Support TWACIB

I love this black humour about useless NGOs:

It reminds me of a joke that we had in Malawi about the proliferation of useless (and often fraudulent) NGOs – we talked about the NGO TWACIB, which stood for “Two wankers and a computer in Blantyre.

On a recent trip to London I was taken aback by the widespread view that small NGOs are more effective than large NGOs and official aid agencies because they don’t have bloated bureaucracy and they are closer to the beneficiaries.  That is not the general perception here in Ethiopia, where people regularly bemoan the proliferation of small NGOs. These organisations tend to have high overhead costs in proportion to their programme (each needs a Director, an office, drivers, etc).  Many of them have to spend a disproportionate amount of time and effort raising money.  These costs are spread over small programmes with modest impact.  Of course, some are very innovative and successful, and they design programmes that should be taken to scale (but all too rarely are).

According to local newspapers, there are roughly 3,800 NGOs here in Addis Ababa, spending roughly $1.5 billion a year between them.  The Government’s annual health budget is roughly $300m a year, and it is impressively effective.  If there were 20% fewer NGOs, and the money went to the Government instead, health spending by Government could double and there would still be too many NGOs.

If the aid world were more business-like, there would be mergers, acquisitions, takeovers, and bankruptcies, which would naturally cull the proliferation of small organisations.  The most successful organisations would grow, or become part of an established organisation, while unsuccessful and inefficient organisations would either be taken over or would be allowed to fail.  In the absence of any of effective evolutionary pressures, the NGO world remains a pool of tadpoles.

A friend of mine is the country director of a small NGO based here in Ethiopia. She thinks that what they do is worthwhile, but that they are far too small to be a cost-effective way to help people. Ideally she would like the work she does to be taken over and absorbed into a larger organisation; but there is no way in the aid industry for this to happen.

I’ve got nothing against NGOs, big or small.  But there is nothing in the system that pushes NGOs (or indeed official aid agencies) towards being the right size; and there is nothing that weeds out the ineffective organisations.  And so we should not be suprised that as well as many very effective organisations, there are a lot that are far too small and ineffective.

Published by Owen Barder

Owen is Senior Fellow and Director for Europe at the Center for Global Development and a Visiting Professor in Practice at the London School of Economics. Owen was a civil servant for a quarter of a century, working in Number 10, the Treasury and the Department for International Development. Owen hosts the Development Drums podcast, and is the author Running for Fitness, the book and website. Owen is on Twitter and

Join the conversation

10 Comments

  1. the numbers you give from the ethio press are shocking. DPPC (is it still called that?) control probably allows for the spend figure to be calculated. Not sure that anybody knows even approximately here in Tanzania.

  2. Ooh, tricky topic for me. I’m with you most of the way on this one, despite being someone who helped set up a small NGO.

    However, I’m rather proud of our little project. There are challenges of being a small NGO, but also strengths.

    We set up the project because we promised to help our Tanzanian friend’s community. It’s very much a community project, run by community members, and targeted at their needs. It’s run by my friend, with loads of community members and leaders chipping in and running different aspects of it. Consequently “lacking the understanding of the challenges and local networks/contexts” isn’t much of an issue.

    We’ve managed to get support and funding from a larger (but by no means huge) charity who didn’t yet have projects in that part of Tanzania. So in a way, we have been “taken over”, and it’s very much to our advantage. My friend is now their paid employee and he can devote all of his time to it, rather than fit it around a teaching job. We also don’t have to worry much about fundraising ourselves, and have been able to take on some more ambitious programmes.

    Another advantage of setting up in a friend’s village was that hardly anyone else works down in the south-west of the country. One of the problems with so many small NGOs in Tanzania is that they tend to be set up by well-meaning tourists who climb Kilimanjaro or tour the Northern Safari Circuit, and then decide to help the people they see. Consequently most Tanzanian orphanages and student sponsorship programmes are situated in the already-more-affluent touristy regions of the country.

    “These organisations tend to have high overhead costs in proportion to their programme (each needs a Director, an office, drivers, etc).”

