefs and by the fellowship of like-minded colleagues.

Shared values can be powerful guides to behavior because they offer actors a sense of efficacy

# Table I: Sector Dilfferences

<!-- Start of picture text --> Commercial Sector Government Sector Voluntaq Sector<br>Primary Produce Goods Preserve Social Actualize<br>Concern and Services Order Social Visions<br>Implidt Markets Hierarchies Clan/Consensus<br>Orzation<br>Coordination Negotiated Authority and Shared Values<br>Mechanisms Exchange Coercion<br>Enforcement Contracts and Supervision Moral Obligation;<br>Mechanisms Reciprocity Norms and Rules Professional Ethics<br>Prototpe Corporation Army Church<br><!-- End of picture text --> _5-_
in molding the world to fit a collectively desired vision. Organized action to supplement or counteract the activities of govcermnt and commercial organizations often depends on mobilizing resources through such shared values. There is growing evidence that the economists' "free ridere hypothesis simply does not hold up well empirically people do in fact contribute time, energy, and money to agencie seeking to produce public goods even if they receive back less in material terms than they contribut&Y Conceptualy the distinction we are making is quite simple. The three sectors focus on different concerns and employ quite different mechanisms to mobilize resources and human energy.u Empirically, of course, the world is a good deal more complex than our model suggests. Most organizations have multiple concerns and utlize a variety of mechanisms to pursue them. VOs utilize fmancial incentives in the form of salaries and they employ hierarchical authority to guide activities. But we will argue that true VOs are _pna*_ driven by shared values. This distinction is critical to understanding the development potentials of NGOs that are truly VOs. Note that not all NGOs are VOs by this definition. NGOs that are legally nonprofit but in fact primarily concemed with market and financial incentives are better classifed as commercial agencie4. NGOs that are largely dependent on and subordinate to governmental authorities are better understood as part of the government sector in spite of holding a non-govermnental legal status. Self-help organizations of the poor are another importan **t** ype of NGO, but they are not necessarily voluntary organizadons by our definition. We will elaborate on this later.

# Defining Development

We believe that development is most usefully and accurately defined as: _a process by whkh the members of a societ develop themselves and their instutions in ways that enhance their abilty to mobilize and manage resource to produce sustaiabk and stuy disibuted improvemmn in their quai f life consistent with their own aspatons._ We further believe that many development failures can be explained as a consequence of focusing too heavily on the financial transfer dimensions of development and neglecting the institutonal and political transformation dimensions essential to constructive sustainable improvements in human well-being. Defrung development in instits,tional terms helps to avoid such errors.

Financial transfers wiU have developmental consequet-es only if institutional structures to manage available resources effectively are in place." The Marshal Plan in Europe and Japan, for example, was successful because it channeled resources into settingp in which the necessary values, skills and institutional capacities to use them were basicaly in place, in spi' of widespread physical destruction. In the Third World, by contrast, development assistance has commonly been fed into institutional systems devised for feudal or colonial expropriation, so new resources are too often converted by elites into current consumpticn or capital flight. Consequently, the anticipated economic renaissance has failed to materialize in many countries.

Where the necessary values, skills, and institutions for effective resource management are not in place, the developmental impact of financial transfers should be assessed largely by their contribution to creating them.

# Differentiating Development Roles

Now we are ready to look at the natural development toles of each of the three sectors.

Historically in many countries government has assumed the primary responsibility for development leadership. The distinguishing characteristic of the government sector is its ability to obtain resources and compliance through authority and legitimate use of coercion. Legitimate authority and coercion offer effective means for accessing existing wealth. If the central task of development is to gain control over existing financial and physical resources, the govemment sector must play a very central role. But authority and coercion are more limited tools in the creation of value added and in the promotion of social innovation.

The commercial sector has the advantage in the efficient production of goods and services, while voluntary agencies have greater potential for mobilizing voluntary social energies and innovative problemsolving. Consequently development is difficult to achieve in a society in which the state maintains total dominion over civil society. While the state must set the rules and the framework, it is ultimately the civil society that must drive the development process, a fundamental truth now being acdnowledged even in the U.SS.R. and China. From this perspecdive, the fact that development analysts have turned their attention to the potentials of the commercial sector as an engine of development, after years of focus on centralized economic

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planning and production through public enterprise, is an important advance. Much of the current concern with privatization," for example, can be understood as an effort to separate the functions of the commercial and the govermmental sectors so that each sector may perform those tundions for which it is best suited. But the development task is not limited simply to increasing the value of economic transactions, which is what GNP measures. Development has failed unless thv society has increased its capacity to transform available resources into justly distributed improvements in human well-being. The commercial sector has evident advantages in pursuit of market induced innovations that increase the value of economic transactions. However, the innovations that insure that these increases in value are translate' into justly distributed improvements in well-being must normally come either from government or from the voluntary set ir. Between the two, VOs have important advant&,s over goverrnent organizations as catalysts of the types of social and institutienal innovation required. Governments depend for their function on a broadly based political consensus fashioned through negotiation and compromise among numerous existing power holders and interest groups. Their ability to innovate is constrained by the n.:cessity of * first achieving a reasonably broad consensus, at least among key power holders who may have a substantial commitment tomaintaining existing inequitien. The constituencies of VOs are generally much smaler tan those of governments and are built around a more coherent values consensus. Consequently, in comparison with government, the VO is able to define positions more clearly, to press for innovative solutions, and to experiment in ways that governments find difficult. This gives VOs a disdnctive role as catalysts of system change in dcfning, articulaing, and advocating positions that are outside the established political mainstream and therefore not supported by existing publihc policy. t or Driven by values rather than by the quest for economic or political power, it is also natural that many VOs focus their attention on the needs of the poor and disenfranchised more naturally than do governments. In countries with a mature voluntary sctdor, VOs are constantly callng attention to and acting on perceived opportunities for improving the well-being of the society's members. The voluntary sector role in socilI innovation is far more varied and pervasive than its commonly recognized role in implementing pilot piroject for replication by governments and donors For example, Vos have had a leading role in creating the cil rights movement, the environmental movement, the women's movement, and the focus of world attention on population. These efforts have changed global pereeptions and policies on fundamental social issues.

In a world dominated by the government and commercial sectors, VOs thcmselves may lose sight of the centrality of values to their cistence. In their quest to strengthen their funding base through proving their professionalism many VOs have been inclined to deny their voluntarism, which some have come to view as an embarrassment - though it is in fact their distinctive asset. If VOs are to rcalize their full potential as a distinctive developmer force it is importan **t** hat they become morc self-co's regarding the contrality of values and voluntL so their distinctive na:ure and role.

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## **Plualsm and the Volrntaa Stw**

Our definition of developn., nt focuses attention on distributive justice as a major development issue. This recognizes that poverty is as much a political as it is an economic condition. In many Third World societies the achievement of broadly based sustainable development depends on achieving a more broadly based distribution of economic and political power, %hile simultaneously strengthening incentives and values that support the use of that power to make productive use of availablc resources. This necessarily requires strengthening the role of the civil society **_vis_** _a vis_ the state. It must be recognized in turn that democratic pluralism is a _sinc qua non_ for a strong and dyhamic civil society.

The vuluntary sector has a specal role in contributing to the development of pluralistic civil societies and in the awakening of a socially conscious work and investment ethic. Indeed, these may development roles.

The grassroots organizing work that is central to the agendas of many Third World VOs is an important contributor to democratization and to the strengthening of civil society. It facilitates the breakdown of residual feudalstic structures and value systems by realigning power structures and improving access of the actual producer to productive resources. Producer organizations in turn reinforce new values that support socialy conscious productive work and investment.

In their political role, VOs supplement political parties as mechanisms through which citizens define and articulate a broad range of interests and make demands on government. In their educational roles they provide training grounds for democracy, develop the political skills of their members, recruit new poltical leaders and stimulate political participation. In their watchdog role they serve, as does the press, as checks on what Diamond refers to as ... the relentless tendency of the state to centralize its power and to evade civic accountability and contzoL"' The importance in the development of the United States of both VOs and, what we will describe later as, people's organizations is summarized in Box 2. Although many of the initial activities of VOs in the US. were essentNliy charitable, many VOs also undertook activides with cubstantial pohtical and economic imphcations and had important roles in the creation of other institutions needed to respond to unmet social needs.

## VOLUNTARY ENERGY AS A DEVELOPMENT RESOURCE

Voluntary energy is an almost wholly neglected development resource. It is the life force of the VO. It is important that we better understand its nature and application.

# Specl Characteristkcs of Voluntary Energ

Voluntary energy has several characteristics that disiguish it from the energy generated by financial exchanges or governmental authority. These characteristics are important to the role of the voluntary sector in development.

First, voluntary energies are _low cost,_ at least in financial and political terms and exist in potentially inexhaustible quantities. Many powerful voluntary movements do not have access to large amounts of rinancial capital or political power-indeed, part of powerlessness, as in Gandhi's Ladependence movement. This is not to say that voluntary movements do not need financial and political resources; they do. But their lifeblood is in their aippeal to values to which people will commit energy, time and often their lives.

Second, voluntary energies are _not easiy congolled_ by the mechanisms usel to control other forms of social energy. Furthermore, they are difficult if not impossible to buy and cannot be stored. Leadership by appeal to values demands skills different from those learned in market or bureaucratic organizations. Although some public and private leaders develop charismatic leadership styles that serve them well in mobilizing voluntary energies, others are mystified by the demands of mobilzing and guiding voluntary energies. Not surprisingly, voluntary energy has proven to be a development resource largely inaccessible to development planners, bureaucrats and technicians.

Third, voluntary energies may be subject to _selfreinforcing escalaion._ National and international social movements can grow from minuscule beginnings, as most of the world's major religions illustrate. Norman Uphoff has argued that the combination of shared values, new ideas about how to accomplish common goals, and new friendships can interact to produce a self-regenerating positive escalation of social energies with wide impact. He offers the example of a Sri Lankan irrigaton system rehabilitation project in which the voluntary energy of participating farmers astonished the project organizers and led to development activity far beyond expectatons.

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There are, however, also inwtances of negative reinforcement cydes that produce "burnout of voluntary energies and a failure of enduring commitment. More understanoing of the circumstances that lead either to positive or to negative reinforcement cycles in the generation of voluntary energy is badly needed.

One recent comparison of work force characteristics in the three sectors in the United States found that voluntary sector employees reported significantly more meaning in their jobs and significantly fewer experiences in which job requireme,nts violated their consciences. They also were paid two thirds as much. The authors of the study concluded:

# **Voluotary** Energy in Public and Commercial Sectors

The importance of voluntary energy is not limited to the voluntary sector. Public and commercial agencies may also seek to mobilize voluntary energies in the service of government or corporate goals.

