Technical guide for analyzing the efficiency of credit granting nongovernmental organizations (NGO's)

This Book distills the essential lessons learned from extensive consulting and evaluation work and shows the reader, step by step, how to apply them to the assessment of these organizations' activities. When used as a prac-tical tool, the Technical Guide provides a salutary, though possibly painful, insight into the workings of this type of institution. Since the mid-1980s, NGOs have been incredibly successful in attracting development cooperation funds. They have shown a remarkable ability to present themselves to the public, to policy makers and, above all, to donor institutions as a competent, dynamic and effective alternative to bureaucratic government-owned and -run development banks. Their main asset seems to be that they are private-sector institutions. This may indeed be a reason why they can be more dynamic and less bureaucratic. However, much like public-sector institutions, NGOs do not have a well-defined owner in an economic sense and therefore lack the profit motive as an incentive to operate efficiently. Accordingly, profitability does not serve as the standard on which they base their deci-sions and as a guarantee of their long-term viability. This guide seeks to pro-vide donors in particular with a methodology for gauging and monitoring the efficiency of credit-granting NGOs. However, implicitly it also makes clear the responsibility incumbent upon donors to ensure the survival of these institutionally fragile partners, which are sometimes used to disburse funds - in very much the usual manner - merely because they are perceived as a fashionable vehicle for development efforts. In such cases, no real consideration is given to credit-granting NGOs' institutional and organizational problems, and above all their deficiencies in the area of financial technology.