The Role of Non-Profit Organizations in Development: the Experience of the World Bank

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The Role of Non-Profit Organizations in Development: the Experience of the World Bank| |
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In both industrialized and developing countries, there is a growing body of experience, which attests to the positive roles that non-profit organizations (NPOs) play in development. (Clark, 1991) These roles include, in particular: - * providing goods and services - especially meeting needs which have not hitherto been met by either the State or by the private sector; * assisting the government achieve its development objectives - in particular through contributing skills for which NPOs have comparative advantage, such as public information, education and communications campaigns, or providing information about the situations and needs of particularly vulnerable groups; * helping citizens to voice their aspirations, concerns and alternatives for consideration by policy makers, thereby giving substance to governments' policies regarding freedoms of association and speech; * helping to enhance the accountability and transparency of government and local government programs and of officials. For such reasons, the World Bank, in common with other development agencies, has become increasingly interested over the past decade in the work of non-profit organizations. The World Bank usually speaks of non-governmental organizations (NGOs) by which it means NPOs and community-based organizations (CBOs) that are (i) entirely or largely independent of government; (ii) not operated for profit; and (iii) exist to serve humanitarian, social or cultural interests, either of their memberships or of society as a whole. (World Bank, 1996)

The proportion of Bank-financed projects, which involve NGOs in one role or another, has increased steeply in recent years. While there were examples of such involvement in the 1970s, collaboration really only began to grow significantly in the 1980s, especially in the social and rural sectors. Most of this engagement was with NGOs from developed countries. By 1990, NGOs were involved in about 12 percent of projects being implemented. Today, NGOs are involved in 38 percent of active projects; and in Fiscal Year (FY) 1999, 54 percent of all approved projects involved NGOs to some degree. The majority of these NGOs are now from developing countries. (World Bank, 1997-9) (These statistics derived from Project Appraisal documents and include staff counts of the number of projects in which there is intention to involve NGOs but which may not always be realized in practice).

While early NGO involvement was mostly oriented to more cost-effective or more poverty-targeted service delivery, and was often a very minor aspect of the project in questions, in more recent years NGO roles have both widened and deepened. This diversification of roles was described first in 1989 in the Bank's Operational Directive on NGOs. (World Bank, 1989) That Directive recognized the potential of NGOs to reach poor communities and remote areas at low cost, identify local needs, promote participation, build on local resources, and introduce new technologies. It also recognized potential weaknesses of NGOs including limited managerial and technical capacities, uncertain sustainability, localized operations, limited replicability and weak accountability. Hence, the Bank regards the judicious involvement of such organizations, properly coordinated with the activities of public agencies, as facilitating pursuit of equitable and sustainable development.

This premise was tested in 1998 by a wide-ranging review by the Bank's Operations Evaluation Department (OED) of the institution's track record regarding operational collaboration with NGOs and CBOs. (World Bank, 1998b) The report broadly underscored the premise, concluding 'experience indicates that strong NGO/CBO involvement significantly contributes to project success, especially to providing benefits and opportunities for participation by the poor and marginalized.'...
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