Much of the literature on "excellent companies" is focused on how to develop mstrong cultures that mobilize employee values and goals in the service of company strategies.<sup>3</sup> Similarly, many governments seek to mobilize the voluntary commitments of their citizens in the service of public goals. When governments are seen as legitimate and the goals are consistent with popular concerns, enormous outpourings of energy may result. For example, thousands of young Iranians went forth to fight the Iraqi invasion; thousands of idealistic young Americans joined the Peace Corps in response to Kennedy's calL When government actions are not seen as legitimate, the same energies may be turned against them, as in the United States when large segments of the population actively resisted the Viet Nam War and in the Philippines when election fraud led the people to oust their government.

# Mobilizing Voluntary Energy

While in practice most organizations utilize several approaches to mobilizing and organizing their resources, they often depend on one approach as primary. Thus Etzioni argued almost three decades ago that organizations could be divided into three types quite similar to the sector descriptions we have proposed. In his typology, utilitarian organizations, like commercial firms, promise material rewards to their members in exchange for their calculaive involvement; coercive organizations, like prisons and armies, secure alienating involvement through coercive control; normative organizations, like churches or social movements, mobilize members for moral involvement through shared values and normsY If VOs in fact mobilize people around shared values, we would expect the members of VOs to see their jobs in quite different terms from members of primarily commercial or governmental organizations. There is evidence that they do.

..third sector employees bring to their jobs a greater commitment and nonmonetary orientation and find more challenge, variety, and autonomy in their jobs and more influence, and, perhaps, mystique in, their work roles. Nonprofit workers also find more intrinsic rewards in their jobs. The majority would prefer to continue in their present work.<sup>3</sup> 0 The dominance of value-based motivation in the voluntary sector has implications for leaders of VOs. Leadership based on hierarchical authority or financial incentives is less likely to be effective in VOs than leadership grounded in shared visions and adherence to common norms. There is a growing body of research on the characteristics of the charismatic leader who appeals to the values and visions of his or her followers. This research concludes that leaders who are able to articulate shared visions and mobilize their foilowers around them are more successful than others in sparking high levels of performance in individuals, teams and even national governments.3!

# Organizing Around Shared Values

Organization to use voluntary energy effectively requires stru tures and processes in some ways quite different from those familiar in other sectors. Recent conceptual analyses suggest that there may be organizational forms that are particularly appropriate to different forms of social energy. The analyses of 'transactions costs theorists, for example, have identified three fundamentally different patterns of organization that are efficient under different conditionsY2

- a _Markets_ are highly efficient for making decisions provided certain assumptions about competition and information availability are met. The mechanism of price provides a coordination mechanism; decisions are made through negotiations about prices; agreements are formalized in contracts and if necessary enforced through the court system.

9.
- _Hierwdchies,_ in contrast, are efficient organizational forms when the assumptions of a frictionless market are invalid. Formal authority is the fundamental coordination mechanism in hierarchies; decisions are made or legitimated by commands; authority can be formalized in rules and procedures and assigned responsibilities of individuals. Hierarchies are particularly useful when the transactions costs of repeated negotiations in an imperfect market outweigh the administrative costs of creating and maintaining a bureaucratic hierarchy.

- _Clans_ are organizatonal forms that are ccordinated by shared values and norms rather than authority or price mechanisms. Decisions in such organizatons are grounded in consensus about values and goals; expectations are enforced by "moral obligations" or professional ethics. Clan organization has higher costs in terms of socialization of its members for agreement on core values and expectation, but they cope efficiently with market imperfections that would undermine markets and with task uncertainties and ambiguities that would overwhelm bureaucratic hierarchies.

Clan forms of organization are equipped to innovate in the face of high levels of uncertainty and ambiguity. Their members are integrated around shared understandings of the organizational mission, so they can adjust their behavior to fit changing conditions-rather than follow outdated rules and procedures. There are drawbacks to value driven organizations. Experience in voluntary development organizations indicates that the value commitments that are their strength can also be the source of considerable difficulty. Disagreements within value-driven or. ganizations are easily interpreted in ideological terms, for example, and so lead to explosive internal and external conflicts that can disintegrate the agency.33

# A Mix of Values and Strucres

It is worth re-emphasizing that most effective organizaeions in any sector will use a mix of values and structure to motivate and coordinate the actmities of their members. Whle VOs are organized around and centrally dependent on values for the definition of core activities and the mobilization of key resources, most also make use of authority and exchange as well.

In some VOs it is possible to identify two distinct systems that operate side by side. One represents a sort of leadership core of those individuals who carry and interpret the values of the organization, providing it with its energy, continuity, and direction. This is the group that will be found working nights and weekends, that stays with the organization through good times and bad. In addition there may be a parallel system, comprised perhaps of the administrative and possibly the operational personneL that performs somewhat like a conventional bureaucracy. This system is staffed with persons who have been attracted to the organization as a source of employment and have a conventional exchange relationship with it, remaining so long as the pay and benefits are more attractive than alternative offers.

The Rural Development Trust, for example, hires many village level workers whose primary reason for joining the agency is employment and regular pay. In return for employment these workers are expected to follow the dictates of authorities in the organizational hierarchy. Yet at the top of the RDT organization is a leadership group, the members of which are committed to a common vision, are the carriers of the organization's values, and remain with the organization to pursue that vision in spite of opportunities for more pay in other agencies. So long as members of the leadership team maintain the organization's value commitment, opportunities presented to the organization for increased funding and political power will be rejected if acceptance would threaten the organization's core vision of empowering the rural poor.

# VOLUNTARY ORGANIZATIONS AND DEVELOPMENT

Generally the VOs of concern to development donors have been those engaged in such functions as:

- . _Disaster relief_ for people suffering fromfamine, drought, war, and other natural and man-made catastrophes.

- **a** _Provision of senices_ such as health care, family planning, agricultural extension and crediL

- a _Comnmuniy oranizing technical and educational assistance_ to enable local groups to organize, solve local problems, and influence other agencies to provide better services.

- _Grant making_ to people's organizations and to service provider and community organizing VOs.

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- _Traning and technical assista3ce support to_ other VOs performing development functions.

- _Research and infomnation xchange_ for the formation of development policies and programs.

- _Netwoddng_ for experience sharing, program coordination and joint ation on sector issues.

- _Development education_ to increase public and opinion leader understanding of key development issues.

- _Advocacy_ in support of critical policy and institutional changes.

Our experience suggests that the order in which this list is presented roughly coincides with the allocation of donor resources to VOs under foreign assistance programs. in other words, disaster relief receives substantially more donor funding than any other VO activity, advocacy receives the least.

AU of the above activities involve international assistance. However, not all can be considered developmental by the terms of our definition. For the same reason, not all VOs assisted by donors are properly classed as development agencies.

# Service versus Development Catalyst Orpnlzations

There is an important distinction between welfare and development interventions that is important in distinguishing between voluntary service delivery organizations and voluntary development catalyst organizations.

_Vohwtwy Sernce Delivery Oriations._ Many organizations that provide disaster relief and welfare services in developing countries are organized around shared values and visiOnS, often tracing their roots to religious traditions.' VOs that deliver disaster relief or social services perform important social functions, but unless they are developing the capacity of indigenous organizations to replace them in these functions on a self-sustaining basis after their departure they cannot claim to be doing development work Where these are foreign or foreign funded VOs they may unintentionally be creating an anti-developmental dependence.3 In the case of disaster relief agencies, it is clearly difficult in the midst of a catastrophe to work seriously on building local systems to respond to future crises. However, m other than emergency situations, attention should be given to a more developmental approach that reduces dependence on foreign charity.

Some VOs, such as Oxfam America, have a clear commitment and approach to diagnosing local institutional capacities and to working to support and build these capacities rather than focusing on relieving immediate symptoms of the problem. Yet many VOs that deliver services needed in a local setting, such as medical assistance or education, find that it is easier to provide the needed services than to build local capacity.

Sustainability and accountabilit to benefiiary populations are critical concerns in assessing the appropriateness of service delivery arrangements. Sustainabiliq requires building systems with reasonably secure sources of ongoing resource support, such service fees or access to public finances raised in the jurisdiction served. Accountability can be achieved through developing competing fee for service providers that offer the consumer a choice, or through governance structures that allow the serice users to hold sctiice providers directly accountable - for example, parents electing a governing board that hires the teachers for the local schooL Where the services are funded by a foreign donor and delivered through an organization that has no accountability to beneficiaries it is difficult to establish that the tests of sustainability and accountability have been met.

Foreign voluntary relief and service organzations can have developmental impacts when they make explicit efforts to create local capacities to support or provide services that can be locally sustained. They are not development agencies when their impact is to create continuing dependence on themselves by the populations they serve or when they compete so successfully with local institutions that they in effect destroy local capacity for selfreliance.

_Dewlopment Catawst Oganiations._ Thirty Asian NGO leaders who met in Bangkok under the auspices of the Asian NGO Coalition in March 1988 to discuss issues of NGO strategy focused their attention on the importance of VOs workimg as development catalyst organizations defined as _oo that use temporay intenven"ons to promote the creon of sustanabk loca-ccountable stitions that in-_ _prove the quaty of life._ Development catalyst VOs differ substantialy from VOs that undertake to deliver services for an indeterminate period. The role of the development catalyst is temporary. Its actions are directed to catalyzing changs that produce self-dieding, self-

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**Ur 3. Dwtopmstt Catalyst** e"OrganlUon: "S iaijdl

donor's lack of understanding of the VO catalyst's basic nature and function.

First, the catalyst VO is neither a government dependency nor a business. So unless a donor is sufficiently generous to give it an endowmen **t** o fund its operations in perpetuiy, the VO necessarily depends on a continuing flow of external contributions from donors willing to allow it the independence and autonomy essential to carfying out its mission.

Soils ManJi: le -voluntary organzation that wOr-s W ith small fnrmers bn rural vilages ln mdIi..L: in the. late: $aventI village: workers b..ame frIstrated with-the minima IWpct of training mail farmers.ln agr1lcutur **m** l ods. Wlththeal -*id-. an outside consulant Fey loia program tolp famr leaders .and village groups anayze thekairIcurstancesia plan InitIatIve and organizeSthemseles collecto: arry o their plans.

Second, the true catalyst VO performs temporary functions. For this reason there is no inherent contradiction between its reliance on external funding and its commitmen **t** o sustainability - as long as it maintains its independence in defining its agenda and strategy.

Te farm.r groW ps became wetreely actie, ng ' **c** hosen projects like buld. aly .ig chools, reducing vlllage alcohol consumptilon demanding more attention from agricul tS ext6nn-agents, and building coa1Ions Etol:el:t fW repese t to local govern mennt- bodles. The -results of the wodrhops nd villagefollowup actvties were 8so suc cesefuiJthat ... ,So: a Mandir staff soon began applying it hi dozen dof other villaes, The task of the catalyst Vo is to build selfreliant sustainable institutions that are accountable to the people, rather than to become self-reliant and sustainable itself. The concern of the donor therefore should be not with whether the catalyst VO is itself becoming financially self-reliant so much as with whether it is effectively developing self-reliant self-sustaining organizations and structures able to survive its own departure.

Sotibee RaJesh Taridon _and_ LDavid Brown, :ranzatlor-Buildlng for Rural Development: AnEXpeimet 'in India. _JJourna ApiWed_ BeheMru _$cfce._ :17:Z 1981, -pp.172-189.

