Global Policy Forum

The Power Shift and the NGO Credibility Crisis


By James McGann and Mary Johnstone*

International Journal of Not-for-Profit Law
January 2006

World politics has undergone a radical and often-overlooked transformation in the last fifteen years, resulting neither from the collapse of the Soviet Union nor the rising tide of fundamentalism, but from the unprecedented growth of non-governmental organizations around the globe. NGOs or Civil Society Organizations (CSOs) have moved from backstage to center stage in world politics, and are exerting their power and influence in every aspect of international relations and policymaking. NGOs have been a positive force in domestic and international affairs, working to alleviate poverty, protect human rights, preserve the environment, and provide relief worldwide. Few, therefore, have felt the need to take a critical look at the effectiveness and accountability of these organizations.

After 9/11, however, the specter of terrorists using NGOs as a front for their operations and some highly publicized cases of abuse have made this a critical issue that needs to be addressed by the NGO community.2 In addition, the increasing power of NGOs has prompted scholars, governments, and the media to raise questions about the roles and responsibilities of these new global, non-state actors. Fundamental questions include: how many NGOs actually exist, and what are their agendas? Who runs these groups? Who funds them? And, perhaps most significantly, to whom are NGOs accountable, and how and what influence do they actually have on world politics? This article will attempt to address these questions and suggest some ways in which NGOs can become more transparent and accountable as a means of protecting the credibility and independence of these vital organizations.

New Actors and Agendas

Organizations such as Amnesty International, Greenpeace, and the International Campaign to Ban Landmines have helped bring non-governmental organizations the international recognition that has made "NGO" a household word. Some NGOs gained notoriety by organizing large-scale protests that captured international headlines due to the violence and disruption they caused. Still others have organized meetings to coincide with the official gatherings of the G-8, the World Trade Organization, the World Bank, and the International Monetary Fund with the intent of challenging their legitimacy.

Milestones in this largely non-violent NGO revolution include the Solidarity Movement's role in the 1980's political transformation in Poland; the influence of environmental activists on the outcome of the 1992 Earth Summit in Rio de Janeiro; the international coalition of groups led by the South Council that developed the 1994 "Fifty Years is Enough" campaign directed at the World Bank and International Monetary Fund; and the labor, anti-globalization, and environmental groups that derailed the 1999 Seattle WTO meeting. The effectiveness of these efforts stunned the major multilateral institutions and governments worldwide and forced them to develop ways to engage and involve NGOs in their deliberations and decision making. With their place in world politics now firmly established, the majority of NGOs have moved from protesting on the streets to contributing to policymaking in the boardrooms of the United Nations, World Bank, World Trade Organization, and the International Monetary Fund.

International relations were once the exclusive domain of diplomats, bureaucrats, and states; however, today's policy-makers must consider a diverse set of international actors when formulating policy, including organizations as varied as CNN, al-Jazeera, the International Campaign to Ban Landmines, al-Qaeda, the Association of Southeast Asian Nations (ASEAN), and the Organization of Petroleum Exporting Countries (OPEC). While these actors were not born of globalization, they have been empowered by it. The diffusion of information, technologies, and power have leveled the playing field and enabled NGOs large and small to organize locally and have a global impact.

Jessica Mathews, Lester Salamon, and others have written extensively about the dramatic proliferation of NGOs and the impact these institutions are having on world politics.3 The current body of literature, however, has not examined the problems created by what can be called a crisis of transparency and accountability, an issue that looms on the horizon for the entire NGO sector. As we will see, NGOs as an international community lack the transparency and accountability in terms of finances, agenda, and governance necessary to effectively perform their crucial role in democratic civil society.

