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close this bookNGO Guidelines for Good Policy and Practice (Commonwealth Foundation)
View the document(introduction...)
close this folderPart I: NGOs: what they are and what they do
close this folder1. The rationale and purpose of this report
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View the document1.1 The origins and scope of this report
View the document1.2 An overview of the report
View the document1.3 The purpose of this report
View the document1.4 The importance of NGOs
View the document1.5 The global dimension
View the document1.6 The local dimension
View the document1.7 NGOs, government and civil society
close this folder2. The historical context
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View the document2.1 Care and welfare
View the document2.2 Change and development
View the document2.3 The historical evolution of NGO/government relationships
View the document2.4 Welfare pluralism
View the document2.5 The emergence of alternatives
View the document2.6 New concerns
close this folder3. NGOs defined
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View the document3.1 Diverse current ways of defining NGOs
View the document3.2 Defining ''NGO'' for the purposes of this report.
View the document3.3 Is ''NGO'' the right term?
close this folder4. NGO activities described
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View the document4.1 The spectrum of NGO activities
View the document4.2 Who and what
View the document4.3 How
View the document4.4 The diversity of NGO activities
close this folder5. A typology of NGOs
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View the document5.1 Why a typology is needed
View the document5.2 Component 1: A descriptive typology
View the document5.3 Organisational terms
View the document5.4 Main forms of control
View the document5.5 Location between government and civil society
View the document5.6 Level of operation
View the document5.7 Legal forms
View the document5.8 Links with parent and subsidiary bodies
View the document5.9 Links between NGOs
View the document5.10 Component 2: An organisational typology
View the document5.11 Organisations in civil society which engage in NGO-type activities
View the document5.12 Fraudulent NGOs
close this folder6. The governance and operation of NGOs
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View the document6.1 The accountability of NGOs
View the document6.2 Improving NGO governance and operations
View the document6.3 Management
View the document6.4 Human resource development (HRD) and training
View the document6.5 Reviewing, monitoring and evaluating
View the document6.6 Information
View the document6.7 Networking and alliance-building
close this folder7. The legal and institutional frameworks within which NGOs operate
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View the document7.1 Freedom to associate
View the document7.2 The political dimension
View the document7.3 The law
View the document7.4 Regulation
View the document7.5 Collective, external and self-regulation
close this folder8. The framework of relationships within which NGOs operate
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View the document8.1 A complex pattern of relationships
View the document8.2 Relationships with government: key issues
View the document8.3 Relationships with government: ways forward
View the document8.4 Relationships with funders: key issues
View the document8.5 Relationships with funders: ways forward
View the document8.6 Other strategies to strengthen relationships
close this folder9. The international dimension
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View the document9.1 Forms of international linkage
View the document9.2 Funding links
View the document9.3 Operational links
View the document9.4 Partnerships
View the document10. Conclusion and introduction to the guidelines
close this folderPart II: Guidelines for Good Policy and Practice
View the document11. Guidelines for good policy and practice on the part of Governments
View the document12. Guidelines for good policy and practice on the part of NGOs
View the document13. Guidelines for good policy and practice on the part of funders
View the document14. Guidelines for good policy and practice on the part of ''North'' and international agencies
View the document15. Implementing the guidelines: A plan of action
close this folderPart III: References
View the documentAnnex 1: The process of research and consultation
View the documentAnnex 2: List of those submitting information, consulted, or responding
close this folderAnnexes
View the documentAnnex 1: The process of research and consultation
View the documentAnnex 2: List of those submitting information, consulted or responding

8.4 Relationships with funders: key issues

A common observation by NGOs of their relationship with funders is that there is often a lack of clarity as to whether funds being provided are contract payments or grants:

- contract payments mean the NGO doing what the funder (often a government funder) wants to be done;

- grants mean financing the NGO to do what it wishes to do.

Thus different forms of relationship are required in each case.

Where NGOs function as contracted service deliverers, funders contracting with them can legitimately expect to have a form of relationship which gives them an influence over the NGO on matters related to the specific service being delivered.

