Economics and Governance of Nongovernmental Organizations in Bangladesh:Bangladesh Development Series #11
  Abstract: Bangladesh has made striking progress on a range of social indicators over the last 15 years, an achievement widely credited to the country's pluralist service provision regime. Nongovernmental organizations (NGOs) have significantly expanded their services during this period and have shown that it is possible to scale up innovative antipoverty experiments into nationwide programs. Notable innovations that were expanded include delivering credit to the previously "unbankable" poor, developing a non-formal education program to cater to poor children, particularly girls, and using thousands of village-based community health workers to provide doorstep services. The fact that poor women constitute a large proportion of NGO beneficiaries, despite the persistence of strong patriarchal norms, also testifies to institutional innovation. The unique role of Bangladesh's NGOs is not confined to the delivery of social services and pro-poor advocacy. NGOs have developed commercial ventures in order to link poor producers with input and output markets, as well as to develop a source of internally generated revenue for the organizations. However, the rapid growth and diversification of the NGO sector has also given rise to questions and concerns. These include the viability of a regulatory framework developed when the size and scope of NGOs was far more limited, the appropriate political and commercial spaces for NGO activities, trade-offs between NGO sustainability and pro-poor orientation, the impact and quality of NGO services as they have scaled up, NGO corporate governance, and the implications of different government-NGO partnerships. There has been little systematic review of the public policy implications of the changing character of NGOs in Bangladesh. The present report seeks to augment this effort. The first part of the report presents the Bangladesh context, the current debates surrounding NGOs, and an analytical framework within which to examine these issues. It then turns to the questions of what NGOs do, whom they cater to, how their programs and expenditures differ from those of other providers, and what impact their programs have had on individual, household, and community welfare. The report next takes a close look at issues related to the financing of NGO activities through donor support, government contracts, private contributions, microfinance income, and commercial activities. The basic questions here concern the relative importance of these various sources of income, changing trends in financing, and the implications of these trends for the nature of NGO activity in the medium term. The authors then assess the status of the legal and regulatory framework, relating it to the scope of activities and financing trends discussed earlier. As part of this, the report assesses the state of financial accountability and corporate governance in the NGO sector.