NGO Proliferation and Power

The term "non-governmental organization" describes a wide variety of organizations variously known as "private voluntary organizations," "civil society organizations," and "nonprofit organizations." The dramatic proliferation in the number of NGOs and the growth in public and private grants and contracts flowing to these organizations have enabled them to become a powerful force in world politics. Because so many types of organizations are subsumed under the acronym NGO, the scope and breadth of this sector's typological landscape is lost. Our inability to accurately gauge the size and range of this sector is one of the critical problems that needs to be addressed jointly by the public (first sector), private (second sector), and NGOs (third sector) around the world. Despite these limitations, a variety of efforts at estimation provide a glimpse into the scope of NGO proliferation. The Economist estimates that the number of international non-governmental organizations rose from 6,000 in 1990 to 26,000 in 1996.4 According to the 2002 UNDP Human Development Report, nearly one-fifth of the world's thirty-seven thousand INGOs (international non-governmental organizations) were formed in the 1990s. The Independent Sector, a non-profit organization that serves and tracks developments in the third sector of society, estimates that there are currently 1.5 million non-profit organizations in the United States. Similarly, India was estimated to house more than one million NGOs. NGOs have not only increased in numbers but also in membership, with many organizations more than doubling their member base at a steady rate.5 Recent figures from the United States Institute of Peace (USIP) emphasize the growth of NGO budgets, many of which have reached millions of U.S. dollars. USIP states that the 160 INGOs associated with InterAction have a combined annual revenue of $2.3 billion, almost all of which comes from private donors. USIP also echoes the point that "sheer growth in the number of INGOs in recent years has been dramatic," noting that more than 1,500 INGOs are registered observers of the United Nations.6

The real story is not the proliferation of NGOs, but how these organizations have effectively networked and mobilized their members to reshape world politics. This point was graphically illustrated by the significant NGO presence at the 1992 Earth Summit in Rio, where 17,000 NGO representatives staged an alternative forum to the UN-sponsored meeting, while 1,400 were involved in the official proceedings. Emboldened by their success, an even larger group converged in Beijing for the Fourth World Conference on Women in September 1995. There, an astonishing 35,000 NGOs organized an alternative forum and 2,600 NGOs participated in the official multilateral negotiations.

Understanding the Paradigm and Power Shift

The growth of non-state actors has in large part been fuelled by the perceived inability of both domestic and international institutions to respond to the social, economic, and political consequences of rapid advances in science and technology, growing economic interdependence, and political fragmentation. In addition, a growing number of transnational threats (pandemics, global warming, and the proliferation of WMDs) that require a coordinated response have created a need for new partners and approaches to solving global issues. As the NGO sector grows, however, it is also facing a new array of organizational challenges that it must address. We have identified six interrelated forces that we believe have propelled the remarkable growth of NGOs, and here look at both the problems and possibilities that each of these represents:

1. increased democratization, and recognition of the importance of civil society in promoting democracy;
2. an increased demand for independent information and analysis;
3. the growth of non-state and inter-state actors;
4. improved communications technologies;
5. the globalization of NGO funding, especially from North to South;
6. what can be called "a crisis in confidence."

1. Democratization and the Civil Society Ideal:

The addition of more open societies has been a necessary condition for the creation of an environment conducive to the proliferation of independent, issue-driven, and action-oriented NGOs. The emergence of the civil society movement has put political pressure on governments, which in turn have created the space and demand for NGOs in the political landscape.

The work of civil society theorists, such as Robert Putnam of Harvard University, and the dramatic social laboratories of Poland, the Philippines, and South Africa have served to advance the perception that democracy cannot prosper unless a society contains an extensive network of organizations that promote civic engagement, dialogue, and trust among both acquaintances and strangers. NGOs are perhaps the most natural and effective response to this need. Furthermore, according to civil society proponents, such organizations are critical to promoting the protection of freedoms and social needs as well as the quality of public information and political interaction.

It is important to remember that many NGOs do not fit the mold of the grassroots, mass-participation vehicles idealized by many theorists. However, NGOs often come the closest to engaging directly with those citizens most affected by but least heard in policy decision-making. The growth in interest in civil society has thus stimulated interest in NGOs as an alternative source of information on issues of national and international concern and as a potential critic of government policy that can, in theory, speak with a uniquely objective voice independent of either governmental or business interests.

