The late Obama
administration envoy to Afghanistan and Pakistan Richard Holbrooke sparked an uproar when he indicated
in 2009 that U.S. development assistance would be channeled primarily through
local Pakistani NGOs, instead of traditional partners:
American contractors and the government of Pakistan. The Pakistani government -- one of a
handful of governments receiving direct budgetary support from the U.S.
government -- vehemently protested. American development contractors faced
the cancellation of contracts and became concerned about losing business in Pakistan, and
their jobs. Even a USAID official leaked a dissent memo to USA Today, stating that "very few
Pakistani firms and NGOs can currently satisfy the stringent management
financial management audit requirements for USAID project funding."
Lately, the dust
seems to have settled. Recently, the USAID Inspector General released an
oversight report, detailing 54 awards worth $269 million that have been made
to Pakistani NGOs. Last week, USAID Administrator Rajiv Shah indicated that the emphasis on NGOs is a general
shift in the way that USAID does business -- not just in Pakistan, but around
the world: "We are now at a point where nearly 40 percent of our funding goes
to non-government organizations. And in each of our countries, through all of
our missions, we're setting specific targets so that we can increase the
percentage of support that we provide to local organizations and local
entrepreneurs and local NGOs."
The push towards
partnering directly with local NGOs makes sense, at least in theory: locals
understand their needs, their context, and potential solutions better than
foreign contractors, and do not have the high overhead and security costs associated
with Americans working abroad, especially in hostile environments. Funding them
directly can also increase the profile of U.S. assistance with local NGOs, and
promote local ownership of aid projects.
The initiative
makes particular sense in Pakistan. The people of Pakistan consistently get a
bad rap for not doing enough for the welfare of their country -- they rob the
country of precious national resources by not paying their taxes and are
destroying it from the inside through extremism and violence. Yet, Pakistan
deserves credit for its vibrant civil society: the value of local philanthropy,
at $1.6 billion, exceeds current U.S. development
assistance, at $1.5 billion annually for 5 years. In 1998-1999, according to
the last major study of the issue done by the Pakistan Centre for Philanthropy,
which certifies NGOs on behalf of the government, Pakistan donated the
equivalent of 17 percent of national revenue or 1.25 percent of GDP, with 200,000
people volunteering their skills full-time in 2004. And local giving is perhaps
more efficient and sustainable -- devoid of overhead costs and fluctuations in
political commitments -- than foreign aid.
And Pakistani-Americans
may be shocked to know that the value of their charity to Pakistan, albeit in
dollars, is no match for the rupees that Pakistanis are giving back locally:
according to a study done by Johns Hopkins University and Agha Khan Foundation
in 2001, only 0.59 percent of funding for Pakistani NGOs comes from individuals
outside of Pakistan. According to another
study led by Dr. Adil
Najam at Tufts University, Pakistani-Americans gave $1 billion in 2005, of which
only 40 percent went to Pakistan -- mostly to needy individuals directly
instead of NGOs, due to mistrust and a lack of awareness among Pakistani-Americans
about good locally-initiated organizations.
The irony, then,
is that while Pakistan has one of the lowest tax-to-GDP ratios in the world, it has also been rated one
of the most charitable, suggesting that some Pakistanis are
evading their taxes, not out of a disregard for public welfare, but because
they believe that public funds are misused. (Of course, there are also
Pakistanis, particularly among the elite, who are evading their taxes, simply because they can.)
So if Pakistan
has such a vibrant civil society, can the U.S. simply inject aid into local
NGOs to realize better development, and public diplomacy, outcomes? It turns
out that aiding civil society is not that simple.
First,
non-governmental organizations come in so many different flavors that the term
"NGO" is meaningless as a basis for debate, discussion, or policy. For example,
while Pakistanis are actively building schools and hospitals, and delivering
post-disaster relief, largely through NGOs, many of them refuse the label of
"NGO" and it is very negatively perceived by the Pakistani public. The term "NGO" can
be as much an object of scorn and suspicion as government efforts, because it is
not associated with locally-initiated work, but with foreign-funded organizations,
known for their perceived elitism, high material comfort (high salaries, fancy
offices, expensive cars), and lack of visible signs of work. There are also
suggestions of corruption and cronyism within the government- and
foreign-funded NGO sector.