Effective performance in the catalyst role requires that the VO maintain substantial independence in defining and interpreting its own mission so that it does not fail captive to power holders in government or business who see their interests as better served by maintaining the status quo. At the same time, its survival and effectiveness often requires that it maintain credibility and legitimacy with a wide variety of external constituencies, including donors. Effective development catalyst VOscatalyst VOs become adept at articulating visions and values that stituencies, as well as in their own members.

financing local institutional arrangements that can survive its departure. See Box 3 for an example of a development catalyst organization.

Some VOs that believe themselves to be catalwith a wide variety of external constituencies, ysts are surprised to realize on reflection that they including donors. Effective development catalyst VOscatalyst VOs are not. Even VOs committed to organizing local become adept at articulating visions and values that communities for empowerment and self-reliance strike resonant cords among diverse external conoften find they have unintentionally allowed the stituencies, as well as in their own members. beneficiary groups to become dependent on them for services such as credit or health. Such depenVoluntuy Sector Support and Networking dence is increasingly being recognized by VOs as Orpinatlons counter-developmental.

Development catalyst VOs face constant pressures from donors to move into welfare oriented service delivery roles that may compete with their distinctive catalytic functions. Service delivery is easier, produces results more quicldy, and is more likely to please donors who want their resources matched with clearly measurable outputs. Both donors and catalyst VOs must be alert to these forces and attempt to resist them.

As the voluntary sector matures in a given country, there is normally an increasing differentiation of functions among its component organization **s** , ome of which undertake to become specialized service providers either to other members of the sector or to people's organizations. Similarly growing numbers of networks will emerge.

_Sector Support Ogewi4dos._ These organizations provide technical assistance, training, research, advocacy support, and other services to VOs that can not allocate resources away from their primary activities to create in-house expertise. As the voluntary sector grows in size and complexity, increasing Another dilemma posed for the catalyst VO by well-meaning donors is the expectation that they should demonstrate their ability to become selffinancing The expectation commonly reflects the

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Bz 4s. Supporti **Or: nization: Societo** for orll 46acrch In As (RIA).PRIA Ii Sfl NGO that provides jpartlclpatrY rMWch, tItftinlflg andconsulting suppom to * wida range df aess|ltOs nilonar g _hn_ Indbiaand AsIa$bhs aff members typicafly hav **t** s kgrouneds inl community organizing and MUM Ot fields;: and they work In half a do se' raing ro w deM * -ont toli ery **t** tfO wasteland reclama. :ion, m _.PRI_ has pieed te theoy and pracropad rch anIld ctll,uad d: hi with -o9perarassroo s **t** ion NGQ -way of diagnosing and solving thelr problems ofO-aizat and fafaee The- agency has- developed a program of educating NGO staf.*Wf Ixperiential training methodologies adapted to- rral organizin woc PiRIA staff iave also utuiiid their experlenc to dsveop manuals and literature on parWatory niZing. Through linkages with simlar .IntdtutI6ns: n other countrs these materils have received wordwide disseminatkn,

numbers of such specalized organizations can be expected to emerge to serve its growing needs. In India, for example, the growth of the voluntary sector has rea&rd the point where it requires the support of many high quality technical service organizations, such as PRIA. See Box 4.

_Networks._ Networks are self-help support systems, commonly with secretariats that provide services for their members similar to those provided by the sector support organizations described above. But unllke other sector support organizations the network secretariat is commonly responsible to a board that represents the members the secretariat is intended to serve. Most rnetworks also have the specific function of linking together like-minded organizations to share information, plan joint activities, and make a united response to political pressures from governments and the demands of international development agencies.

As development catalyst VOs become more concereed about the sustainability of local development initatives, they also become more conscious of the detrinental consequences of many existing development policies and insitutons and the need for coliective advocacy efforts. This is leading network organizations and associations to take on increasingly important roles. For example, a new interest is emerging members of some VO networks in defining shared visions to which they can apply their individual resources in mutually supportive ways in pursuit of national development agendas that would be impossibk for any single member organization to attempt.

Some networks attempt to link al voluntary agencies within a country or geographic region. An example is the Association of Development Agencies of Bangladesh (ADAB) described in Box _5._ Other networks are organized around specific ..... -:;..::.-:.=issues or aras of joint interest The International Council on Adult Education (ICAE), for example, is an association of regional and national associations that includes the adult education and literacy associations of Africa, Asia, and Latin America as members. ICAE World Assemblies are occasions at which adult educators from all over the world share experience, learning and support.

While these associations seldom speak for a very integrated constituency, they do serve as important channels for the diffusion of ideas and technologies for local development initiatives The "participatory research" movement, for example, which has advocates and practitioners on virtualy evcry continent, has grown largely out of networks inspired by ICAE and its membe&'3

> BoK 5. Voluntary Netwolrk: -Assoclo f Development -Agencies oft B. ng3ladih (ADAB)

ADAB includes the major vnuntar deopment agencies working in Banglade`h among Its tmmibership. in early 1988 fte chliie .- tives of the largest dozen merber8:od ADAB came together to discuss the developmen situation In the country and thf p sf the future. Although- the-agencs had a hW oy of-some conipedtion and jealoiUsy t h,It eoxtetues weret somewhit stard ind themselves i essenti agreement about th bleak prospecs for future deveil.'PM Outoad this,m eIn :::mergdanAh -:. ml: that U1 ih9e pat th ment In Bangladesh depided othbt t ldless peoia organiopmt by.thevarious NGOC to'. link: o i-. otions capable f ng n l e and -politIcal influence. They aged td begi exprlefitlng in eetdirc iththe promotion of landless feratdi w long term end of enablin w d4 eMtlon among peopleog n

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they are committed -- as is true of many socially progressive for-profit businesses. Many also operate on the basis of high ethical standards -- as again do many for-profit businesses.

## OTHER **TYPES** OF SOCLi1 ACTION NGOS

As indicated earlier, there are a variety of NGOs of interest to development donors that are not VOs. Two types bear special mention: puolic service contractors; and people's organizations.

However, the VO is likely to be more cleauly focused than the PSC in the pursuit of its particular social mission. It is more likely to challenge conventional practice and to be openly critical of government and of public policy. It will be more selective iL its choice of funding sources, attempting to limit its reliance on donors that might redirect its mission. It will strive to accept contracts only when they offer a clear opportunity o advance its own mission We will look more closely at the issues raised by the PSC in a latter secion.

# PubUc Service Contactots

Maz-y NGOs are highly market oriented, evaluating their 9verall performance on such criteria as total funding level and market shares of particular tyes of fund&g. Though non-profit, they function largely as businesses within the development industry, selling services to governments or private donors, much as firms in the US. that accept contracts from government to provide a range of municipal services from garbage collection to health delivery. We refer to these or6utizations as public service contractors (PSCs).

# PeopWs Ogdzantions

People's organizations (POs) are commonly cassified as NGOs. They represent a special form of NGO that differs from both VOs and PSCs in ways that make them of special importance. For an organization to qualify fully as a PO it must meet three criteria: The more competitive PSCs feature substantial technical competence, elaborate management systems, and concern with cost efficiency. Where resources are available they may operate on considerable scale.

- It must be _self-rliw_ in that its continued existence must not depend on outside initiatve or funding.

It is important to address PSCs as a special category of NGO, because they often represent what donors are really seeking when they contract with NGOs for advisory services and project implementation. It is important for donors that want a contractor type of service to be aware of the difference between VOs and PSCs, both to increase the chances they will get what they want, and to reduce the chances that they will treat a VO like a PSC and unintentionaly reduce its ability to function in its distinctive VO role.

- It must be a _mual bene associaton_ in that it exists to serve its members.

- It must have a _democwc sttuctu_ that gives its members ultimate authority over its leaders.

The fundamental importance of strong POs in maintaining the dynamism of a society has been demonstrated throughout history, even in the early pre-industrial empires. A series of studies by Unger concluded that periods of decline in the great preindustrial empires were triggered by the success of elites in gaining control over peasant land and labor. This control enabled them to reduce smallholders, **t** enants and wage laborers to serfs on great estates. According to Unger, empires that avoided decline were characterized by vigorous independent local organizations of farmers who wereof farmers who were sufficiently politically conscious and organizationallypolitically conscious and organizationally skilled to engage in collective self-defense against these ultimately self-defeating and anti-developmen-and anti-developmental forces of social oppression.37 Conceptually the difference between a VO and a PSC is clear. A values-driven VO defines its program based on its social mission, and then seeks the funding required to implement it. The marketdriven PSC stats with an assessment of prospective funding sources and defines its program on that basis.

In reality it is sometimes difficul **t** o distinguish independen **t** enants and wage laborers to serfs on between the VO and the PSC, particularly as NGOs great estates. According to Unger, empires that come to rely heavily on government support, and as avoided decline were characterized by vigorous a growing number of VOs establish PSC units or independent local organizations of farmers who wereof farmers who were affiliates as a means of generating income for their sufficiently politically conscious and organizationallypolitically conscious and organizationally VO work in response to donor interest in contractskilled to engage in collective self-defense against ing with NCOLs. these ultimately self-defeating and anti-developmen-and anti-developmenThe PSC may in many respects look much like a VO in its structure and its formal statement of purpose and have the same type of legal registration. Many PSCs combine a market orientation with a social commitment and have mission statements that emphasie the social agenda to which As development catalyst VOs articulate their visions, they commonly define as one of their central tasks the empowerment of people through the formation of grassroots organizations to assume key economic and political roles in improving their own

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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.

__15 -_
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- _. Tehncal capacity for comple project._ This is a function of their smal size and budgets. They are limited in the total number of sta and their modest pay scales limit their ability tolimit their ability totheir ability to attract staff with advanced technical and profesdsional qualifications.4qualifications.4

# VO STRENGTHS AND WEAKNESSES

Many writers on VOs have been particularly interested in enumerating their special strengths and weaknesses, commonly using government or commercial organizations as a basis for comparison, While these assessments differ, there is a general consensus that we attempt to summarize below. In each instance we have indicated the characteristics of VOs that give them the specal strength or debility in question. It should be noted that the VO community is highly diverse. Not alU VOs reflect the strengths noted here. Nor do all suffer from what are widely perceived to be typical weaknesses.

# vo S ghb s

In general evaluators agree that VOs have a special ability

- _To reach the poor_ and other populations unserved by public or commercial agencies.4 This capacity is often a function of their special commitment to help poor and neglected groups.

- _Abilty to nscake up" succefid projecs_ to achieve regional or national impact. This is a function of small size and resources, limited administrative systems, intensive focus on a few communities, the difficulty in maintaining their essential value consensus as the staff expands, inattention to developing real efficiencZ and expertise in a weU defined technology, and even their own commitments to their initial beneficiary populations.4

- _Abiity to d&wJop_ **_cOflunity oi'gnns_** _dth are able to susadn hemehler_ once the VO withdraws its special staff and resources. This is a function of the fact that VOs depend on short-term, soft-funding sources, commonly define their interventions as short term, and work in isolation from or even in competition with other institutions whose support is required for long-term viability. VOs also seldom give adequate attention in project planning to sustaufabihty questions.

