Due to the accountability environment in which NGOs operate (i.e. how NGOs interact with their donors) they have literally been rendered unable to claim any such immunity, i.e. ineptitude, callousness and corruption—the entire market is subject to rank inefficiencies due to the way it operates and accounts.
The disempowerment of NGOs stems from the entities—people, corporations, or governments—that give them money.The first inefficiency is the inability for NGOs to consistently determine success. NGOs are supposed to act as intermediaries between donors and project beneficiaries. However, since the donor market has no standardized way of defining development goals, determining NGO partners, or deciding on resource allocation, NGOs have no standardized way to account for their activities. This leads to a vast spectrum of project quality without the ability to determine effectiveness, especially since comparison to private and public markets is, by nature, discouraged.
To continuously attract the donors, NGOs intend to put more of the money into short-term effective programs. Their different incentive from private companies is the source of inefficiency.
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