2. Growing Demand for Information, Analysis, and Action:

In an increasingly interdependent and information-rich world, governments, policy makers, and citizens face the common problem of bringing expert knowledge to bear on decision making. Policy makers need basic information about the societies they govern--about how current policies are working, possible alternatives, and their likely costs and consequences. Citizens increasingly demand the same, and NGOs have grown to be an integral part of the response to this increased demand for information.

Both policy makers and the general public, however, are often besieged by more information than they can possibly use. The problem is that this information can be unsystematic, unreliable, and/or tainted by the interests of those who are disseminating it. NGOs have an important role to play in monitoring and facilitating the collection of reliable data needed to make informed decisions - a role that is particularly important in developing and transitional countries, where such information often does not otherwise exist. Furthermore, NGOs, which tend to focus on a relatively narrow range of issues, are often much more expert on a given topic than a general policy maker could possibly be and therefore provide a bank of experience and knowledge to which officials can turn.

Even when providing reliable information, however, NGOs are hardly neutral on issues of policy formation. Due to their varied nature, NGOs often play the interesting dual role of providing information and acting as an agent of political pressure on the government, leading to potential conflicts of interest. Transparency and the disclosure of interests and funding sources here are crucially important, but there are often few mechanisms to ensure compliance, especially on an international scale.

3. Growth of States, Non-state, and Inter-state Actors:

The latter part of the twentieth century has seen unprecedented growth in the number of nation-states, as well as in governmental and non-governmental organizations. In 1950 there were only fifty nations and approximately sixty inter-governmental organizations. We now have four times as many nation-states and inter-governmental organizations and, as noted earlier, an almost exponential growth in the number of NGOs.

The forces that drove the expansion of all non-state actors also led to the astounding proliferation of NGOs. No factor is as significant as the global trend toward increased democratization and decentralization, which began with the increase in the number of nation-states after World War II, and the creation of a host of inter-governmental organizations (such as the UN, World Bank, and WTO) to which certain powers and functions were delegated. While the grand vision of a world government was never fully realized, a seamless web of organizations and activities, most notably in the areas of low politics, has helped reduce conflict and facilitate bilateral and multilateral relations.

In our current system of global governance, inter-governmental institutions work with what The Economist identifies as "an enormous weakness"--they are limited by the treaties and states that created them, and therefore subordinated to the national interest of states, making decisive and responsive action difficult. The embattled public image developed by these large, centralized bureaucracies has made them easy targets of "NGO swarm," as NGOs eagerly move to fill the vacuum in global governance.7 Partly in response to the mass meetings and protests described earlier, World Bank president Jim Wolfensohn gave some of the Bank's harshest critics a role in the majority of the Multilateral Development Banks' work. Over half of World Bank projects are currently executed in partnership with NGOs. This move, however, has not only "co-opted" some of the Bank's former critics but also created a situation in which "NGOs are at the center of World Bank policy, and moreover often determine it. While the current World Bank is more transparent, it is also more beholden to a new set of special interests."8

The ultimate legitimacy and impact of NGOs, therefore, even in work with institutions such as the World Bank, are still compromised by the lack of transparency that exists in the NGO community today. This translates into an increased incentive for organizations such as the World Bank and the United Nations, which work extensively with NGO partners, to support the development of a set of standard policies and best practices to improve third sector transparency and accountability.

4. Improved Communications Technologies:

Extraordinary changes in the technology of communication have also helped transform the world of NGOs. The widespread diffusion of knowledge made possible by improvements in information and telecommunications systems, plus the near-ubiquity of electronic facsimile machines by the early 1990s, made it possible to transmit documents almost instantly to virtually anywhere in the world. The growth of the Internet has furthered an instant, inexpensive, and almost entirely unregulated flow of information.

