Global non-profit chains and the challenges of development aid contracting

Burger, Ronelle; Owens, Trudy; Prakash, Aseem

Abstract

This paper employs Oliver Williamson’s transaction cost approach to assess contracting. We find that donor contracting with global non-profit chains is conducive to NPO opportunism due to the asset specificity of the contracts, infrequent contracting, and the uncertainty of outcomes. These risks are further exacerbated by the weak enforcement mechanisms available in many developing countries. Williamson’s framework predicts that these risks would tempt donors to resort to the muscular approach, where they would exercise maximum control over the non-profit chain. Although competition would be a safeguard against the muscular approach, the donor landscape suffers from collusion and is monopsonistic. Our analysis suggests that while the current contracting and oversight arrangements might serve the donor procedural objective to exercise control in a sector marked by information asymmetries, these arrangements can undermine the primary objective of donors, namely responsiveness to beneficiaries, and ultimately, improved beneficiary welfare. We illustrate our conceptual analysis with short case studies of three Ugandan NPOs.

Citation

Burger, R., Owens, T., & Prakash, A. (2019). Global non-profit chains and the challenges of development aid contracting. Nonprofit Policy Forum, 9(4), 1-12. https://doi.org/10.1515/npf-2018-0026

• Journal Article Type: Article
• Acceptance Date: Oct 13, 2018
• Online Publication Date: Nov 11, 2018
• Publication Date: Feb 25, 2019
• Deposit Date: Mar 11, 2019
• Publicly Available Date: Mar 11, 2019
• Journal: Nonprofit Policy Forum
• Electronic ISSN: 2154-3348
• Publisher: De Gruyter
• Peer Reviewed: Peer Reviewed
• Volume: 9
• Issue: 4
• Pages: 1-12
• DOI: https://doi.org/10.1515/npf-2018-0026
• Public URL: https://nottingham-repository.worktribe.com/output/1626126
• Publisher URL: https://www.degruyter.com/view/j/npf.2018.9.issue-4/npf-2018-0026/npf-2018-0026.xml
• Contract Date: Mar 11, 2019