- _Strategic perspeti and lnkages wth_ **_odhr_** _ipmpt actors._ VOs often ignore the larger context in which they operate, focusing only on the micro-level and failing to recognze the

16 -
extent to which the communities they serve are parts of systems strongly influences by other agencies and forcees This weakness may stem from a combination of commitment to locality specifc interventions and a sense of moral superiority that leads to undervaluing the ability and intentions of other orgamzations.

- _Manageril and oganizational capabilities_ .This stems from a combination of their lack of the necessary skills, reluctance to spend their scarce resources on functions that seem unrelated to beneficiary needs, donor unwillingness to fund administrative expenses, and values that equate administration with inflexible bureaucracy.

# Rethinking VO St&engths and Weaknesses

To summarize, voluntary development organizations have demonstrated substantial comparative advantages, especially their ability to innovate, adapt to local conditions, and to reach and work with poor and difficult-to-reach populations in developing countries. These capacities are a function of their values, special skills, small size, limited resources, flexibility, and freedom from political constraints. They also commonly demonstrate serious weaknesses, especially in achieving sustainable outcomes on a consequential scale. It is important to note that many of these weaknesses are a function of the same characteristics that give VOs their distinctive advantages, in particular their value commitments, smaUl size, independence and lack of administrative rigidity.

One important implication is that it may not be possible to eliminate all the weaknesses in VOs without simultaneously eliminating their strengths. For example, the larger the organization the more difficult it is to sustain the value consensus that is critical to sustaining the flow of voluntary energy that gives the VO its special quality.

On the other hand, some VO weaknesses are not inherent, i.e., they are correctable without eliminating the qualities that give the VO its distinctive strength. However, corrective action must be grounded in an understanding of the distinctive nature of these organizations. Otherwise, wel intentioned interventions may eliminate the very qualities that made the VO an attractive partner in the first place.

Ultimately it is the commitment to values and social mission that defines the distinctive strengths and weaknesses of the sector. The voluntary energy that drives the VO is self-directing within the parameters set by organizational values and visios It supports innovative problem-solving behaviors of a type and intensity that is difficult to achieve through coercion or even market forces.

Development planners and donors who recognize the special power of voluntary energy as a development resource face a frustrating dilemma. They see the potentials of VOs. Yet they need to operate on a large scale, while VOs tend to be small and scattered, with account ng systems that do not meet the standards of donor auditors. The primary tools with which planners and donors work are the conventional government tools of coercion and money. The use of either is more likely to suppress than to elicit the release of voluntary social energy. Furthermore, their planning and management tools call for adherence to project blueprints and fixed schedules. The social processes through which voluntary social energy is generated and released simply don't conform to these types of blueprints and schedules.

The first temptation of planners and donors is to remake the VO to conform to their administrative and programming requirements. To do so is something akin to killing the goose that laid the golden eggs. It is likely to destroy the ability of the VO to generate the special resource - voluntary social energy -- that is the object of the planner/donors attention.

A particular danger is that the planner/donor will create incentives that will encourage VOs to assume more of the characteristics of PSCs. Or they may unintentionaly encourage the formation of new market driven NGOs, or PSCs, primarily in response to the availability of funds. The availability of funds from foreign donors for family planning services in Bangladesh, for example, has inspired the emergence of agencies legally organized as NGOs that appear to be more a response to market incentives than to voluntary commitment.

Differences inherent in the nature of organizations in each of the three sectors -- government, - commercial, and voluntary give organizations in each sector a natural advantage in some tasks and a natural disadvantage in others. Thus, for example, it is equally inappropriate to criticize:

- a Voluntary organizatons for limited ability to provide routine services to large populations on a sustained, self-financing basis.

- a Government organizations for limited ability to innovate and to adapt responsively to the needs of many different groups.

- **a** Commercial organizations for limited ability to provide services below cost to persons who cannot afford to pay.

> - 17 -
Donors and planners accomplish little by treating VOs in ways appropriate to commercial or government agencies. Voluntary organizations are not a substitute for government or commercial organizations in performing functions for which these other seCtors are naturally better suited. Where a donor identifies a need suited to the nature of government or commercial sector organizations it should not look to VOs as a cheap substitute.

# IMPROVING VO PERFORMANCE

are to have a consequential and contrutive role in its drcision process. When VOs are criticized for lack of technical talent, it is important to ask what kind of technical capability the critic believes they should acquire. VOs commonly demonstrate the ability to undertake projects that are highly complex from a social or political perspective. But one would not normally turn to a VO to build a dam or implement a major reclamation project. These capabilities are readily available from commercial firms that would be technically ill-suited to mobilizing community organizations.

There are important opportunities for improving Vo Expanding Scalk and SustalnablUty performance without risking loss of those qualities that are their distinctive asset. Many of the past Not all VOs have difficulty in increasing the scale of limitations of VOs have been largely self-imposed, their operations. The Bangladesh Rural Advancepartly due to their own acceptance of the prevailing ment Committee and the Sri Lankan Sarvodaya belief that development leadership can come only Shramadana, for example, operate programs and from large organizations with substantial financial projects of national scale and employ thousands of resowurces. As VOs re-examine their development staff members. The difficulties of sustaining volunroles, many of them see with increasing clarity the tary commitments and value consensus in such large extent to which their limitations are largely selforganizations are serious, but not insurmountable.5 imposed. As a consequence they are, in growing At the same time there is reason to question whethnumbers, thinking beyond charitable action in a few er NGOs operating on this scale are most accurately communities and giving greater attention to the classified as VOs or as PSCs. underlying causes of poverty, injustice, and environMore to the point, however, is the question of mental destruction. whether VOs _should_ Not all VOs have difficulty in increasing the scale of ment Committee and the Sri Lankan Sarvodaya Shramadana, for example, operate programs and projects of national scale and employ thousands of tary commitments and value consensus in such large organizations are serious, but not insurmountable.5 At the same time there is reason to question whether NGOs operating on this scale are most accurately classified as VOs or as PSCs.

More to the point, however, is the question of whether VOs _should_ operate programs of such scale, given their special strengths and weaknesses. We would argue that the scaling up issue has generally been improperly defined, at least in relaof the VO to operate services on a very large scale. There are other, possibly more appropriate, ways for them to contribute toward large scale social and economic impact, as illustrated by the examples in Box 7. The following are among the appropriate VO roles and strategies in support of 'scaling-up." This means thinking nore broadly than defined scale, given their special strengths and weaknesses. project areas. It means thinking and acaing in terms We would argue that the scaling up issue has of people's movements, and becoming engaged in generally been improperly defined, at least in relashaping national policies and institudons. It quickdy tion to VOs. It is not evident that it is in the nature becomes evident that this requires gaining access to of the VO to operate services on a very large scale. top level technical talent, thinking strategically about There are other, possibly more appropriate, ways for issues of scaling up, and building organizations that them to contribute toward large scale social and mobilize and use resources effectively. It becomes economic impact, as illustrated by the examples in equally evident that large scale sustainable changes Box 7. The following are among the appropriate VO require building alliances with other organizations in roles and strategies in support of 'scaling-up." the voluntary, commercial, and government sectors to solve problems that are intractable to any one of * _Demonstraton and Transfer to Govemment or_ them alone.<sup>4</sup> _Commercia Sectors._

- _Demonstraton and Transfer to Govemment or Commercia Sectors._ The VO may prove a service concept to be politically and economically viable on a pilot basis and then facilitate its transfer to the government or commercial sectors through provision of technical support. This was the chosen strategy of many of the local affiliates of the International Planned Parenthood Federation that pioneered the development of family planning services. A variation on this approach was used by Helen Keller International (HIU) in working with the Ministry of Health in Sri LIanka to develop a program of primary eye care and cataract treatment In this instance rather than doing its own pilot, HKI helped the miistry itself to develop

# Enhancng Technnal Capacity

VOs have the capacity to tap highly sophisticated technical talent either as employees or as volunteers - when they set their minds to doing so.4 There has been a significant growth over the past two decades in the number of highly qualified and socially committed specialists, researchers, lawyers and economists that have joined the staffs of VOs.sb Of course when adding such talent, it is important to take care that the individuals added not only bring technical expertise. They must also share in the value commitment of the organization, if they

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the new service on a pilot basis and then supported expansion on a national scale.

- _Doing Small Scale-Development on a_ **_Larg_** _Scale through the Networkdng of VOs and POs. For example,_ In Indonesia WALHI has promoted environmental action on a national scale by promoting the development of a national network of independent local environmental organations.<sup>52</sup>

- _Promote Nahonal Policies that Enabk Self Help Action._ This may be effective where legal barriers seriously constrain decentralized self-help action. The Institute for Liberty and Democracy in Peru has identified legal and procedural constraints that limit the productivity of the selfhelp employment in the informal economy and has mobilized broad political support for key legislative changes.5

It is important to recognize that the strength of the voluntary sector as a development agent is not found in the size of its individual organizations so much as in their number and variety, their abilitp to constantly evolve, and the ever shifting networks and coalitions that they form. To focus on the performance and scale of individual VOs is to risk losing sight of the aggregate phenomena that they represent, a movement that is attempting to return the control of development back to the people who are its intended beneficiaries through the creation of what Annis describes from the Latin American experience as a "thickening web of grassroots organizations.' Cernea describes this movement as: a growing stream which gradually gathers its waters from innumerable affluents of various origin, location, and content, at every turn running into barriers or being constrained by straits, but nevertheless converging into an ever wider flow with multifaceted strength.5 In general it is probably inappropriate to look to VOs as large scale service providers. But there is nothing that predudes their pursuit of strategies aimed at large scale consequences, as demonstrated by a rich experience.

## Improving VO Management

We do not see any inherent reason why a VO must be poorly managed. But the management procedures and styles chosen must be appropriate to the VO's

# BOX 7: Appropsa Scaln Up

The Bangadesh Rural hdecmn Committee (BRAC) _cawed out a naon wide cam-_ plgn _tha_ trined one _person_ in each houe hold In Bargadesh to admIiter oral e hydtion trpy. Thls was accoplisshed as a one time campaign wlth ma media bacUp. Recognibn the nee for susaied uwppOt to the community In other areas such as Immniation and Vtmin A dlsbrut. BRAC has been drawing on k own wxper- **Wem** in vilag **healUt care** to assist **Mhlty** of Heath In deveopng Xt _capacy d ks_ nrWi health **ces** to **provide this** **_U_ on** a sustained basis throughout tho county. . CARE/Indona had **become** recognzed for ts **succ** In Itallng commwnity masaged water systems. But a selWassessmet led to the conclusion that 70 to 80 water systems a year was an nconseqeti contribution In a country of 170 mbilIon people. Furthermore, all the resources avalabe to lI agerclC hIn both ft egOv D n and vduntary sectors for water supply developwmet **WeO** not enough to met th needs oi unserved populaions In the foreseebW futix on th usul subsidized bashi Coneqiety CARE lIndonsia has reornte strategy to focs on expelrenfing wih selffinancng approaches to vilage waer supply. It then expets to share the lssons of tfis experencew wih governent and ote voluntary organkations who want to provide technical support throughout the country In the rIstallation of self-financing systemrn

> Ource: -David C. Korten, BRAC (A). (B) & (Q.- and CARE Indonesia (A) (B) & (C), teaching cass available from IDR.,

# nature and task.

Too often, the criticism of VO management capabilities is substantialy motivated by the concern of donors with meeting their own audting and reporting requirements. There is little evident relation between performing these tasks wetl and actual development effectiveness, partiejArly in the more innovative roles of the VO.