NGOs, whose goals for impact often outstrip their budgets, have benefited greatly from the information age and have found that they can have a tremendous impact with a small staff. Leaders in the NGO community agree that NGO growth has been greatly facilitated by the increased ease in collaboration, and the dissemination of information across vast distances.9 International consortia of like-minded NGOs have sprung up across cyberspace to share ideas and coordinate efforts to push for their adoption into policy.

Contributing to the growth of NGOs has been the fact that the nature of the present information age makes it increasingly difficult for authoritarian governments to restrict the inflow of information and opinions they would prefer to exclude. Increasingly, the only options are to allow untrammeled access or to bar access to the Internet entirely. However, the issue of accountability rises again when discussing NGOs' increasing reliance on cyberspace, a forum in which there is almost no means for quality control of information. Sham NGOs can easily be created online and disseminate their views at low cost in a manner that might prove convincing to an unsophisticated viewer. Thus, in the cyber-age as in the age of NGOs, the caveat emptor principle is more appropriate than ever before for those seeking reliable information.

5. Globalization of NGO Funding:

Although the market for ideas is well established and expanding, even the most prominent NGOs require constant inflows of money in order to operate. In both Western countries and the developing world, many organizations operate with small budgets and minuscule staffs. Thus, the issue of funding trends and sources is crucial to the discussion of trends in the development of NGOs because it is the globalization of funding that has helped create and sustain many of these institutions. In Africa, Asia, and Latin America, particularly, NGOs often lack critical tax incentives for donors that foster philanthropic traditions and in turn encourage local support. As a result, much of the impetus for NGO activity growth in developing and transitional economies has been the flow of money from industrialized countries. Many donors have chosen to work through NGOs out of a concern that their funds may otherwise be misused.

While international funding has dramatically increased the resources available to NGOs, it clearly poses problems of its own. Foreign funding can raise questions about the credibility of an organization's activities: if foreign donors are providing money for an NGO, might they be dictating its goals as well? This can be distorted and exploited, and may even serve as an excuse for an authoritarian leader to shut down organizations, which was the experience of some East European affiliates of the Open Society Institute in the 1990s. Less extreme controversies have also occurred in industrialized nations. Critics have expressed concern that the use of foreign money to support the work of U.S.-based NGOs may come with strings attached, or at least cause institutions that accept money from foreign corporations and foundations to mute any criticism of the donor country's foreign or domestic policies.

The issue of funding and accountability becomes even more complex when an NGO operates across national boarders, at which point the need for NGO transparency and accountability becomes most clear. It is often almost impossible to accurately track the funding of NGOs based outside the United States, Europe, Japan, and Australia. Most NGOs in the developed world have at least achieved financial transparency as a result of a mix of public and private oversight, regulation, and accreditation. Every NGO in the United States, for example, must file its finances annually with the Internal Revenue Service (IRS), the federal agency in charge of taxation. Once filed and processed, these reports are accessible to the public. In addition, every U.S. NGO must register with the state in which it is resident and is required to publish an annual report. Charitable organizations throughout Europe, Japan, and Australia are also required to register with their governments; beyond registration, however, further accountability in terms of governance and programs is not uniform, and in many cases is not required. Given the current concerns about security, it is essential to understand where international NGOs get their funding in order to understand exactly whose interests they may be, even inadvertently, promoting. This lack of transparency in the NGO sector is perhaps their greatest vulnerability, and must be addressed internationally in order to ensure the integrity and continuity of the work of NGOs. Unlike a true democratic mandate, however, funding for NGOs is almost impossible to track. Echoing Steve Rudolph, Peter Tavernise points out that many foundations do not probe deeply into what exactly is being done with grant funds in both developed and developing countries. Grant makers' trustees, who are volunteers, often do not even read grant proposals, and program officers are often "too busy" with grant applications to read reports on projects' impact. Thus, while funders are in a prime position to demand accountability from NGOs, this opportunity is often lost.

