NGOs: the Trojan Horse of corporate interests?

The treacherous horse 

There have been several instances in the last few weeks when I have come across the suggestion that NGOs are the Trojan Horse of a global neo-liberal conspiracy to undermine the role of the public sector in the Third World. The claim, endorsed by the likes of Carleton University’s Manfred Beinefeld, who is currently giving a series of public lectures at the LSE, is spelt out more clearly in David Harvey‘s A Brief History of Neo-Liberalism:

The rise of advocacy groups and NGOs has, like rights discourses more generally, accompanied the neo-liberal turn and increased spectacularly since 1980 or so. The NGOs have in many instances stepped into the vacuum in social provision left by the withdrawal of the state from such activities. This amounts to privatization by NGO. In some instances this has helped accelerate further state withdrawal from social provision. NGOs thereby function as Trojan Horses for global neoliberalism.

As a world-renowned geographer, he might be excused for being a little confused on the matter. But the accusation still stands, and it is important to clarify why it is misleading.

First of all, the term NGO refers to a non-governmental organisation, and this simply means an organisation that does not operate under governmental control. Harvey uses the word NGO, however, in its more commonly-known embodiment, referring to the sphere of international non-governmental organisations that are usually northern-based and run development and humanitarian relief programmes mainly in the developing world. The World Bank defines NGOs as “private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development” (Operational Directive 14.70). In wider usage, the term NGO can be applied to any non-profit organization which is independent from government.

When discussing public service delivery, NGOs are part of a much broader spectrum of non-profit/voluntary organisations that are usually lumped up under the umbrella of the Third Sector (in the UK, Italy), the Social Economy (in France, Spain), the voluntary sector (in the US). Part of the third sector is the emerging social enterprise sector, which has been defined by the UK Government as:

[…] a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

Social Enterprises can encompass everything from mutuals, employee-owned businesses, private companies limited by guarantee and – most importantly for our analysis – the vast world of cooperatives:

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. [source: International Cooperative Alliance]

To put Harvey’s statement into perspective, we need to understand that NGOs play a significant role in the delivery of public services, but they are not alone, and certainly not the most well-endowed. Worldwide, for example, over 800 million people are members of a cooperative and the sector provides 100 million jobs, 20% more than multinational enterprises. We’re often led to believe – by a certain mediatic discourse – that ‘poor people’ are passively waiting for our help to survive, but this is rarely the case. And in some cases, local initiatives become an example for the North itself, like in the case of Brac, an almost entirely self-financed Bangladeshi NGO/social enterprise, which employs some 97,000 people, helps providing livelihoods to another 100 million and offers education to 11% of Bangladesh’s primary school-children.

So back to the provision of social services. On the one hand, we have Oxfam and Wateraid recently publishing a report on the subject, In the Public Interest: Health, Education, and Water and Sanitation for All, where they state that

[…] developing countries will only achieve healthy and educated populations if their governments take responsibility for providing essential services. Civil society organisations and private companies can make important contributions, but they must be properly regulated and integrated into strong public systems, and not seen as substitutes for them. Only governments can reach the scale necessary to provide universal access to services that are free or heavily subsidised for poor people and geared to the needs of all citizens.

While the World Resource Institute’s Development Through Enterprise blog publishes a scathing review of the report, enraged by the fact that

[…] the summary recommendations are written for a) developing country governments — to direct money (they don’t have) toward basic services, abolish fees for what minimal services they currently do provide […], train workers (with crippled education systems, to fill government jobs that they can’t fund); b) to rich countries and the IFIs to give more money for these purposes; and c) to civil society to push for all of the above. Recommendations for the private sector? Or to civil society or the public sector as to how to engage the private sector in ways that actually deliver the public benefits they purport to support? Sorry, nothing worth saying, apparently.

In a nutshell, the NGOs want a greater role for the state in the delivery of public services, while the private sector complains that they are not taking its potential role in poverty alleviation seriously. Will someone please explain to me at this point how the former is meant to be the Trojan Horse of the latter, given neither seems to be endorsing this idea?

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4 responses to “NGOs: the Trojan Horse of corporate interests?

  1. I want to raise the specter of a vicious cycle currently turning in the U.S. where the now-deposed Republican majority, led by the White House, cited NGO activities (as service providers) positively as evidence for why the government should NOT provide social services.

