Global Policy Forum

by John Greensmith, International Executive Director, Plan

This paper was presented during a Panel Session, 'The changing paradigm of international giving', at the 21^st International Fundraising Congress (IFC) held by The Resource Alliance, October 2001, Noordwijkerhout, The Netherlands.

I would like to focus on how International NGOsâ€"and especially the operational INGOs working in developmentâ€"are responding to changes in their environment and create or follow trends in their market place, and how they redefine their strategies to accomplish their mission. I will then highlight what this may mean for the work they do, the way they fund themselves and how they work with others, and illustrate that with developments in Plan (an International NGO).

The causes of change in the environment of INGOs are many and varied but the key ones seem to me:

 

Typology and a short history of roles of development NGOs

The World Bank defines NGOs as "private organisations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development". The term NGO is very broad and encompasses many different types of organisations. In the field of development, NGOs range from large, Northern-based charities such as CARE, Oxfam, World Vision and Plan to community-based self-help groups in the South. They also include research institutes, churches, professional associations and lobby groups.

I will focus on what the World Bank has labelled as operational NGOsâ€"as opposed to advocacy NGOsâ€"that is, NGOs whose primary purpose is the design and implementation of development-related projects. Operational NGOs account for the lion's share of fundraising and giving by INGOs. The two categories are not mutually exclusive. A growing number of NGOs engage in both operational and advocacy activities. Plan is among the large operational INGOs whose advocacy work is becoming more important - witness our activities in the Global Movement for Children and for Child Rights, for example birth registration.

For our purpose another World Bank classification of operational NGOs into three main groups is useful:

Throughout the 1970s and 1980s, most examples of World Bank-NGO collaboration involved international NGOs. Since the early 1990s, however, this trend has been reversed. Among World Bank projects involving NGO collaboration recorded in FY94, 40% involved CBOs, 70% involved national organisations and 10% involved international organisations.

This drastic change in World Bank-NGO relationships is illustrative for developments that have taken place in relationships of the NGO sector with official donors in general. There is a direct relationship with changes in thinking about the role of the state vis-í -vis the private for profit and not-for profit sector.

Initiallyâ€"during the Reagan-Thatcher years of supply-side economics, privatisation and deregulationâ€"operational INGOs were given a larger role, while governments of developing countries were seen as even more inept in service delivery as their counterparts in the North. Since the middle of the 1990s however, there has been a growing realisation that local ownership, empowerment and donor co-ordination were needed for development results. An important factor has also been the end of the Cold War in 1989. This brought about the realisationâ€"after initial euphoria and a shocked belief that market forces alone would sufficeâ€"of the centrality of governance issues for former Soviet republics and Eastern European countries. This has led to a re-appreciation of the role of government, although in combination with measures for good governance and a strengthening of local civil society.

Key words are now as well: comprehensive development framework, poverty reduction strategy papers and development partnerships. They are the parameters of current development paradigms for reaching the International Development Goals for 2015, such as halving the number of people under the poverty line by that year and basic education for all. It seems to me that the disappointing levels of development assistance remain a prime factor as well.

Size and influence of the NGO sector

NGOs have become major players in the field of international development. Since the mid-1970s, the NGO sector in both developed and developing countries has experienced exponential growth. From 1970 to 1985 total development aid disbursed by international NGOs increased ten-fold. In 1992 international NGOs channelled over $7.6 billion of aid to developing countries (ODA stood at $58 billion that year). Eighty percent ($6 billion) of this amount consisted of private donations. The private donations part dropped to about $5.5 billion in 1996-1998, but increased again to $6.7 billion in 1999, on the back of a strong economy. This may well have extended into the year 2000; studies for the UK and the US have shown further growth in that year in private giving.

Between 15 and 20 percent of total overseas development aid is now channelled through NGOs. If the debt service on development loans is taken into account the NGO share in net flows to developing countries is still considerably larger. The numbers in table 1 illustrate how different the performance of INGOs and official donors has been.

Table 1. ODA- and INGO aid flows to developing countries 1983/4-1999

	Average 1983-1984	1999	Index 1999 1983-1984=100	Average annual growth percentage
Official development assistance (m USD) 1)	51,880	55,250	106	0.4%
Net grants by INGOs (m USD) 1)	4,650	6,550	141	2.2%
Plan sponsors (.000)	210.3	959.0	456	10.3%
Plan expenditure (m USD 1)	107.7	305.0	283	7.0%

Source: OECD and Plan International annual reports.

1) DAC-deflator used; all $ amounts in prices of 1998.