6. Paralysis and Poor Performance of the Public Sector:

While the challenges to the governments in Eastern Europe and the former Soviet Union were swift and dramatic, there has been a more gradual erosion of confidence in the leaders and institutions of governments across the globe. The paralysis and poor performance of policy makers as well as the seemingly endless stream of scandals involving public officials and a bloated, unresponsive bureaucracy have led the public to question the very legitimacy of their governments. We live in a period when the nation-state is distrusted, or more precisely, its institutions are considered ineffective and unreliable. Similar to their role in international governance, NGOs operating on a local level have emerged in an effort to address the deficiencies of nation-states and the lack of leadership shown by government officials.

It is important to note, however, that the rapid proliferation of NGOs has not always resulted in a clearer policymaking scenario. Rather, as John Paul Lederach, director both of the International Conciliation Service of the Mennonite Central Committee and the Conflict Analysis and Transformation Program at Eastern Mennonite University points out, NGO proliferation has resulted in the development of myriad qualified institutions to focus on issues in "hitherto inaccessible and neglected parts of the world." While this is positive, Lederach also points out that this "has also complicated relief efforts by creating an extraordinarily complex system which makes medieval Europe look centralized and ordered by comparison."

Reversing Accountability

True international accountability is for the moment an elusive goal, one that first requires a comprehensive definition and an answer to the complicated question, accountability to whom? There is no global method to ensure that NGOs are accountable to anyone, a fact that leaves their mandate compromised if NGOs do not as a sector prioritize the achievement of transparency and accountability. There is a need, therefore, at the very least, for committed action on the part of NGOs towards organizational and systemic transparency that is in line with their role in impacting policy and engaging the public in dialogue on the challenges facing our world. In a period of intense scrutiny of governments and corporations, it is only logical that NGOs should be closely examined.

NGOs have proven their effectiveness in holding large institutions and governments accountable and exposing them to public scrutiny. In terms of accountability from the reverse perspective, however, neither the policy nor academic communities have systematically analyzed the funding, transparency, and accountability of NGOs. No international mechanism currently exists in which a meaningful dialogue about these critical NGO components can take place. This fact both weakens the credibility of NGOs that, as a sector, cannot claim to be anything close to models for transparency, and also leaves NGOs as a group vulnerable as no "industry-wide" standards for transparency and accountability are in place. Kumi Naidoo, president of CIVICUS, a civil society advocacy group, captures the importance of this issue when he addresses civil society organizations (CSOs):

In seeking to improve our accountability and transparency, we need not be defensive or apologize for our work. [CSOs must] think critically about long-term viability, especially when some government and business leaders are questioning the legitimacy of CSOs, and when CSOs operating in new conditions of political instability are increasingly being asked to be transparent, legitimate, and accountable.

Civil society organizations must meet this challenge head on by making themselves more accountable and transparent. Maintaining public trust in CSOs is critical for ensuring active, participatory democracy, which can enrich our public life at the national and global levels.10

We should not be afraid to ask who holds groups working in the public interest accountable or, as a New York Times article put it, "Asking Do-Gooders to Prove They Do Good."11 In the final analysis, the NGO community must be willing to practice what they preach or they will risk losing both their credibility and their independence. The diversity of the NGO sector is, in many cases, a source of disorganization. Observations such as John Paul Lederach's thus represent a further call to NGOs to ensure that their work is not jeopardized by weaknesses in their sector. The kind of dialogue and coordination that would be necessary for NGOs to achieve significant advances in terms of the creation of norms for transparency and a framework for discussion of accountability would also have the attractive benefit of creating an NGO sector that is more self-aware, cohesive, and therefore effective.

Bridging the Credibility Gap

The proliferation of NGOs is challenged by the fact that the impact, nature, and interests of these organizations can each become almost impossible to measure.12 Despite the fact that NGOs have always played a role in "sustaining an independent civil society," their proliferation and the increased scope of their role in every aspect of society now requires better monitoring and regulation so that they can function effectively and protect the integrity and independence of the entire third sector.13 The NGO community holds one of the most significant roles internationally in maintaining accountability in the private sector, public sector, and international bureaucracies. It is therefore vital that the NGO community commit itself to developing a set of credible and verifiable standards that can be universally applied.