The control oriented st).rs of management common to government, and generally favored by donors, are not effective when the goal is innovative problem-solving and the mobilization of voluntary energy. The modern literature on corporate management demonstrates that the most effective forms of

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management, even for large market-oriented corporations, are those that seek to mobilize the selfmotivation and self-direction of staff through the development of value consensus regarding the firm's social role.' These forms of management emphasize selfdirecting, problem-solving teams. They also feature well developed accounting and information systems, but these systems are designed to provide information useful in self-directed problem solving rather than to assure close adherence to budgets and blueprints. These forms of management are well suited to VOs.

Resistance among VOs to management improvement is rapidly declining. As VOs take themselves and their development roles more seriously, they are also becoming more interested in improving their managerial capabilities. The barriers are increasingly found in the lack of adequate sources of assistance in developing appropriate management systems and skills;58 and donor resistance to funding administrative overhead and staff development expenses.'

# INTER-SECTORAL RELATIONS

Balanced development is a complex undertaking that cannot be achieved by any one sector alone. Each sector -- market, government, and voluntary -- is subject to failures inherent in its nature. These failures can often be compensated by strengths of organizations from other sectors. Pluralistic societies that foster the strength of all three sectors thus gain institutional advantages over societies dominated by a single sector in the wealth of organizational resources they can bring to bear on difficult problems.

But in practice such collaboration is often difficult to start and even more problematic to sustain. The differences among the sectors are simultaneously the source of potential synergies and the cause of setious misunderstandings.

# Development Partnerships

Cooperation across sectors is an attractive means of using the special capacities of different sectors in development projects. The importance of publicprivate partnerships between government and business is increasingly recognized in some settings. For example, in the United States there has been a dramatic escalation over the past decade in the use of public service contracting as a substitute for direct delivery of public services through government bureaucracies. The resulting competition among service providers results in increased efficiencyq.

Me ly development problems have the characteristic of social "messes," in which interacting conste itions of problems reinforce one another and frustr .te single agency efforts at solution.<sup>6</sup> ' Multisector partnerships of institutions from different sectors that utilize the special strengths of each ma, be a key to unlocking many development problems.

The potentials for joining forces with other organizations within or beyond the voluntary sector are being discovered by a growing number of VCs. An example of the type of collaboration that is resulting is illustrated in Box 8.

VOs have natural advantages in facilitating the formation of such partnerships by acting as a credible bridge among potential partners who have histories of conflict or mistrust.' Their independence gives them a degree of neutrality and flexibility,T 4 and sometimes confers a degree of credibility that other participants in the partnership lack -- particularly in dealing with poverty groups. A. . s ;ame time, the experience of VOs in relating vith cdifferent constituencies -- POs, donors, govt- -nment agencies -- can be a critical input to the sensitive negotiations required to launch and maintain cooperative activity among very diverse agencies.6' Important though it is, there are important barriers to collaborative problem-solving in manky Third World countries, particularly between VOs and governments.

# Uneasy Relations between Governments and VOs

At the most basic level, as outlined earlier, the distinctive role of government is to maintain order and stability. The distinctive role of VOs is experimentation, innovation, and change consistent with core val,ies of their members. Though both government a d VOs contribute to a dynamic society, it is easy for tnem to come in conflict. It is also easy for agencies v each sector to become preoccupied with their oWL importance and lose sight of the extent to which th ir effectiveness can be enhanced by the effectiveness of other sectols.

From the point of view of those who hold state power, VOs and POs may represent more than a source of competing ideas. Even enlightened political leaders who recognize the role of `'tutional pluralism in achieving development dyn-. **-ir** m are aware that the sector may also produce poUacal and economic competition. VOs are commonly training grounds for alternative leadership, and sometimes the temporary haven of out-of-power opposition politicians. Consequently, there are good reasons for politicians in power to look with a wary eye on the emergence of a dynamic voluntary sector.

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# **Box z. Development Partnerhip: Savings Development** Foundation In Zimbabwe

For these reasons, Third World governments are inclined to assess VOs and their contributions more from a political perspective than from economnic efficiency perspective that tends to preoccupy donorse' and to make decisions regarding their regulation on this basis -- rather than on the basis of their potential as engines of social and economic development. The less secure a government is about its own politica **l** egitimacy, the greater its reason to fear a populace mobiized in autonomous organizations -- and the more ikely it will seek to control, even suppress, the voluntary sector,' as w5il as the free market commercial sector.

In Zimbabwe, the Savings Dowopmnt Foundation (SDF) works with govemment ministrbs and private firms to support Increase agricultural production among smallholders, pariculary women. SDF pinerd a simple method of encouraging weely savings d small amounts of money by households organized Into neighborhood group and devie a fnncial reoord-keepIng system accessible to non-literate people. As a resuilR group members-numrrring by 1985 about 250,000 persons In more than 5,700 dubs-now save enough money to place bulk orders for fetilizer and seed. Rural women thereby Increase their financS Irdependence and modemize their fanning skills.

Michael Bratton has identified four categories of control mechanism used by African governments to control VOs and POs, rangin from the relatively subtle to the outright coercive.

- _Monitonng/Registrtion._ In order to transact business, and particularly to receive foreign funding, in most countries a VO must be registered. This can be a proforma procedure involving a few straightforward requirements or a serious barrier to NGO formation.6 Requiring government approval of foreign funding contributions also provides opportunities for harassment and delay, even where approval is ultimately granteAd.

The parnership Involves the Mlnistry of Community Development and WomeWs Affairs, whose fedd staff are trained by SDF to teach the savings methodology, and th Ministry of Af1culture, whose extension agents are llnked by SDF to groups why raquire technical services.

The -parnrship has also Involved a privte fetiIzer company to flnance the production of tralning materials. The company's sales to peasant farmers have Increased as a consequence -of Increased savings.

- _Coordindon._ Haphazard patterns of rural development can lead to official coordination of VO activities. At local levels VO activities may to subject to approval by a local agency or official, affirming that development activities are a monopoly of the state.

By the mid-Eighties this Innovative. lowcost, and participatory approach to raising agricultural production among the rural poor had become finrmy lnstitutionalized In Zimbabwe as a trgateral partnership between the public, private, -and voluntary sectors.

- _Co-optalion._ In some countries all development VOs are required to become members of a government sponsored coordinating body. The body may be registered as a VO, but will commonly have a board of trustees controlied by senior government officials. Control under such bodies may include review and approval of operating plans or control of all foreign funding. Co-optation is particularly popular with authoritarian governments of the politica **l** eft.?

Source: Michael BraKton Many Third World governments have been particularly pre-occupied with controUling POs, especially labor unions and cooperatives. Throughout much of the Third World government control of cooperatives is so complete that they are more accurately described as government agencies, created and managed by the state, than as POs. VO leaders in India have expressed concern that their government may follow the same regulatory path with VOs that undermined the cooperative movement as an inSee Box 9.

- _Reornizadon, Dissolution, and Imprnismuna_ described as government agencies, created and These less sdbtle control measures include managed by the state, than as POs. VO leaders in forced reorganizations in which the government India have expressed concern that their government replaces the existing leadership, (often in the may follow the same regulatory path with VOs that name of correcting some financial abuse), undermined the cooperative movement as an indissolution of the organization, or imprisonment dependent force for self-reliant local development. of the organization's leaders -- without legal See Box 9. recourse.

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This reglatory process can proceed in small incremental stcps--each of which is relatively innocuous and apparently well-intentioned. The cumulative impact of many smail steps, however, can devastatc the independence needed for the effective operatioui of both VOs and POs.'<sup>2</sup> The threat that some governments perceive VOs to pose does not arise purely from their more overt efforts to spawn political competition in their societies. The legitimacy of many Third World govern-

**Box** 9: Cooperatives Legislation In India

The first Cooperatives Act was Introduced In India in 1904 "to encourage thrift, self help and cooperation among agriculturalists, artisans and persons of limited means, and for that purpos& to provide for the constitution and control of cooperative societies." It was a ten page document that left it to the cooperative members to use their own Initiative In rnanagement matters. The Registrar of Cooperatives was to provide for their legal registration, audit their accounts free of charge, and perform certain fairly minimal regulatory functions. Subsequent versions of the law dropped "to encourage thrift, self-help and cooperationr from the purpose, Increased the Involvement of govemment, and all but eliminated member control over their own organizations. The Act in force in Andhra Pradesh State In 1985 was over 80 pages in length and gave the Registrar of Cooperatives the power, among others, to: divkie and consolidate cooperatives, amend the by-laws of any cooperative, postpone management committee elections and appoint a "person-In-charge! to assume the management committee's functions, supercede the decisions of elected committees, and Issue Instructions that all cooperatives were required to follow - irrespective of the wishes of the cooperative's members. Due to application of these provisions, aii cooperatives throughout Andhta Pradesh were for several years managed by persons-incharge who had no accountability to the members. Free election of management coimittees by cooperative members was restored only as a result of a successful **court** action brought by Samakhya, a VO committed to restoring the independence of cooperatives in Andhra Pradesh.

Source: Samakhya ments is based on their ability to deliver scrvices. Any VO that delivers services more cffectivcly and efficicntly ihan government becomes a political thrcat, no matter how benign its intentions.

There are basically three options open to the regime so threatened. One is to position itself to claim credit for VO accomplishments. A second is to hinder VO operations to the point that they become ineffective. A third option is to displace the voluntary sector by creating captive organizations to assume the apparent functions of VOs, but as instruments of the regime.

# Captive Organizations: GONGOs and DONGOs

NGOs that are created as captives of government to substitute for true NGOs are commonly re"ferred to by NGO leaders as "CONGOs," which stands for government-organized NGOs. GONGOs are created and registered as NGOs by govcrmnental agencies as instrumcnts of governmcnt poticy with government deftned missions. An example is the Indonesian women's organization, the PKK. Its national chairman is the wife of the Minister of Home Affairs. Each provincial organization is chaired by the wife of the governor, and so on down through the hierarchy. It is made clear to wives of government officials that they are expected to participate.

