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Competition, Outsourcing, Mergers: NGOs Adapt To Economic Realities

In today's economy, non-governmental organizations (NGOs) are forced them to build internationalization strategies and corporate culture.

Local NGOs, like this one in Kenya, often have
Local NGOs, like this one in Kenya, often have
Daniel Bastien

AIX-EN-PROVENCE – It's a beautiful spring day in southern France. Students from the International Humanitarian Law & Action master's program at University Paul Cézanne are divided into small groups of 15: It's time to role-play.

Each group has received an envelope containing a scenario, and group three has to organize the return from Ghana of Ivorian refugees who fled civil war after the disputed 2010 presidential election.

A few minutes later, the students have adopted their new persona and are vigorously debating the fictional situation in English. Inch by inch, negotiating takes place between a representative for the Krisan and Buduburam refugee camps, International Organization for Migration and World Food Program, as well as Ghana security forces, Ivorian authorities and even the United States' Ambassador in Accra.

This kind of intense situation will soon be a professional reality for some of these students, as humanitarian and development NGOs are highly sought-after by future job-seekers. Non-profit organizations are very media-savvy, and thanks to sidewalk fundraising and mailing campaigns, everybody knows their names and what they do. Médecins du Monde, Doctors without Borders, Handicap International, Action against Hunger, Care, Greenpeace and the WWF are on top of these future professionals' dream-job list.

The first "humanitarian" diploma was created in Aix en Provence during the Bosnian crisis in 1993, explains Marie-José Domestici-Met, director of the renowned International Humanitarian Studies Institute at University Paul Cézanne, which is itself part of an international network of schools offering such diplomas.

France is among the world's leading countries for training humanitarian professionals, notes a professor. Graduates from prestigious business and administrative schools are increasingly abandoning lucrative careers to work for non-profits, either because they are disillusioned by the business and finance world or just because they want to do something meaningful. The result is that the NGO's can afford to be more choosy when it comes to recruitment.

"We have 800 applications for 80 spots," explains Domestici-Met. It isn't unusual for NGOs to get thousands of applicants for job offers, sometimes even for temporary contracts. But these young enthusiasts are entering a very particular, heterogeneous and globalized environment, one that increasingly resembles the private sector.

Economic heavyweights

The world of non-profits creates hundreds of thousands of jobs in the world, and for the bigger NGOs, carry huge annual budgets: 70 million euros for Médecins du Monde, 100 million for Action against Hunger, 230 million for Doctors without Borders and over 1 billion euros for its entire network. Oxfam has an 800 million euro budget, and World Vision, the American NGO, has a $2 billion budget, which matches NATO's.

These are real economic heavyweights - for what used to be considered a third sector. "They have unmatched influence in poor countries," notes François Grünewald, general director of the URD group, a think tank specialized in humanitarian reconstruction. Financing comes either from international public sources, governmental organizations or private donations. Doctors Without Borders France refuses any governmental financing, as do Amnesty International and Greenpeace. It is the price of their independence.

Competition for both public and private financing is increasingly harsh, pushing organizations to adopt attitudes typical of big multinational companies. "To survive, many NGOs are forced to merge, and the smaller ones often end up disappearing or being taken over. We also see more activity diversification and aggressive marketing methods - because reputation is important if you want donations," explains Bénédicte Hermelin, the director of GRET, a development NGO.

Adds François Grünewald: "It's exactly like the private sector, with large actors vying for markets and growth, and smaller ones specializing in niches."

This phenomenon is encouraged by institutional backers (such as the U.N., the World Bank or the European Union) who would rather give money to fewer large, strong organizations or consortium leaders than to several small, fragile structures. In the Western world, 20% of organizations get over 80% of financing.

"The biggest NGOs create subsidiaries in other countries, like Doctors without Borders, Oxfam or Greenpeace; others choose to federate, like Caritas, which created partnerships with actors like Secours Catholique in France," says one NGO veteran.

The smaller - and more numerous - organizations create networks within national or regional platforms, like Coordination Sud in France (140 non-profits) or Concord and VOICE at the European level. "NGOs have realized that to be influential they had to be present and efficient in a maximum number of countries simultaneously," explains Olivier Consolo, director for Concord in Brussels.

Outsourcing to local NGOs

There are even instances of subcontracting: institutions subcontract to NGOs, and Western NGOs subcontract to local ones. It's a delicate topic. "The idea that we are just service providers hurts!" admits an NGO manager.

In these circles, people prefer the term "partnership." Similarly to large funds like the Bill and Melinda Gates Foundation, "the European Union doesn't have a presence on the field, so it prefers to finance operators. Twenty years ago, 20% of the World Bank's actions were handled by NGOs, today that proportion reaches 60 to 70%. This is because the World Bank puts more trust in NGOs than in States, and also because it has a decreasing number of agents in the field," says François Rubio.

"Large institutions have clearly understood that non-profits have a highly motivated, efficient and inexpensive workforce. Given the salaries of these big institutions' employees, using an NGO employee paid around 2,000 euros or a local NGO employee who is paid 200 euros is like outsourcing," says Grünewald.

Competition and institutional requirements have another consequence: professionalization and accounting transparency. The ultimate aim is a real "results-oriented" culture. "In our offices, we now have people with graduate degrees from prestigious schools, and in the field we have engineers, agronomists, geographers. Volunteer work and compassion aren't enough any more," says the GRET director.

"We have adopted the "value for money" stance," adds a European NGO employee.

Financial transparency has also become an important issue. NGOs don't really have a choice: in many countries, institutional controls have become mandatory. "In terms of control and audit, there is no wiggle room," says Sophie Zaccaria-Duvillier, manager for Médecins du Monde's analytical department.

Even if many NGOs now look like accounting firms, they insist they are not. NGOs are non-profit organizations that need to balance their budget so their patrons don't back out. "We are run like a company because that's what is more efficient, but our end goal has not changed. He have to juggle both ends: the humanitarian and the economic," says François Danel, general director for Action against Hunger.

And in the end, NGOs go "where companies won't," notes Kathrin Schick, director for VOICE in Brussels: "Don't forget that a non-profit's initial goal is to be an actor of social change."

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