The path toward achieving increased transparency must begin with systematic international dialogue on the topic within the NGO community. A primary objective of such dialogue would be a consensus regarding the state of transparency in the NGO community and the establishment of realistic goals for the sector on this issue. These goals must include an approach that focuses on making the finances, governance, and programs of NGOs more transparent. These recommendations will take skill to craft, given the great diversity that exists in the third sector, but proactive steps in this area are necessary and can serve as a prudent safeguard against the potential loss of the public's trust. Private donors, national governments, and international organizations should actively encourage this effort and provide the resources necessary to help the NGO community define and implement the principles of transparency for NGOs worldwide. Once NGO transparency norms are drafted, a series of fora should be created to promote their adoption and discuss the importance of transparency to the NGO sector. The application of the standards need not be inflexible and must take into consideration the social and political environments in which NGOs operate, but the basic principles of transparency must not be compromised if the effort is to be successful.

On transparency, an ideal next step would be committed, coordinated action toward a plan of action intended to achieve specific goals regarding transparency as defined by NGOs. This can only be realized if we create a transnational culture of accountability and greater transparency within the NGO community that is based on a set of international best practices and minimum standards that make all NGOs accountable for their integrity and performance. These standards and best practices must be developed, implemented, and monitored through an international inter-sector partnership. NGOs have been vested with great power, and with that power comes a profound responsibility to all the citizens of the world. As "the conscience of the world" they must be beyond reproach so that they remain the keepers of the public trust.


1 About the Authors: James McGann is the Director of the Think Tanks and Civil Society Program, Foreign Policy Research Institute. He is also a member of the political science department at Villanova University. Mary Johnstone is a consultant for the Office for Trade, Growth, and Competitiveness at the Organization of American States. She was previously a Research Assistant in the Think Tanks and Civil Society Program at FPRI.

This article originally appeared in the Brown Journal of World Affairs, vol. XI, issue 2, winter-spring 2005, and is reprinted with the Journal's kind permission. To view additional articles and receive information on how to subscribe, please visit the Journal online at Copyright 2005 by the Brown Journal of World Affairs.

2 See, for example, Jeremy Scott-Joynt, "Charities in Terror Fund Spotlight," BBC Program, 15 October 2003; "Palestinian Civil Society Hurt by NGO Funding Scandal," Advocacy Net, 10 April 2003.

3 Jessica Mathews, "Power Shift: The Rise of Global Civil Society," Foreign Affairs 76 (January/February 1997); Lester Salamon and Helmut K. Anheier, The Emerging Not-for-profit Sector: An Overview, (Manchester; New York: Manchester University Press, 1996).

4 "The Non-Governmental Order: Will NGOs Democratize, or Merely Disrupt, Global Governance?" The Economist, 11-17 December 1999.

5 Ibid.

6 Pamela R. Aall, NGOs and Conflict Management ( Washington, D.C.: United States Institute of Peace, 2000).

7 The Economist, 11-17 December 1999. op. cit.

8 Ibid.

9 What is Behind the Current Debate on NGO Accountability? Panel produced by Keely Stevenson and Phil Collis,, Skoll Foundation and Alliance, 19-30 January 2003.

10 Kumi Naidoo, International Journal of Not-for-Profit Law, 6 no. 3, June 2004.

11 Jon Christensen, "Asking Do-Gooders to Prove They Do Good," New York Times, 3 January 2004.

12 The Economist, 11-17 December 1999 op. cit.

13 Peter Willetts, "What is a Non-Governmental Organization?" UNESCO Encyclopedia of Life Support Systems, Section I: Institutional and Infrastructure Resource Issues, Article, Non-Governmental Organizations ( London: City University).


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Young, Dennis R., Robert M. Hollister, Virginia A. Hodgkinson, et al. Governing, Leading, and Managing Nonprofit Organizations: New Insights from Research and Practice. (San Francisco: Jossey-Bass, 1993).

More Information on NGOs
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