Ideally this relationship allows, reciprocally, for the NGO to influence the policy during its formation or review. But where NGOs secure funds for their services, activities or projects through grants, funders should not expect to exert the kind of influence they would have in a contract arrangement. A relationship through which the NGO can report on its work and experience is nonetheless still desirable.

A second issue concerns funding periods. Government funding of work within their own countries is often in the context of policies which tend not to change over long periods. In broad terms, therefore, NGOs feel that such funding should be secure over such periods, and regret that in practice it is actually often only offered on an annual (or at the very best, three-yearly) basis. This is a further way in which NGOs feel that their goals of long-term security and sustainability are undermined.

Outside government, the fact that other funders are prepared to commit funds over periods of three or more years is welcomed by NGOs.

A third issue concerns what is termed "funder faddishness" or "funder paternalism":

"Donors' funding strategies...many-a-times determine programmes, policies and priorities of the NGOs...instead of encouraging the latter to evolve their own priorities and programmes in response to their (own) analysis of the local conditions and situations"

Many funders frame their policies on their own perceptions of how their resources are best expended, and on where they feel they can secure the maximum possible impact. In the case of trusts and foundations, there may also be requirements placed upon them by the stated objectives of their founders, or the companies or endowments from which their resources are obtained. So, typically, they will have their own priorities, perceptions and objectives. NGOs point out that this has the effect of causing them to shape their work according not to their own perceptions and knowledge of needs but to the perceived interests and sensitivities of funders. Even funders having flexible mandates - including those that raise their resources through donations from the general public - are felt by NGOs to change their priorities and objectives from year to year or even more frequently, without warning or consultation. This not only distorts NGO activities - forcing them to shift from one activity to another as funder policies change - but where they actually work. One NGO worker in Asia, for example, pointed out that a number of external funders had shifted their geographical priority from one state to another: "So region A is now out and region B is in," she said, "where does that leave us ?"

Similarly, some NGO programmes supporting the development of women were adversely affected after the Rio Summit, when funding trends shifted from women to the environment.

Growth in funder faddishness has a number of other effects:

It undermines as well as distorts. Since many big funders publicise their work and concerns in order to secure funds from the public, their fads and perceptions therefore influence public opinion. In turn this can restrict the ability of many NGOs to raise funds directly from the public.

It confuses the distinction which should exist between contract and grant funds. NGOs often find themselves securing resources which restrict them to doing what funders determine to be needed, even when the funders describe such resources as grants.

It fosters fraudulent NGOs, the operators of which are very adept at exploiting "funder fads".

It leaves smaller NGOs at a disadvantage, especially those working in the fields of relatively unknown or unpopular causes and needs and those not in the know about what the latest funder fads are.

It fosters competition among NGOs, for NGOs having close relationships with particular funders are able to know about new trends and priorities at an early stage, and respond accordingly. Others get left out. It thus also tends to discourage positive development in the field of NGO co-operation and networking.

A final issue concerns funding purposes. NGO expenditure can often be divided into two broad headings: what can be called core or administrative costs, and what can be termed activity or programme costs. One of the reasons why NGOs are effective and efficient is that commonly, a greater proportion of their resources is expended on their activities and programmes, compared to public institutions. But this can, some NGOs feel, become a threat: an expectation grows that their administrative costs will not just be low in proportion to programme expenditure, but minimal, even non-existent.

The problem is compounded when funders, even those who make genuine grants available, impose conditions or have expectations which restrict the proportion of the funds that can be used for core, administrative expenditures. In consequence there are NGOs which are under-administered and under-managed, even by the admission of those running large-scale programmes. It leads some NGOs to think that they are valued by others not for their speed, creativity, efficiency, understanding, values and commitment, but rather because they are merely a cheap way of getting things done. It also means that NGOs often do not have sufficient resources to expend on the task of improving their governance and operations, as discussed in Chapter 6. When in consequence they are accused of mismanagement, their frustration is understandable.