While statistics about global numbers of NGOs are notoriously incomplete, ten years ago the World Bank estimated that there were somewhere between 6,000 and 30,000 national NGOs in developing countries. CBOs across the developing world number in the hundreds of thousands. The number of registered INGOs registered in developing countries increased from 1,600 in 1980 to 2,970 in 1993.

Naturally, both national NGOs and CBOs have flourished from the swollen flow of funds directed to them by institutional donors and international NGOs. Quite a number of large national NGOs have emerged, such as BRAC, Dian Desa, etc. INGOs have found themselves working more with national NGOs and CBOs, out of an adopted new development philosophy or as an adaptation to donor requirements vis-í -vis development partnerships and building civil society.

Many national and international NGOs work in partnership with CBOs - either channelling development resources to them or providing them with services or technical assistance. Five years ago INGOs were said to be able to play an important role as "intermediaries" between CBOs and institutions such as the World Bank or government. But official donors now view the INGO as 'intermediary' more often as an expensive middleman raising transaction costs.

A small number of operational INGOs make up quite a large portion of the INGO flows to the South. A somewhat crude list (table 2) will clarify this.

Table 2. Large INGO cloud

1. World Vision International (1950, Korean War)	> $1billion	Crude estimate, includes in-kind
2. CARE (1945, aftermath WW2, sending 'CARE packages')	$420m	Annual report 1999, web site
3. Catholic Relief Services (1943, to assist poor and disadvantages affected by war)	$370m	Annual report 2000, web site
4. Oxfam International (1942, children affected by war, Greece)	$300m	Annual report 2000, web site
5. Save the Children alliance (1919, children affected by war Germany, Austria)	approx. $300m	Crude estimate
6. Plan (1937, war orphans Spanish civil war)	$300m	Annual report 2000, web site
7. Christian Children's Fund (1938, helping war orphans in China, Asia)	$125m	Annual report 2000, web site
8. Actionaid (1972, not war related)	$75m	Annual report 2000, web site
9. Children International (1936, reason established not known)	$70m	Annual report 2000, web site

 

When we subtract fundraising and management costs, costs of programs in the North and ODA-grants from the above amounts, the nine INGOs in the table may still account for about one-third of the total flow of net grants to the South. A few other big INGOs such as the Red Cross (founded in 1863, relief of military wounded) and The Salvation Army (1821, not war related) are not included in the list. The top twenty INGOs may well account for half of the flow of grants to developing (and Eastern European plus Central Asian) countries.

What is interesting to note is that all but one or two of these large INGOs emerged from a war, are 60 years or older and started with relief work. Most of them still do as part of their mission. Even young ActionAid started with a 'charity' approach. Now all of them do quite respectable development work, are present on and raise funds over the Internet and most of them are transparent and put their financial report out for all to see. All these INGOs give a breakdown of their income. All have a healthy amount of money coming from private donations so that they are quite independent from official donor agendas. All are expanding their fundraising efforts to the South. Some establish national offices or foundations and boards in developing countries.

Following a trend among official donors to decentralise decision-making to embassies and missions in developing countries, INGOs are relocating their fundraising troops as well. INGOs also understand that sustainable development requires local people and institutions to have a growing financial stake in their own development. INGOs help the national NGOs and CBOs they work with to build their resource mobilisation capacity, and most work with the Resource Alliance to do so. INGO-staff in developing countries are almost exclusively host country nationals or nationals of other developing countries.

What large INGOs probably fear the most is the World Bank's Comprehensive Development Framework for donor co-ordination. This new organisational approach to development co-operation implies that donors give co-ordinated aid for a country's poverty reduction program. The recipient country decides how the funds will be used for implementation and what who will do the work: the private for-profit sector, CBOs, national NGOs, international NGOs and government itself. INGOs wonder how they will fare in this new architecture, and fear that developing country governments may exclude them from the implementation scene.

 

Current and future fundraising and giving trends

I see the following possible future developments which may affect INGOs, national NGOs and CBOs, and therefore require new strategic answers and organisational development.

Concluding remarks

The fundraising theatre is changing profoundly. INGOs are facing donors requiring new approaches and products, in places different from where they used to be, while using new media and communication messages. Investments needed to stay competitive - in HR, in communication media, in branding, marketing and fundraising - are multiplying. These investments need to be done under the eye of an increasingly well informed, difficult to please and sophisticated donor. INGOs will choose to work more transparently under self-imposed norms for efficiency and effectiveness.

INGOs also work in a more demanding program theatre, for better informed and connected target groups and recipients - whether they are individuals, CBOs, national NGOs or host governments. They do so more often in complicated partnership arrangements. "Giving" is a less appropriate term by the day. Rather, financial transfers are, these days, part of more mature and equitable set of exchanges, in often more complex collaborative frameworks at different levels from the grass-roots up to international level.