    The vicious cycle:

    1. Public sector resources for low-income people are already inadequate, prompting churches and other volunteer organizations to marshal financing (private contributions, bake sales) and energy (sympathetic volunteers) to step in rather than stand idly by as people go without food, shelter, clothing, job training, etc.

    2. George Bush lauds these ‘armies of compassion’ and points to their work as evidence for why the private sector (here meaning voluntary orgs, not business) is best able to deal with social problems and, conversely, that social problems are best handled by the voluntary (read: religious) sectors resources.

    3. Activists throughout America groan; George Bush and Republicans cut heating assistance, food assistance, healthcare assistance, disability assistance, veterans assistance, and so on, requiring even greater expenditures of effort and financing by the voluntary sector to cover even more people thrust into poverty and food insecurity prompting even further declaractions as to the benificence of the American people and the corresponding lack of necessity for public sector funding.

    Now, if you ask where the private sector is in all this, the answer lies somewhere in terms of CSR programs and financing the grantmaking foundations that fund much of the voluntary sector’s activities.

    The argument on behalf of the activists is, of course, that even this funding is demonstrably insufficient – people are not generous enough when it comes to the poor, on the whole – and the government, rather than off-shoring social responsabilities to the voluntary sector needs to make much larger investments. The government logic involves a fallacy: no one denies that voluntary organizations on the ground ARE good at identifying clients and coming up with innovative and cost-effective ways of meeting their needs – but the government interprets this as meaning it can safely withdraw funding, creating ‘smaller government’ and ‘entrusting society to govern itself’.

    Now, I think taking a step back, there is one major dynamic for which the private business sector (or else its structural framework) bears primary responsability: declining real wage prices. What is the private sector mainly doing about this? Squeezing labor more and more to produce goods cheaply enough that they still can find customers, which is a different but related vicious cycle.

  2. You simply need all three (NGOs, government and business) and you need to stop spending time correcting people who misunderstand the concept of NGOs, as you have so authoratatively shown. Well done. And what a silly argument…trojan horse of neo-liberalism. He’s a moron.

    Jon, I don’t think CSR is directly connected, or at least CSR that goes beyond PR.

    Businesses are usually quickest to innovate, so they lead. But the markets they create fail and create lots of externalities, like Ryan Air, for example, so governments help out to tax the bloody hell out of them. Government’s ain’t so good at figuring out how to spend money they get from taxes so they need help. Thus, you have a bunch of different types of organizations that fill in. Then, even governments fail some groups and you need dedicated individuals who usually form organizations and that makes up the non-governmental and non-profit sector. Who cares what we call it, Mr. Harvey? I would fight him if I could meet him. Fight him, I say.

  3. Paul, you are giving away your North American origins. Harvey has a right to talk shit like everyone else! But you do have a point there. I’ll try to speak about more controversial issues in the future.

    As for the vicious circle, Jon, here is where I have a problem with generalistic economic models – whichever side of the fence they sit on – and in fact with the tendency to create big behavioural models typical of the social sciences. You cannot dissociate these patterns from the local contexts. What is not working in the US might actually work pretty well in Zambia or Taiwan. In fact, it’s working quite well in parts of Italy. That is because every society is different. Social capital. All that stuff.

    And the global markets allegedly flattening everything on their path in pursuit of profit? I don’t buy it. I like Robert Gilpin’s analysis of the various national systems of political economy. That makes sense to me. It makes sense to my anarchic Italian nature (don’t quote me on this one).

  4. I wasn’t making a generalistic economic model and I would hold that there are different conceptions of “working well” that DO depend on local context. But the service NGOs are caught in a hard place, because people who need help now are caught between them and federal spending.

    Personally, I think the best practices created by the NGOs should be deployed cooperatively by the government – there are some projects like this, for instance, in the field of school nutrition – because the government has the resources and distribution structures (both State and Federal). It’s like the social version of public R&D and does occur on small scales in pilot or demonstration programs. However, caution is called for in this case as well, as pilot programs CAN be used to trojan horse in some retrenchment, which is the current debate over food stamp policy in the U.S. At this level, a very great deal can depend on a few words of legislative language.

    So, clearly there are many layers – I wasn’t denying that. But a lot of the coordination between the three sectors is rather ad hoc – who is supposed to be managing this??

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