    No worry on that front. Drivers? Why on earth would we spend money on that? I know a lot of charities do and they like to have shiny white Land Cruisers, but some of us small chaps recognise that it’s not always necessary. We do have a motorbike, which saves huge amounts of time, but costs very little in comparison to what many charities spend.

    In fact we’re really really stingy about unnecessary costs. One of my friend’s favourite boasts is that at every local NGOs meeting, he knows that we’ll be the project with the least money, and yet who reached the most people. Not because we spread ourselves too thinly, but because we use our money well and have lots of support from local people willing to give their time to help.

    We have shortcomings, of course. There is a significant lack of expertise in some areas. There is sometimes a lack of common sense efficiency in running the project, for example. Teaching quality (and teacher absence) is pretty awful in rural Tanzania and our sponsored students are underperforming, so I’m working on researching more ideas for improving teaching quality and giving our students (and donors) a better deal.

    We’d love to be able to take a cutting edge teacher training project from elsewhere and replicate it in Songea but the expertise and funds for that don’t exist, and neither are there any good large NGOs locally who could do it for us. So we’ll be encouraging near-no-cost sharing of good practice to start with, and working on creating our own kick-ass local school-network model.

    You are right about many small NGOs. I know of one other local project who also focus on education, and who get rather generous Government funding. And they have lots of very well paid employees and several cars. And sponsor fewer students than we do. Somehow. And they’re not the only ones wasting money.

  3. Great post.

    Time to inject a dose of reality into the unfortunately widespread thinking that small NGOs are better/do better work by definition.

    I’ve complained about this repeatedly, but you’ve done it beter.

  4. I completely disagree with you. You seem to think NOGs operate in some form of vacuum, free from market forces. Let me pop that fantasy with an analogy to small businesses.

    Small NGOs are just like small businesses – they have sales (fundraising) and operations (programs). Now some businesses, be that for/nonprofit have great marketing, and therefore great sales. Or they operate in a niche with either high barriers to entry or few buyers that they are intimately aligned with – so they are protected from open competition and are effective in survival. Note that all these income effectiveness’s are separate from the effectiveness or benefit of the thing they sell.

    Once you realize this, you’ll also realize that there are only as many NGOs as the market can support. If you think there are too many small NGOs in Addis, look to their funding. You’ll find a fractured funding model (domestic, international, private foundation, individual, public, USAID, GTZ, etc) that supports a proliferation of NGOs.

    If you look at the private businesses on your block, you’ll see the same diversity in funding too. You’ll also find that in most economies the small businesses outnumber large ones – the USA is something like 80% small businesses.

    But at the same time, you’ll find NGO failures too. Just like small businesses, NGOs can go out of business. Yes, it actually happens more often than you think, though you may not realize it because the NGO can carry on for a while with 1 or 2 committed people working on its fundraising on the side of a real job.

    There are just as many small NGOs as the market supports – each one of them fights for funding with the next. There are no free lunches, even with donations, so they weak NGOs do die. But that weakness would be in sales (fundraising) not effectiveness.

    Owen replies: thanks for your comment, Wayan. I agree that there are some pressures of the kind you describe, but as I explained in a recent working paper, the market you describe does not work well. The reason is that the people paying for the NGOs – which is mainly funders in rich countries – have very few ways to know whether they NGO they are funding is providing services that the beneficiaries actually want, little way of comparing their cost effectiveness, and little way of monitoring their performance. In this way they are quite different from the private businesses on your block, who are selling services directly to the consumer. The consumers of NGOs – in the sense of the people paying for them – know far less than a consumer in other businesses about whether the NGO is delivering the right kind of outputs at the right price.

  5. Yah spot on Owen — in the main, the consumers of NGO services are not the same as the customers who pay for those services. I agree that the “efficient NGO-markets hypothesis” if you can call it that, breaks down.

    Good NGOs have a good set of partnership principles and trust-based relations that the private sector should rightly deeply envy, but conversely that sector’s ability to consolidate itself is something we could look at and learn from, within the context of those pre-existing values and principles.

Leave a comment

Leave a Reply to J. Cancel reply

Your email address will not be published. Required fields are marked *