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Bringin? Home the Curry and Givin? it away: Commercial Ventures of NGOs in Bangladesh

  • LY, Pierre-Emmanuel

From handicraft shops to cyber cafés, more and more NGOs in developing countries are moving toward investment in revenue-generating business ventures. This paper explores the motivations behind such investments and their impact the donor-NGO relationship. First, a case study of NGOs in Bangladesh provides evidence of NGOs? commercial earnings in the country. Then, a simple theoretical model underlines three determinants of an NGO's decision to invest in business: the uncertainty of future donor funding; the lack of funds available; and the need to finance expenditures that donors do not value. Furthermore, facing uncertainty regarding their ability to renew future commitment, donors might prefer NGOs with business ventures. Finally, the analysis shows that having an independent income does not necessarily make NGOs better off.

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Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Berlin 2006 with number 19.

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Date of creation: 2006
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Handle: RePEc:zbw:gdec06:4742
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  1. Besley, Timothy J. & Ghatak, Maitreesh, 2001. "Government versus Private Ownership of Public Goods," CEPR Discussion Papers 2725, C.E.P.R. Discussion Papers.
  2. Edward L. Glaeser & Andrei Shleifer, 1998. "Not-For-Profit Entrepreneurs," Harvard Institute of Economic Research Working Papers 1852, Harvard - Institute of Economic Research.
  3. Stiles, Kendall, 2002. "International Support for NGOs in Bangladesh: Some Unintended Consequences," World Development, Elsevier, vol. 30(5), pages 835-846, May.
  4. Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February.
  5. Jean--Paul Azam, 2003. "A Theory of Poverty Aversion and Civil Society Development," Economics and Politics, Wiley Blackwell, vol. 15(1), pages 61-84, March.
  6. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  7. Jack, William, 2001. "Public policy toward nongovernmental organizations in developing countries," Policy Research Working Paper Series 2639, The World Bank.
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