The formation of a GONGO seldom reflects a spontaneous expression of a shared value commitment, and participation is often less than voluntary. The motives in forming such organizations may be positive, and they may serve useful social functions, but they are less likely than agencies more squarely positioned in the voluntary sector to serve as consequential agents of social innovation.' As donors become more interested in NGOs, they also find themselves tempted to create NGOs suited to their own perceived needs. Such agencies might be called 'DONGOs," or donor-organized NGOs. The mission of a DONGO will normally be defined by its sponsoring donor. Such organizations may serve useful functions for the donor, while offering a degree of flexibiiity in administration and funds disbursement that the donor's own procedures might not allow.<sup>74</sup> Since donors are particularly preoccupied with the disbursement of funds and usually find their own procedures and modes of working ill suited to making grants to dozens, or even hundreds, of small scattered organizations, the DONGOs they create are most often funding bodies. This does not create a particular problem in itself, unless a number of donors should decide to pool their funds and channel them through a single DONGO -- creating a single control point for funds in violation of the

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pluralism principle we will outline later. Ultimately the person or persons who control this oranizadon gains inordinate control over the sector Such an orgnization also becomes a natural take-over target for a governmen **t** hat feels threatened by independent VOs.

# GUIDELINES FOR DONOR ACIION

There are important dilemmas in any effort to forge partnerships between VOs and major donors. As articulated by Michael Bratton: Concerns with coordination, size, and technical capacity of NGOs may encourage donors to support the idea that NGOs should b_ brought together under coordinating bodies that can absorb and retail large blocks of donor funds, insure proper accounting standards, and coordinate responsibilities for serice coverage. This concern may lead donors to sugges **t** hat government form an NGO coordinating body, or the donor might decde to act directly to form or co-opt a naticnal level NGO or NGO consortium body to serve as a conduit and a coordinating agency.

Big donors and small NGOs make uncomfortable bedfellows by virtue of unbridgeable differences of scale, ethos and capacity. In an asymmetrical power relationship driven by the movement of money, the goals of the dominat agency will invariably displace the goals of the subordinate partner.3 The differences between VOs and large donors are important and often difficul **t** o bridge effectively. In general, donor agencies tend to deal in money and technology, VOs deal in values, people and institutions. Donor agencies work with central governments; VOs work with grass roots organizations. Donor agencies engage in large projects; VOs engage in small projects. Donor agencies fund contracts; VOs depend on grants Donor agencies emphasize pre-planning VOs engage in adaptive learning. Donor agencies find strength in their size; VOs in their numbers and adaptability. There are many opportunities for complementarity, there is also much potential for conflict and mutual damage. There are no easy rules for donors interested in assisting VOs and the VO sector. We believe, however, that two basic tests of available choices _- vountaism_ and _piwusm -_ provide useful guides to action.

Such initiatives may appear to suit the needs of the donor, but they carry considerable risk of disrupting or co-opting the organizations they are intended to assist. The distinction between VOs, POs, and PSCs becomes important here. There is no contradiction in a donor effort to coordinate activities of PSCs through the use of centralized contracting mechanisms. But any external effort to impose coordination on VOs and POs represents a denial of their esseontial nature.

The donor that is conscious of such issues may tarity, there is also much potential for conflict and seek to avoid the imposition of external coordinadon mutual damage. There are no easy rules for donors by seeking to channel its funds through an existing interested in assisting VOs and the VO sector. We autonomous NGO consortium body governed by its believe, however, that two basic tests of available own members. This too can have unintended consechoices _- vountaism_ and _piwusm -_ provide quences. Consortium bodies normally exist to be useful guides to action. responsive to the needs and interests of their members. When NGO consortium secretariats become The Test of Voluntarism involved in exercising judgements on individual member proposals for the purpose of allocating a Commercial organizations are driven by market limited block of funds it inevitably changes the demand for goods or services. In working with relationship between the consortium body and its commercial organizations it is appropriate for donmembers. It may also politicize elections for the ors to say what goods and services they want, and board of the consortium body by enticing politically for vendors who can provide them with an accepambitious members to compete for control over the table return to present their bids. In the developconsortium's fund.' Commercial organizations are driven by market demand for goods or services. In working with commercial organizations it is appropriate for donors to say what goods and services they want, and table return to present their bids. In the development "business," donors contract with agencies that demonstrate their ability to meet required quality standards at the least cost. The contract specificatons and the donor demand that they be met as a condition of payment constitute the relevant control mechanism.

If donors and governments are to build an effective partnership with VOs, it is important that they recognize the distinctive social roles of the VO and the extent to which these roles turn on the VO's independence. They must also be able to recogpize the nature of NGO variants like DONGOS, and GONGOs." In contrast, the donor's guarantee of VO performance is the VO's demonstrated commitmen **t** o its mission and values. If the VO is to exercise its distinctive competence as an agent of innovation the relationship between the donor and the VO must give the VO the flexibility it requires. It is entirely possible that specific outputs cannot be known in

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advance, and therefore cannot be contracted in the conventional sense.

In a values-driven organization the value commitment is the source of motivation and discipline. Sinec the value commitment is intcrnal, the organization is largely self-regulating with respect to those values. With such organizations grants with broad terms of reference are appropriate, especially when the donor is more interested in investing in the organization and its mission commitment than in purchasing a specific service or product. Under such grrnts VOs are answerable to donors more in terms of faithfulness to their espoused misons and values than in terms of pre-specified contracts and outputs. Of course donors dealing with values-driven organizations have to be well informed about their values if they are to avoid unpleasant surprises. This leaves the donor with a difficult question. How does it know whether it is working with a real VO, when many organizations with non-governmental, non-profit legal status may be GONGOs, DONGOs, or PSCs rather than true value drive VOs? Whether an organization is non-governmental or non-profit is easily established. Whether it is a VO by our definition is less easily determined, and very much a matter of judgement.

As the availability of public funding for NGO activities increases, so to do reports of retired bureaucrats, unemployed local touts and other opportunity seeking individuals rushing to form NGOs to qualify for funding. These organizations are formed more as an entrepreneurial response to market or political opportunities than on the basis of value commitments. Donors should not expect that such NGOs will act like VOs, or even like responsible PSCs.

The test of voluntarism, which involves asking questions such as the following, can be quite helpful

- Does the organization have a well defined sense of its mission, and has there been continuity in its basic commitments over the years?

- Is there evidence that the staff, and especially the leaders, work for the organization primarily because they believe in its mission?

- Has the staff accepted adverse working condi-

- tions, when necessary, to pursue that mission including working at salaries below the market rate for people of their education, ability and performance?

The track record is criticaL Substantial differences in commitment and capability will have a major bearing on VO performance. An effective VO will commonly have a program that has evolved on the basis of learning from its own experience.tm Where the organization's program consists of partial shortterm commitments that coincide with shifting donor fads--one year women in development, the next year child survival and the next snall enterprise development--one might ask if it is market-driven more than values-driven.

# The Test of Balanced Pluallsm

When choosing interventions that bear on the development of the voluntary sector, we believe that balanced pluralism among the sectors is a useful guide. By balanced pluralism, we refer to development of different sectors consistent with effective use of their complementary strengths.

A key issue in the evolution of balanced pluralism is the distribution of power among the sectors. While equality among them is not practical in most countries, some degree of mutual influence is critical to using their complementary strengths welL The test of pluralism involves one basic question:

- Does the proposed interventio- enhance institutional pluralism and mutual influence in the society?

When the intervention would be more likely to create monopoly control over a particular institutional space, reduce the independence of existing organizations, or create a control point that might be used to limit freedom of independent association, it fails the test.

The issues involved are complex Take the case of funding for voluntary activities. Many donors are interested in increasing the flow of funding to VOs and POs. There are also calls for greater local control of such funds, on the grounds that funding decisions should be made by indigenous rather than expatriate organizations.

The range of possible mechanisms for financing voluntary activity is quite broad, a subject we touched upon above. What guidance is provided by the "test of pluralism" in choosing among them? For purposes of illustrating the underlying issue, we can put forward a worst case scenario: It is required that all financial contributions to VOs, whether from government or private, foreign or domestic sources, must pass through a single govermment-controlled agency that has sole power to decide on their allocation.

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In this scenario there is a single decision point, a total monopoly on voluntary rmancial resources. Decision-making would be in the hands of a single individual or group, virtually eliminating the possibility that the sector will serve multiple perspectives and values. The interests served would be almost certainly those of the persons who control the state.

An alternative scenario with respect to pluralism might look like the following.

A strong prevailing norm of voluntarism encourages individuals in the society to contribute ten percent of their income and time to voluntary causes of their choice. The state supports voluntary funding of VOs through tax exemptions for contributions to qualified organizations. Qualifying for tax-exempt status is simple, and freedom of association and expression is protected by the courts.!' In this scenario the state sets the basic framework. The choice of priorities in the allocation of funding resides entirely with individual citizens according to their individual value preferences.

These two scenarios represent the extremes of the spectrum from unitary central control to the ultimate pluralism of individual choice. The latter scenario is generally limited as an option both for lack of governmental commitment and for insufficient development of an ethic of charitable giving, We would argue, however, that in choosing among the policy options that it will support, the donor preference should be toward those options that represent greater pluralism, ie., more broadly distributed choice making. Thus for example:

- Pubfic financial support of VO activities should give preference to tax incentives for individual contributions over direct govermment funding.

- Direct public funding of VOs should be dispersed across multple ministries and levels of government rather than centrally controiled.

- Blocks of funds contributed to indigenous organizations to allocate should be distributed through several independent agencies rather than through a single conduit organization.

Donors should decline to participate in or endorse any scheme that calls for channeling all foreign contributions to the voluntary sector through a single govermnment controlled agency. Such schemes are, by their nature, a direct denial of the pluralism that represents the foundation of the voluntary sector.

# MODES OF DONOR SUPPORT FOR VOS

What are ways in which large donors can work effectively with VOs? On the basis of the discussion so far, we can identify at least five possibilities.

# **1. ProvidIng Direct Financial Support**

Most donors are primarily funding agencies It is natural -or them to think first in terms of providing VOs with increased financial support for their activities. There is no question that VOs require fin&acial resources and might benefit from increased flows of those resources But there are several dangers involved.

- Too much money can undermine voluntarism. Those who carry the values of the VO must remain clear on the organization's mission and their own reason for participating. Money must remain secondary to mission.

- . The easiest relationship for donors is to enlist VOs as contractors to implement projects, and to deal with them essentially as commercial firms. VOs that respond to this invitation may find themselves reorienting their basic nature to become PSCs rather than social catalysts.

- a Donors that seek to support VOs by earmarked government-to-government transfers of funds to be reallocated by the recipient govermnent to VOs risk undermining VO independence by giving the state control over their funding. Grants administered through the recipient government can inadvertenty compromise the pluralism that is essential to the strength of the voluntary sector.

Alleviation of poverty depends as much on the strengthening of institutions for political participation as on the strengthenivag of institutions that guarantee economic competition. Both forms of initiative depend on the institutional pluralism to which most VOs are committed.

If donors accept this perspective as the basis for !heir relationships with the VO community, they must recognize that on many issues VOs have more relevant expertise than donors. Where the VOs have greater expertise, it is appropriate for them to take the lead in defining the relationship.

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This will not be easy for either party. Few VOs have given serious thought to the possibility of such a relationship. Neither have donors. The donors would have to learn to listen and to play a supportive role, seeking ways to respond constructively to the needs and agendas of the VOs. The VOs would have to learn to grapple with issues and concerns on more of a national scale.

