Have you ever been stopped by Oxfam or Save the Children Fundraisers? I’m sure you have. But, have you ever wondered how these organisations use the donations they get? Well, I have! And I decided to do a bit of research into this. Although it is considerably hard to track every single penny that one donates, I at least tried to understand in what types of interventions they get invested.
In my project I looked at how effective non-governmental organisations (NGOs) are in improving health and educational outcomes. I did this because apart from the private donations that some NGOs get, they also get a lot of funding from international aid agencies, such as OECD and the World Bank. And the volume of funds that go to and through NGOs has been increasing lately, reaching an amount of 12% of total official development assistance.
As Ethiopia is one of the biggest receivers of aid and at the same time one of the poorest countries in the world, I though it might be interesting to see how well the NGO sector is doing in this type of “aid dependency” conditions. I also wanted to capture the effect of some external factors on the NGO sector, namely factors such as an authoritarian political regime, a situation of social unrest, but at the same time, high rates of economic growth.
I chose to look at health and education due to the importance that these sectors are given by the United Nations and other international aid agencies. They are considered priority sectors according to the Millennium Development Goals and essential factors influencing one’s wellbeing.
In order to see how effective an intervention carried out by a particular organisation is I had to first of all somehow define effectiveness. And in order to do this I used the 3rd Copenhagen Consensus Ranking, which is a ranking of interventions aimed at alleviating poverty designed in collaboration with more than 300 economists, including 7 Nobel Prize winners.
I took this ranking and came up with 4 degrees of effectiveness: most effective, effective, potentially most effective and potentially effective interventions, which I then used to evaluate the specific interventions carried out by the 39 NGOs in my sample. I also looked at their main characteristics, such as location, size, how well established they were, the type of international relations they had and their sources of funding.
My analysis revealed that nearly half of the NGOs in the sample carried out interventions, which were considered to be most effective in improving health and educational outcomes. At the same time, 64% of them implemented activities that were considered to be potentially effective. So, overall, the NGOs in the sample were doing quite well, although there was still room for improvement.
In the next step I analysed the characteristics of NGOs implementing each type of intervention. Here is a graph showing the characteristics of those NGOs, which implemented interventions considered to be most effective.
On the horizontal axis we have the various characteristics of the NGOs and what can be seen straight away is that international NGOs are nearly twice more likely to implement most effective interventions. And this feature is then reflected in the size of the organisation, in how well established it is, but also in the type of international relations that it has. We also see that for an intervention to be effective, the NGO needs to have extensive knowledge of both the education and health sectors. These organisations are also getting most of their funds from other international organisations, which include aid agencies, foundations, and other NGOs. What is also interesting is that those implementing most effective interventions are also highly likely to implement some other types of effective and potentially effective interventions, so this shows that they are quite active in the field.
I then looked at successful NGOs, which I defined as those NGOs implementing interventions pertaining to at least 2 of the types of interventions that I defined earlier. But I’ll leave it to you to read about my findings online.
Knowing which NGOs are more effective in what they are doing could help international aid agencies and international donors to invest their funds more efficiently. At the same time, knowing what makes an NGO more successful could improve the way NGOs are organised and operated, thus increasing their impact on the lives of the poor.
Sanda Maria Grigoras
Full Paper at https://www.ucl.ac.uk/economics/non-seminar/upcoming/exploreecon2017/grigoras