Voluntary agencies as development organizations: theorising the problem of efficiency and accountability

Co-operatives, NGOs and community groups are being increasingly used as development agencies by policy-makers, because they are thought to provide more accountable, effective and equitable services in many areas than public or private agencies. This article attempts to consider some of the theoretical and practical implications of this growing role by treating them as ‘value-driven’ organizations, and asking how this differentiates them, in terms of efficiency and accountability, from public or private agencies. It notes the lack of developed theoretical models capable of dealing with this question, and examines the relevance of existing theories (neo-classical economics, public administration and especially varieties of organization theory including the New Institutional Economics) in dealing with agencies which claim to be dominated by motivations based on democracy and altruism rather than self-interest. The author looks at problems associated with the measurement of efficiency and enforcement of accountability in organizational life and at the need for effective incentives and sanctions which provide a stable basis for maintaining commitment. He then considers the issues involved in the enforcement of accountability to ensure the efficient use of resources in producer co-operatives on the one hand and service delivery NGOs on the other. In the former, the focus is on the strengths and weaknesses of market competition and the costs of collective management; in the latter on the varied relationships between ‘principals and agents' involved in the production and management of services.