Elizabeth Reid, a research associate with Urban Institute's Center on Nonprofits and Philanthropy, is an expert on civil society and nonprofit organizations. Reid and Janelle Kerlin have profiled the international nonprofit sector's size, scope, and general financial health. The study examines 5,594 organizations, about 2 percent of the organizations and revenue of the entire nonprofit sector, and shows how these groups mobilize and manage public and private resources for a broad range of international purposes.
Five Questions Archives
1. Why have international nonprofits been understudied?
Small-scale studies of large U.S. non-governmental organizations (NGOs) engaged in international development and assistance have been conducted, but no comprehensive, large-scale studies of the international nonprofit subsector until now. With our study, the public has an overview of infrastructure of U.S. based international nonprofits and their financial capacity to manage their critically important work.
Today's NGOs have diversified beyond more traditional forms of emergency assistance and economic and agricultural development to include work on health, democracy and civil society, environment and sustainability, and human rights. So updating an outmoded classification system to reflect the real work of organizations internationally was a major study goal.
We pinpointed three principal missions—delivery of international development and assistance, promotion of international understanding, or international affairs. International development and assistance was the largest category, with 74 percent of the organizations we studied.
Although our study delivers the most comprehensive picture yet of U.S. international organizations, our data set has some limitations. As globalism has advanced, nonprofits have taken on more international programs. But the data we're looking at cannot show the full scope of those programs. We can look only at organizations that list international missions as their primary organizational purpose. So some organizations like Sierra Club would be classified as a U.S. domestic organization and missed, despite its international work.
We're also missing small organizations—those with under $25,000 in revenues—and religious organizations that are not required to file with the Internal Revenue Service. Unfortunately, some very large religiously affiliated international assistance organizations, like Catholic Relief Services and Lutheran World Relief, don't appear in our study.
2. What findings surprised you most about these organizations?
The sheer numbers engaged in international work. Since 2000, the number of international organizations in the National Center for Charitable Statistics database has nearly doubled to 5,594 organizations.
Many are small organizations with annual revenues of under $500,000. That surprised us because studies often emphasize the large development and assistance providers. But across the board 73 percent of the organizations were classified as small. Only 12 percent had over $2 million in revenues.
This indicates an underbelly of small groups providing a diverse array of services. For example, many small exchange programs help people in other countries get better educations and bridge cultural and national boundaries. Too often, their contribution is overlooked.
Plus, many of the smaller organizations in international development and assistance are not required to report because they're religious. We're only seeing the voluntary reporters among religious humanitarian assistance missions.
We tend to think of international aid as this tangible direct service. In fact, we found 14 percent of international nonprofits are financial support organizations. They transfer money from the U.S. to other foreign institutions—schools, museums, hospitals, and an array of institutions. This is particularly true for well-established ethnic communities here channeling money to support institutions abroad.
And support is often non-cash-medical equipment, toys, or books for example. About one-third of the private donations are non-cash.
The reach of international development and assistance organizations is truly global in the sense of working in every region of the world—47 percent of them work in more than one region. Of those with a single regional focus, most are in South and Central America, Central Europe, and in Asia. But more and more, groups are working in multiple regions and delivering multiple services, so the trend is towards building organizations with the capacity to respond to many situations.
3. What is the relationship between government and nonprofits in the international arena?
In the last 20 years, governments have recognized the value of delivering many types of aid through NGOs. They've been forced to look at NGOs because, in the 1990s, direct government aid floundered and there were cutbacks in USAID staff. NGOs offered a way to contract out government assistance.
On a practical level, NGOs have networks useful to governments. They are trustworthy partners and can build relationships from the ground up. NGOs can advance aid and development goals in ways that government can't. As we look across the fiscal years from 2001 to 2003, we can observe how new government priorities post 9/11 influenced the flow of money to NGOs.
One characteristic of American foreign assistance is its heavy reliance on private donations. U.S. NGOs are the primary way this private largess is channeled abroad. International assistance and development organizations receive far more private than public funds. Only about 20 percent of funding to NGOs came as government grants. In the aftermath of the Southeast Asia tsunami relief drive, for instance, so many people donated that money was left over for other emergencies. Governments, multinationals, and international financial institutions can face funding and bureaucratic constraints that impede action, so nonprofits' flexibility to respond quickly to disaster is important.
There are concerns about legitimacy, autonomy, and accountability when NGOs partner with governments to deliver aid or advance other goals. Dependency by organizations on government grants varies quite a bit. Some organizations are quasi-governmental entities, almost entirely funded through government with close alignment to national interests. For example, several large prominent democracy and civil society organizations rely most on government grants.
Others receive money on occasion for specific programs. Some groups — like Oxfam — prefer to avoid the stigma of government money. Others have tried to build partnerships with government that complement their missions.
An evergreen question is whether government money hinders advocacy. It certainly becomes a question for groups trying to determine what their relationship with government should be, especially those that challenge government on issues of environmental degradation, women's issues, and human rights, as many in the new NGO universe do.
4. How would you describe the fiscal health of the international nonprofits?
On the whole, international organizations operate efficiently. About 11 percent of their money goes for operating costs. Assets, not surprisingly, are concentrated in the larger organizations. Forty percent of the organizations have negative net balances—a cause of some concern. When groups operate with low account balances and asset levels, it's hard to provide relief quickly. They lack the cushion needed to mobilize and move assets fast.
If government wants to run money through an NGO in a relief situation, it can take a while for the wheels of government to work and the grant money to move forward. Meanwhile, the human catastrophe is unfolding before their eyes.
5. Can you recommend some policy or research options for U.S.-based international organizations?
I'd like to see the use of this data continue to grow. It could be used as a baseline descriptive study, reproduced over time and made more useful to policymakers and the NGO community. Our study can provide a sense of whether or not fluctuations in resources hamper organizations in their work. It can also shed light on the relationship among organizations, NGOs, and foreign policy objectives.
U.S.-based exchange groups should certainly be studied more. Most of their international work is overlooked. They're building social capital internationally, an important role in a world torn by national and ethnic factionalism. And government is interested in promoting new foreign language skills to meet challenges post 9/11 with initiatives that will likely affect exchange NGOs.
It would also be important over time to figure out a methodology that could help us chart the growth in the scope of international work within the U.S. nonprofit sector. This current study gives us only a glimpse of the work by organizations doing primarily international activity. But international activities and programs are actually imbedded in organizations across the nonprofit sector—in health and in the environment, in education—and it would be interesting to get an idea of how groups are globalizing to meet challenges around the world.