Avoiding the hazards of direct financing of VOs will require new mechanisms for making funds available in amounts and through procedures that will not overwhelm or pervert their special capacities. Appropriate guidelines might include the following

- Direct aid for VOs, particularly from large public donors, should generally be limited to two types of organizationn

- Large and well-established VOs whose track record demonstrates their capacity to handle large blocks of funds without being overwhelmed or co-opted.

- Organizations that function in the role of private foundations in making small grants to VOs and POs. These might be quasigovernmental organizations such as the publicly funded German foundations or the U.S. Iter-American Foundation. They might also be entirely private foundations geared to this purpose such as the Foundation for the Peoples of the South Pacific or Philippine Business for Social Progress. CIDA has created several foundation-like mehanisms for the channeling of assistance to NGOs in Asia.

- Funding should take the form of broadly defined grants tied to mutually agreed "program missions" that are evaluated in terms of general development values and objectives rather than specific and concrete contracted outputs.

- Reporting system **s** hould be standardized across donors and not require or reward the commitment of substantial VO resources to satisfying special needs of individual donors that make no contribution to improving the VC's mission performance.

Providing direct assistance to key VOs is potentially an important role for donors. But mechanisms are needed to provide that support without undermining the distincive nature of the sector. Without adequate safeguards, it is better for large donors to focus on other approaches.

POs are also subject to co-optation and donor support for them can be even more problematic. POs ideally are permanent community organizations that mobilize local resources to meet continuing local needs. Their strength depends even more than that of VOs on their becoming financiaUy selfreliant.

# 2. Finandng Sector Support lnsdtutions

Our review of the weaknesses of VOs suggests that they often need support other than increased financial resources. Donors may well contribute, for example, to the improvement of VO technical or management capacities. This might be accomplished by providing resources to promote the emergence and effectiveness of voluntary sector support institutions like the following

- a Regional national and sub-national VO consortium bodies that enable individual VOs to share experience and effective innovations, undertake cohesive action to resist destructive pressures from international agencies or government, and to create strategic networks and evolveintegrated natiotal sector strategies for development.

- Institutions offering training and consultation services to VOs, especially in priority areas such as strategy formulation, organization development, management trainiog, community organizing, and various technical areas.

- a Research institutes that offer the voluntary sector access to high quality technical advice and research supporL Such information can be critcal in helpig VOs influence policy decisions that require analytic sophistcation that individual VOs seldom possess.

- Advocacy centers that make available to VOs and POs expertise in developing policy positions, planning advocay strategies and lobbying legislatures. As more VOs and POs become interested in shaping the larger policy contexl, such advocacy and legislative skills will be more in demand.

The more the voluntary sector moves from work at the grassroots to asking questons about how to influence institutional and policy contexts, the more important specialized insttutions characteristic of a strong voluntary sector will become.

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Donor agencies may be able to support the work of grassroots organizations indirectly with resources given to institutions that serve the sector as a whole, even when direct financial aid to operating VOs is not practical for the reasons discussed earlier.

# 3. Increasing PoUtical Space

Our analysis leads us to conclude that some of the most promising opportunities for donor support of the voluntary sector lie in the realm of policy dialogue with national governments rather than in direct financing. There are few natural incentives for governments to encourage VOs, even though they can play an importt role in the long term development process. Donors had to assume a lead role in gaining recogniton for the importance of the market, and they may have to provide similar leadership in promoting policy and operating space for VOs.

There are three areas to which particular attention should be directed.

_Guarantees of Freedom of Associadon._ For the commercial sector to function efficiently, legal and procedural barriers that constrain the market must be minimized. Similarly, for the voluntary sector to perform its social role effectively, legal and procedural barriers to free association and expression must be minimized -in accord with the universal declaration on human rights. Registration procedures should be simple and easily negotiated by any legitimate group that meets the basic standards. Reporting should similarly be simple and limited to routine annual reports of acivities znd finances appropriate to the public record. Recognized organizaions, so long as they are not convicted of illegal activities, should not have to obtain prior approval for ordinary activities and financial contributions.

Just as donors have developed experise in advising on policies, laws, and procedures for a productive market sector, so might they develop the expertise required to advise national governments about the promotion of a strong and constructive voluntary sector. A first step might be to develop an inventory of relevant policies and procedures in countries at differing stages of development and with differing political systems to better understand the range of options and their consequences.

_Policies Encouraging Pivate Philanthopy._ As middle classes emerge in developing countries, the potential for generating significant resources for voluntary sector activities within the country increases. The contribution of such resources to voluntary development activity can be encouraged by legislation that provides tax or other incentives.

Donors might consider building capability to advise countries on how to structure incentives that will encourage private voluntary financing of VOs. Considerable experience has been gained around the world with such tax incentives. As a staring point it may be appropriate to survey this experience for lessons. Examination of how the philanthropic ethic develops in a country and how traditional charities can be encouraged to support development-oriented activities is also worth attention.

_VO Parwipation in Policy POCesses_ Governments commonly require that VOs obtain prior permisson for activities to insure that they are supportive of the priorities of the government. Less common have been decisions like that of the Aquino government in Philippines to invite VOs to participate in the deliberations of municipal, provincial, and regional planning councils to help insure that the development plans of the government are responsive to the needs of the people.

In general, development policy deliberations have suffered from lack of effective feedback from the grass roots. Even the introduction of locally elected councils has only partiatly addressed this problem, because local elites have often controlled those councils to serve their own interests. In a number of countries VOs have been addressing this problem by helping the poor organize themselves to support the election of their own candidates. But effective feedback channels from VOs or representatives of the poor remain the exception rather than the rule.

Donors can do much to help recipient governments explore mechanisms for expanding popular participation in a variety of policy forums. Again a first step might be to compile an inventory of experience with efforts by VOs and POs to provide substantive input to public policy processes.

# 4. Creating Feedback Unks from VOs to Donors

Donors need the kind of feedback that VOs can provide as much as governments do. VOs concerned with development and the environment have become increasingly active in providing donors with feedback on the negative environmental and social consequences of some of their projects. Some donors have taken such feedback seriously and have built mechanisms for continuing the dialogue. This is a positive step and should be given increasingly serious attention. But donor mechanisms for obtaning and acting on needed feedback are stilt limited.

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As VOs become more comfortable in dealing with donors as partners, they will probably seek greater involwement in early project planning in the hope of reducing some of the negative social and environmental consequences of large development projects. Donors might find the establishment of _national_ VO advisory groups to be usefuL just as some have experimented successfuHlly with _intenadonal_ VO advisory groups. One important issue that donors will need to face is the secrecy of their own proceedings and documentation. Donors typically treat their own planning documents as privileged information to be shared only with authorized representatuves of the recipient government. It is the rare representativa of a donor agency who is prepared to openly share such information with individuals or groups that might be critical of their content. There are reports of indigenous NGOs in Asia being able to obtain documentation on World Bank projects being planned or implemented in their countries only by working through U.S. NGOs that could more readily acquire documents from the Bank in Washington. Some NGOs are demanding that Bank documentation be treated as a matter of public record accessible to any citizen of either donor or recipient country. Nearly all U.S. government information is available on request to US. citizens under the Freedom of Information Act, and some NGOs want this principle to be applied to international development agencies.

The greatest resistance may come from borrowing governments. Most governments, including many democracies, insist on some confidentiality regarding public business. It must be remembered, however, that it is ultimately the people who are borrowing the money, not the government. It is the people who must uitimately pay, as particularly the poor of debt burdened countries have sadly learned. They have a right not only to know what is being borrowed in their name, but also how it is being used.

Some donors are becoming more forthcoming, but there is a long way to go before the critical information on donor plans and projects becomes public information subject to the kind of public scrutiny that is necessary to insure that public moneys are being used in benefcial and environmentaly sound ways. Donors are asking NGOs to be responsible critics. To do so VOs will need open access to donor records and technical data, as should be their basic right.

# S. Building Development Partnerships

The involvement of VOs in development partnerships differs in essential respects from the more

> 1 10. IntW-SctoMI Colabomtobn. : In IndonlsU thO Institu for Soco-Economl' Researh, Trainin and In an LlES). amaor vountaly agecy, has be siing t aionaltb ostrengthen vofllOIlt .ln IIlPIf devoe ld managen. W finding and thial rt SUipO(t *om the' Ford undatio :lth U.Sf :ntenatal-D the Iistitute his assited the Mtniiel o PUblc Wbfk. Home MaiAfaIrand 'aQIcM`u.A InIy thl y tined a]ndsUpWlecld gov mnt: CommrJnity aln enien -n p1ot prW"s atmred at e0=liwcn fame **IGIs-** in the: dIevoIpr6ent of ri tems. AA the Instftute became awr o X a d polly Impediments to buWld water users' organiations, thy exponded thelr efforts to Include studies and dialogue with govemment offcials- about the% lea status and powers of User. organiz. Even in smalli rrigationssystems,the go ment usually held managemer uthoritW.. In 1987 the WOrd Bank, draMwng on the Wofk -of-the Institete, agreed.with the-, g mrent to uppofrt. transferrn m rSponlSbblty for ll system.1 the gemment to water usrasociati pJtet inos8 the Institute in a key olto: traln govrnment employees for prildng th aseoclato to take on these ni. responsibUltles.e Insttite Is iwo adBIng on the Institutnal changes needtsu. port1thenew policy. The Institute p tion In this projiet is.financed:by the Ford Foundation.

t$orco Franoes F. Dfn...: conventional involvement of VOs in the implementation of a government- or donor-initiated project. In effective partnerships, VOs often assume leadership roles. Even when VOs are not the partnership initiators, in the type of development partneships we are advocating they are equal participants in planning, problem-solving, and action-taking process rather - rather than simply implementors of projects initiated, designed and funded by others This gives maximum scope for the VO to perform its institutional catalyst role in a way seldom available in more conventional projects.

The case described in Box 10 involving a collaboration between an Indonesian VO, three gem-

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ment ministries, the Ford Foundation, and the World Bank in Indonesia in support of new irrigation policies and programs aimed at strengthening the role of farmer/irrigator associations illustrates the potential of such partnerships. In this instance the Ford Foundation, itself a VO, had an important role in helping the Indonesian VO establish itself as a credible member of the partnership and in funding its participation, The operating modes of the large donors generally do not allow them to play the kind of stipportimg roles in heiping to engage VOs in this type of national partnership that the Ford FouAdadwoa was able to play in this instance. Large donors that lack such capability, might find it useU. to ally with organizations, such as the Ford Foundation, that are better suited to this nurturing role. Other foundations or international private VOs like Oxfam or the World Council of Churches might also be good allies in such cases.

Further efforts to identify and document examples of development partnerships should be undertaken so that the conditions for their success can be better understood and their implications for donor strategy and practice explicated.

# A RESEARCH AGENDA

We have proposed a conceptual lens for examining the voluntary sector that emphasizes its special capacities for social innovation and responsiveness to relatively deprived and unserved populations. This lens provides insights into the distinctive strengths and weaknesses inherent in the nature of the voluntary development sector, and how these complement those of other types of development agencies.

