Roosevelt Institute | Cornell University

When Charity Goes Wrong: Should NGOs Stop Taking Foreign Aid?

By Jennifer KimPublished October 24, 2014

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While NGOs are the driving force in non-profit work worldwide, not all motivations for funding NGOs are purely charitable. Backlash against foreign aid is growing worldwide, with nations concerned about foreign interests working through NGOs to further their own political agendas. However, considering the massive positive impact NGOs have had in communities"”particularly in the developing world"”should they truly have such a large source of their funding cut off?
By Jennifer Kim, 10/24/14

With increasing globalization and its counter-response of growing nationalism, foreign aid has become a key point of controversy for nationalists seeking to solidify borders and focus more government spending on its own citizens. However, recent backlash against foreign aid has arisen not only within the aid-giving nations, but also from the nations receiving aid themselves—a puzzling question for most people. After all, why would anyone turn down funding to alleviate and tackle social and economic problems? 

The answer lies in NGOs. Corrupt non-profit organizations may be unfortunately familiar to the general public, but while assumptions that corruption lies in monetary greed may not be entirely false, they do fail to recognize an additional and possibly even more influential issue: political agendas. For western and international donors, the concept of aiding civil society in developing nations, particularly former Communist nations, was popularly believed to be the best way to promote democracy and other liberal ideas. However, unannounced and even hidden agendas behind international funding for local NGOs has caused two major issues: 1) backlash from nations in protest of international involvement, and 2) fraudulent NGOs. 

Recognizing political agendas amongst foreign-funded NGOs, nations have erupted in protest, passing legislation to limit the influence of such NGOs. Russia, just a few years ago, rang alarm bells around the world when it began implementing anti-NGO legislation that forces any NGO engaging in political activity to declare themselves as "foreign agents, "accept unannounced audits, and register with a special agency before they can accept foreign funds. According to research done by Open Democracy over one-third of African countries have either passed new laws or tightened existing ones to limit foreign aid to NGOs since 1995. Even Canada, generally acknowledged for its liberal policies, has protested foreign-funded environmental NGOs under the claim that they undermine national sovereignty.  

The other major issue with foreign-funded NGOs is the rise of phony NGOS, particularly "briefcase NGOs." These non-profits operate just as their name implies: a well-written proposal in a briefcase that superficially aims to work towards some productive community cause and yet actually only benefits the holder of the briefcase. Briefcase NGOs, however, aren't the only type of corrupt NGO exploiting unaware funders. Another example is the "bent NGO"—a non-profit that pays unreasonably high salaries to their management. One example is extremely familiar with the general public: the Susan B. Komen Foundation, which paid its CEO $684,000 last year. Other fraudulent NGOs include government NGOs, seemingly independent organizations actually created by governments seeking to obtain and/or redirect non-profit funds through an official foreign aid system, and party NGOs, organizations run by aspiring or defeated politicians or parties aiming to further a political agenda. 

So should NGOs stop taking foreign aid? Clearly, many nations are favoring a more isolationist approach. However, as Open Democracy argues, there are many kinds of issues that liberal NGOs address that "don't attract many donations from local individuals, communities, and businesses in the developing world," making them dependent on foreign aid.  On the other hand, as the Spectator argues, poverty in areas such as sub-Saharan Africa is even more rampant than decades ago, "with no sign that foreign aid, however substantive, will end poverty there". The Guardian takes a more neutral stance, declaring that while foreign aid shouldn't be cut from NGOs, donors should be encouraged to work more closely with local communities so as to understand better how "capabilities, needs, and aspirations can be reflected in NGO presence and funding needs". Regardless, the overwhelming consensus appears to be that foreign aid as it is distributed now is being mismanaged and misdirected—and changes need to be made.