Ugandan NGOs act as sub-contractors for international development agencies

International donors have increasingly channelled their aid directly through local non-government organisations (NGOs) rather than governments. In Uganda, is this encouraging the emergence of a domestic charitable sector or are donors simply using local NGOs as sub-contractors for their development activities?

Research from the GlobalPoverty Research Group based at the University of Oxford,in the UK, examines the factors that affect the ability of UgandanNGOs to attract external and internal funds and resources. It also asks whetherfunding from international donors displaces or complements resources raised locally.

Multilateral and bilateralofficial aid agencies, as well as many international NGOs, increasingly channeltheir development funding through local NGOs. Donors often prefer to work thisway in countries where governments are seen as corrupt or undemocratic. NGOsare seen as more committed to their members or clients, and therefore lessprone to corruption. And being smaller and more flexible, NGOs can sometimesprovide services more effectively than governments.

The increase in directexternal funding has led to the rapid growth of the NGO sector in developingcountries; but not necessarily of a genuine charitable sector. Local NGOs aresometimes created for the sole purpose of obtaining external grant funding. Inother cases, local NGOs are effectively sub-contractors for external aidagencies.

International grants are thebiggest source of funding for Ugandan NGOs. Around 80 percent of total NGOsector funds come from international grants, while contributions from membersand local private donors make up less than three percent. But internationalgrant funding goes to a very small number of the country’s NGOs; most receivelittle or no external aid.

Drawing on a survey of 300NGOs based in Kampala and 14 rural districts of Uganda, the researchers find that NGOs receiving externalfunding differ markedly from those that do not.

Key findings of the researchinclude:

• NGOs that receive international grant funding aremuch more likely to be well connected: members of NGO networks or umbrellaorganisations, or affiliates of foreign NGOs.
• NGOs that receive grant funding are more likelyto have a well educated and well connected manager.
• NGOs that receive grant funding raise fewer resourcesdomestically: this is because donors select NGOs that are less involved inraising resources domestically.
• Donors monitor NGOs that raise no local resourcesmore closely.
• Donors tend to award grants repeatedly to thesame NGOs.

The research findingsindicate that donors choose to fund NGOs directly for reasons other thanbelieving them to be more committed and less corrupt than governments.

The researchers conclude that:

• External donors see Ugandan NGOs assub-contractors for their development activities, rather than ascharitable organisations in their own right.
• Grants from external donors are not encouragingthe emergence of a domestic charitable sector in Uganda.
• Donors may prefer to work with NGOs because theyare more flexible and can respond more rapidly (for example, in emergencies)than governments.
• Donors may prefer to work with NGOs because theycan impose more stringent financial controls on them than on governments.