Similarly, the government
of Pakistan employs the term in confusing ways. Prime Minister Yousaf Gilani
and other Pakistani officials have taken a strong public stance against channeling aid through NGOs, repeatedly stating
that the groups will siphon off half of aid money. But such objections are based on the
perceived performance of foreign and international NGOs, such as the United Nations and their subcontractors, making it an
ill-fitting response to U.S. proposals to fund "local NGOs."
Fortunately,
research has been done to clarify this mass confusion, and suggest more
specific terminology.
Oxford researcher
Masooda Bano has suggested a distinction between NGOs based on their source of
funding: foreign or local. In "Dangerous Correlations," a survey of 40 prominent NGOs in
Pakistan, she finds that foreign aid may have a corrupting effect on Pakistani
NGOs. She finds that foreign-funded NGOs are often set up in response to the
availability of aid, have high material incentives -- high salaries, nice
offices, and expensive cars -- are primarily responsive to foreign donors over
local needs, and have no civil society value, evidenced by a complete inability
to mobilize local volunteers and funds. By contrast, locally-funded
organizations are set-up in response to a public problem, motivated by the
needs of a clear beneficiary population, and depend on the support of local
donors, translating into visible results. They tend to have a core group of
volunteers, modest or borrowed office space, and NGO leaders invest their own
money in the organization rather than being compensated for their work.
Locally-funded
organizations also face difficulty absorbing aid. In Bano's study, various
organizations reported nearly collapsing due to the influx of aid, difficulty
retaining sincere workers and instead attracting individuals interested in
personal gain, and a reluctance among local donors to continue support, under
the view that aid made their support superfluous.
The challenge
then, for foreign donors, is to fund Pakistani NGOs without turning them into characteristically
foreign-funded organizations. Fortunately, Bano agrees with my recommendation that this can be achieved through aid
grants that are small and flexible, to support the existing or self-defined
work of reputable local actors. Grants that are small relative to the size of
local organizations ensure that aid will not distort their budgets and
incentives or displace the local support base.
My interview
with the head of a foreign-funded Pakistani NGO in January 2010, who did not
give permission to be named, reinforced Bano's research. She told me, "We can
handle $2 million very efficiently, but if you give us $20 million, we become
corrupt. The problem is that USAID comes up with huge contracts, perhaps $90 million,
and we don't have that capacity. It would be more effective to give that money
to 100 good grassroots organizations. The problem is not our capacity, but
yours."
Fortunately,
some good research has been done on this sector, by Johns Hopkins University and the Agha Khan Foundation. Moreover, the Pakistan Centre for Philanthropy publishes a
directory of 131 local NGOs that have been
rigorously evaluated according to transparency and management standards. (They
use the term "NPOs" or "Nonprofit Organisations" instead of NGOs.)
There is an
added bonus to working with locally-funded NGOs in Pakistan: while USAID
branding has been a hot debate between the agency and its contractors, Pakistani
NGOs and local leaders building schools, hospitals, and major infrastructure,
who I interviewed last year, had no qualms about branding
projects receiving U.S. assistance. To my surprise, they brushed off perceived
threats to U.S-labeled projects: they already brand schools and hospitals for
their local donors, it would only be fair to offer the same recognition and
appreciation for U.S. assistance. One local politician even suggested he would
gain favor for attracting American assistance to alleviate public problems in his
city.
So asking if we should aid NGOs directly is not
enough. The critical question is who,
in this vast sector, do we partner with, and how? Sending aid dollars, in
measured amounts, to the same NGOs that Pakistanis are trusting billions of
rupees with, is one good way to see development and public diplomacy returns on
foreign aid money in Pakistan.
Nadia Naviwala is a recent Harvard
Kennedy School graduate and former U.S. Senate aide. This article is based on
her research, "Harnessing
Local Capacity: U.S. Assistance and NGOs in Pakistan." She can be contacted at nadia_naviwala@hks10.harvard.edu.
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