There has been little theoretically grounded research on VOs, in part because of the lack of an appropriate conceptual lens. With the benefit of such a lens we can better define a range of research needs that have important bearing on donor policy formulation and programming action. Among the important topics for research are the folowing:

# 1. Voluntary Sector Development

Voluntary sectors have developed quite differently in different regions, nations, and even in different regions within a gien country. Voluntary sectors in Asia, Latin America, and Afica each have their distinctive regional characteristics. In Asia and Latin America the voluntary sectors are generally strong. In Africa the indigenous voluntary sector is less well established. In Asia VOs have been inclined to seek out opportunities for collaboration with government.

In Latin America they have been more politically active, often seeing themselves as in fundamental opposition to government.

Within region differences are sometimes even more striking than differences among regions. For example, in the Asia region India and the Philippines are 'nown for the variety and density of their VOs. Yet within India, it is reportedly difficult to find a development VO in any of thle three northern states of Punjab, Haryana and Himachal Pradesh Pakistan and Bangladesh were once part of the same predominately Islamic country, with few if any NGOs. In less than two decades, Bangadesh has become home to some of the largest and most effective development VOs in the world. In contast, Pakistan may have tewer development VOs on a per capita basis than any other non-Communist county in Asia.

NGOs in Nepal are limited to a few charities working under the supervision of the Queen. The largest VO in Indonesia is barely a tenth the size of the largest VO in Bangladesh, though Indonesia is a larger, more populous, and generaly more developed country.

In Bangladesh VOs tend to become aU purpose community development generalists providing rather siu dar services. VOs in India, Thailand, and the Philippines are often more specialized.

There are also important differences among countries in the extent to which the legal framework guarantees freedom of association and encourages consequential voluntary sector involvement in national development. There are similar differences in the number and strength of support institutions offering educational, consultancy, research and advocacy services to the voluntary sector.

Little attention has been given to mapping and understanding these differences and the forces that have created them. For example, how have VOs and POs developed differently under authoritarian and democratic regimes? What have been the consequences of various types of regulatory and incentive policies? Such knowledge is basic to donor policy and action intended to strengthen voluntary sector development.

Approaches to supporting voluntary sector development will need to be very different in the Philippines or in Andhra Pradesh (India) than in say Pakisan, Nepal or the Indian Punjab. Yet donors have few frameworks available for understanding these differences and their implications.

What are the characteristics that define a healthy, vital and effective VO community? Does Bargladesh provide the modeL with its large generalist VOs substituting for government in offering nearly identical services to large rural population?

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Or is the appropriate model something more like the Philippines, with its diversity of VOs of differing political ideologies, policy and program commitments, and operating styles? Are there identifiable evolutionary stages in the development of a VO community? What types of support are most important at each stage? These are important questions for donors if they are to avoid creating distortions through well intentioned, but possibly misguided application of their resources.

Since development catalyst organizations commonly define their own performance in terms of the creation and strengthening of strong, self-reliant POs, no study of VO development performance could be complete without serious attention to VO contributions to the development of POs as an important feature of the institutional landscape.

The questions involved are most amenable to analysis on a comparative basis. They are also questions that many VOs and VO coalition bodies need to be asking themselves. Therefore, a participatory type of research process might prove appropriate. For example, the draft study report for an individual country migt. serve as the basis for a national conference of V(s in that country to review the report and its conclusions in a kind of sector self-assessment exercise.

Several country studies might form the basis for a regional conference devoted to a comparative assessment that would help to sharpen the frameworks for comparative analysis. An international conference might then examine patterns of regional differences. The result would be a much refined set of frameworks for assessing VO development in any given country, and a heightened self-awareness within the voluntary sectors of the participating countries of the issues they face as a sector.

# 2. Small Scale Development on a large Scale

Conventional concepts of replication and scaling up reflect a top-down bias in their underlying presumption that the task involves defining a blueprint for project action and then engagig a large development bureaucracy to stamp out replcations of projects based on that blueprint over a large area. Sheldon Annis puts a different twist on the conventional formulation by asking: 'How large can small become?' Or 'Can small-scale development be a large-scale policy?"m His questions puts the problem in proper context. The genius of the VO approach is found in its people-sized units of action and its local problem-solving focus, in contrast to the imposition of an externally defined blueprint. Yet it is true that so long as this is accomplished in only a few communities the consequences will be severely limited. Obviously the proper answer is to do it on a large scale.

The questions posed by Annis are best addressed on a case study basis. The research task is to identify examples of both successful and unsuccessfu efforts to accomplish smal scale, locally controlled development on a large scale. Normally the focus should be on reasonably mature efforts that yield clear and easily documented lessons, rather than on incipient zfforts in which it is only possible to speculate about prospective results. Each effort selected should be documented and aayzed as a case study to yield lessons and insights thar might be translated into other efforts to make sm-Rl-scale development large-scale policy.

Particular attention should be given to questions such as the foliowing Is there a point at which a critical mass of small POs sets loose a new dynamic that supports the spontaneous generation and linkage of such organizations? What are the conditions conducive to rich an outcome? Reports on the Latin American experience suggest that important insights into these questions may be found in that region.

The proposed documentation should be done from a social learning perspective. The most useful lessons are likely to address the question of how to create and manage the learning process by which a functioning set of institutional relationships emerges in support of large scale local development action. Efforts to find blueprints for cookie cutter replication are likely to contribute only to more large-scale, top-down failures.

In many instances the successful examples of large-scale coverage that provide uscful lessons may not be limited to VOs of the type described in this paper. A study of livelihood programs done by Judith Tendler for the Ford Foundation identified six initiatives that had influenced the lives of large numbers of poor." One was sponsored by a public sector enterprise, three by trade unions, one by a bank, and one by a private consulting firm. Tendler's study provides an important caution in such a research undertalkng it should not look only for examples in which the chief sponsor is a VO.

# 3. Medhanisms for VO/PO Funding

The potential dangers of publc donors channeling large blocks of funds to VOs and POs have been examined in this paper. But simply sensitizing donors to the potential dangers of inappropriate action does not provide them with a solution to their problem. We have yet to answer the key question: Are there demonstrated ways to channel such funds that are consistent with enlarging the

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scale of impact while simultaneously strengthening the funded organizations in their distinctive roles? Again a comparative case study approach is the research method of choice. There is need to pull together the available data on a variety of different approaches to public funding of different types of NGOs, applying the conceptual framework proposed by this paper to discriminate between development and welfare interventions, as well as between VOs, PSCs, and POs. There should be no presumption that a funding mcrhanism appropriate to one or another of these will prove equally satisfactory for the others because both the natuie of the ornzation and the task are likely to differ.

A ars step would simply be to do an inventory of the many mehbanisms presently in place. These include specialized organizations such as the InterAmerican Foundation, the partnership funding mechanisms being established by Canadian CIDA in a number of countries of Asia, the efforts of USAID to expand family planning service coverage in Bangladesh through grants to NGOs, and the experience of European governments in channeling public resources through international NGOs to indigenous organizations.

Once the inventory is complete, a number of experiences that represent a range of approaches and outcomes should be documented and analyzed from a comparative perspective in relation to the issues identified in this paper. Much of the necessary information might be compiled from existing evaluation and assessment documents.O The resulting cases should provide a basis for a contingency analysis suggesting the circumstances under which different funding mechanisms are appropriate. It wiOl be important to assess these mechanisms from a variety of perspectives. Those that are effective at developing VOs as a dynamic force for social innovation may not be the same ones that demonstrate effectiveness in contributing to smal-scale development on a large-scale.

reshaping global policy and programs on population and family planning.

At the more micro-level it would be useful to examine the use of formal mechanims for achieving direct grassroots input and feedback into both donor and host government policy and programm_g. Examples might include MYRADA's role in improving the design and implementation of World Bank funded projects in India involving resetlement of displaced populations and the Philippine experience with the participation of VOs on regional and provincial planning councils.

One output of the country studies suggested earlier might be an assessment of the extent to which VOs and POs in the country in question have played useful roles in shaping development poicy and programming, and why.

# S. Development Partnerships

There are numerous experiences that may lend themselves to documentation and analysis to achieve better understanding of the dynamics of development partnerships, the special role of VOs in their formation and maintenance, and the conditions conducive to their formation. Examples include the experiences briefly described in Boxes 8 and 10 in this paper, the LSP initiatives in Indonesia described in footnote 62; and the coOlaboration of Philippine Business for Social Progress with government, the banking system, and a variety of VOs in Negros Occidental in a locally initiated and controOed land reform initiative.

It is important to be clear here that the interest is in cases that involve joint inter-sectoral problem solving, often in situations that demands expenditure of considerable voluntary energy. This is not the same as the case of the multi-sectoral project implementation committee charged with implementing a project blueprint.

# 4. VO/PO Policy Partidpation

There is growing interest among donors in the roles of VOs and POs as sources of grassroots feedback in the design, implementation, and evaluation of projects. Here again documentation and comparative analysis of experience, particularly of sucessfl experience, is likely to result in useful lessons. At the macro-level it might be useful to examine the role and strategies of environmental VOs in reshaping the environmental policies of the multilateral development banks Going further back in history the same questions might be asked regarding VO roles and strategies during the 1960s and 70s in In relating to NGOs there is a danger that donors may equate small with simple. Most individual NGOs are quite small by donor standards, but they are not simple either in their organizational form or in their development roles. They are particularly complex in the aggregate, in part because the term NGO does not define an organizational type.

NGO defines only a broad range of types of organizations that have little in common with one another except that they are non-governmental and are legally registered as non-profits. They indude market-oriented PSCs, values driven VOs, and member accountable POs.

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Even among the more precisely defined category of VOs some organizations function purely on voluntary commitment, with no budget. Others have well paid full-time profesdonal staff. Their commitments span the range from pure relief operations to development advocacy and the mobilization of politically active people's movements. The participants range from saints to scoundrels. of VOs will often be overlooked if attention is focused on individual organizations. Only in the aggregate is it possible to appreciate fully the sector's contribution to mobilizing voluntary energy in support of a broad range of social agendas; its role in serving as a marketplace of ideas and of social and institutional innovations; and its function in the promotion and preservation of democratic institutions, in part as a counter weight to the centralizing and controlling tendencies of the state. These contributions are best appreciated within the dimensions of development that have so often been overlooked.

The strongest VOs and POs respond to a good deal more than financial incentives. Their distinctive development contributions are found in the fact that they are not the same as goverament organizations or businesses. At the same time they are not immune to financial incentives, which if wrow)y applied have the potential to destroy the volur.ary nature of all but the most strongly self-awsre of sary data elusive, and the potential for damage substantial If there is one central message of this analyis, it is that no resposible donor should undertake to wasdist or 'use' NGOs as a part of its development programming un!ess it is prepared to make a substantial investment in understanding their nature and their distinctive roles. Donors cannot automatically assume that exisdng staff experieuce and training prepare them to play a constructive role in helping NGOs become more effective in their 32 -