Many Southern NGOs looking at INGOs as a source of funding should prepare for disappointment. They should have a minimum of competence in adding value and offer a minimum promise to deserve funding for investment in further building their capacity. In the meantime there is no reason to believe that INGOs will not further and aggressively penetrate their local philanthropic markets. ODA-donors may disapprove of this but have insufficient leverage to prevent any of the major INGOs to raise funds wherever they can legally do so.

Organisations that wish to be serious players, or, indeed, players at all, need a clear vision of their goals, a good understanding of their strengths and weaknesses, and a willingness to change with the times. This does not necessarily consign everyone to following the whims of the donors. A properly structured strategy, with the right alliances and lobbying, can also create trends and provide leadership. Where there is a sound project backed by the right techniques and skills set, the funds will flow easily. Build a better mousetrap... and all that!

INGOs have had a substantial role in resource flows to developing countries, while their funding has largely come from private donations rather than from government grants. Most of the largest INGOs are of respectable age, and wisdom. They have changed and adapted to the times. Some follow development fashions more than others, but overall they have kept their independence. This is a practice for CBOs and national NGOs to follow. Co-operation between INGOs, national NGOs and CBOs is important to achieve coverage of development efforts; a healthy degree of competition is needed for organisational development of the sector.

1.3 billion people, half of them children, still live on less than $1 per day. The world has a special responsibility to young generations well understood by the public. This is all too evident from continued substantial giving, including for child sponsorship. Official aid levels, supposed to be at 0.7% of GNP of DAC countries, are well below that percentage. There is no clear indication that there will be much change, although there should be. There is growing space in which INGOs, CBOs and national NGOs can all flourish, and make a difference. Official donors may need to review their INGO-policiesâ€"again, and all NGOs may want to keep their independence.

 

 

About Plan

John Langdon-Davies, an English journalist, established Plan in England as the Foster Parent's Scheme for Children in Spain in April 1937. While covering the war in Spain for the London News Chronicle, Langdon-Davies conceived the idea of a personal relationship between a refugee or orphaned child and an English sponsor. This principle has been the basis of Plan's work and fundraising ever since. Plan's target group has shifted to deprived children in developing countries. Plan is faced with the challenge to manage and where possible reconcile perceived and actual contradictions. How to balance the dignity of children, families, communities and countries with the very personal and emotive motivation of the Northern public to give for international development. How to overcome the inevitable bureaucratisation and sophistication coming with size. One of the interesting efforts we are presently engaged in is to use new communication technologies for building relationships between our sponsors and the children, families and communities we work with. And another development is that, since its adoption in 1989, our work is increasingly informed by the Convention on the Rights of the Child. We are focussed on children's own participation in development. Communication technology and child rights hold promises for meaningful and ethical child sponsorship relations. Plan is one of the agencies that took the initiative for the Global Movement for Children.

Plan derives an increasing proportion of its funds from institutional donors, corporate donors, foundations and bequests. This revenue stream stands now at 20% of our total income. Although still very small, Plan is now also raising more funds in its program countries. 'Local fundraising', as we call it, has become the third most important source of our non-sponsorship income. It is important to develop constituencies of support and enhance local ownership in the program countries where we work. Local resource mobilisation is more and more emphasised in our program work. We have come to stress the importance of counterpart contributions from the communities, partner organisations or governments we work with. Although they are often hard to quantify (and are not included in our own accounts) they are a substantial resource and we see them as essential for the sustainability of programs.

Besides the thousands of small community projects we conduct each year, we engage increasingly in grant-funded large-scale projects at regional, national or multi-country level. In its regular work, Plan partners with thousands of community-based organisations and national NGOs. It is quite uncommon for Plan to act as a funding agency per se. Most of the time our partners take charge of a piece of program delivery. There are two reasons: firstly, Plan's community programs need to reflect community priorities and need be aligned with Plan's country strategic plans (which have come about in a participatory way). Secondly, Plan is accountable to its sponsors for impact in the communities of sponsored children. Grant making to CBOs or national NGOs can not imply the diversion of funds to projects not having impact on Plan's target communities or the use of funds not aligned with a mutually agreed strategic plan. Over the past couple of years we have learned that it is essential that the expectations of our many sponsors and field program realities be aligned.

In dealing with current and future trends the importance of a clear strategy for an organisation wishing to survive and prosper can not be sufficiently stressed. In our case it was our moving away from a charity approach and greater consistency through country structures, program design and country strategic plans. No revolutionary changes, just reacting to pressures to meet community needs and more sophisticated demands of host governments for more consistency and effectiveness. Also, a realisation that alliances/partnerships are a very good way of increasing scale and improving technical competence through inter-organisational learning.