Should NGOs love groups?

Three years ago, in rural Liberia, I sat down with a young man who had started a farming cooperative. “Why did you start this group?” I asked. “Well,” he replied “these NGOs seem to like to help groups. I tried to get help from them alone, but they ignored me. So I started this group and now they are giving us assistance.”

I’ve since heard the same thing in more than one country and community, and it’s made me cynical about the NGO love affair with groups. Even so, some new evidence suggests there might be good reason for the group lovin’:

We exploit random variation in the meeting frequency of microfinance groups during their first loan cycle to show that more frequent meeting is associated with long-run increases in social contact and lower default. Relative to clients who met on a monthly basis during their first loan, those who met weekly were four times less likely to default on their subsequent loan. We provide experimental and survey evidence that the decline is driven by improvements in informal risk-sharing that result from greater social contact.

That is Feigenberg, Field and Pande in a new paper.

I’m running a similar experiment with training and grants, where half the recipients get formed into groups. This paper has given me many interesting measurement ideas, especially the need for more data on within-group transfers, advice-giving, learning, and mimicry.

But perhaps more interesting that the economic impacts of group aid are the possible effects on politics and collective action. There are many micro-level papers (and more than a few dissertations) to be written on why some people and groups engage in collective action, and whether aid has any impact. Readers: I welcome pointers to interesting research I may have missed.

11 thoughts on “Should NGOs love groups?

  1. Grameen bank experimented with lower frequency of meeting for the groups in parts of Bangladesh. But the borrowers were against the reduced frequency; their argument is that the weekly meeting gets them a chance to get out of the house and meet other members. Moreover, the borrowers felt that they may not be able to able to make the repayment because the less frequent installments will increase the size of the installments and increase the likelihood of default. This is what these researchers are finding out after spending many hours and dollars.

  2. Surely it depends on what one is trying to achieve. Ensuring adherence to certain difficult practices that one might otherwise not do — abstain from smoking, exercise regularly, pay back loans each week — may be enhanced by group reinforcement. But the problem is when the love affair with groups becomes a fundamentalism required for all sorts of things, including ones where people may be better off with the reduced transaction costs (esp. of time) and greater flexibility to act as individuals or self-created on a need to do so, contingent groupings. Because funding incentives are aligned to require groups — including often the paraphernalia of groupie establishment (constitution, registration, office bearers, bank account, meetings, minutes, etc) — I suspect a lot of energy that may be wasted in these unproductive activities could be saved by having a lower transaction arrangement. For an insightful piece on these matters, including how it can marginalize certain groups, see Brian Dill’s article on paradoxes of community based participation in Dar es Salaam http://onlinelibrary.wiley.com/doi/10.1111/j.1467-7660.2009.01569.x/abstract

  3. This is actually what my MSc dissertation was about – collective action on tea plantations in Sri Lanka, how it worked and why it was successful. It’s a massively under-researched area, mainly because collective action theory from economists and sociologists is in my opinion, pretty weak. Model-based approaches about a thing that depends crucially on difficult to model and generalise concepts like identity and leadership are not helpful.

  4. One reason for working with groups – and not specific to microfinance – is that it can lower transaction costs for the NGO/facilitator. (An obvious analogy is children taught in classrooms rather than individually.) But I share your and Rakesh concerns that this has become a sort of overwhelming orthodoxy. Group based systems can suffer from social problems like the free rider whereas in individual action incentives are often more clearly aligned. I blame it on the strong left-leaning current in a lot of development thought and action, with parallels in the romanticisation of tropical agriculture (as discussed by Ranil in a recent post).

    ps. I am not anti working with groups – Grameen’s experience as mentioned by Asif shows they can have important advantages – just want to pick the right approach for the right problem.

  5. Gugerty and Kremer’s paper on the impact of outside NGO funding for community associations on participation by the poor in such groups is an important reference on this topic. Headline: if you bring outside money to something local and low-key set up by poor people, the local elites will want a piece of the action. This study needs to be replicated.

    http://128.95.208.73/files/EvansWorkingPaper-2006-10.pdf

  6. Maybe this simply has to do something with the proverb: If you want to go quickly go alone. If you want to far, go together.

    Maybe NGOs like going far, and not quickly?

  7. I think it largely depends on how organic the groups are …if they are formed solely for the purpose of accessing NGO funds they usually don’t work

  8. I believe a deeper understanding of organizational development within the context of locally-founded and locally-led grassroots organizations in the developing world among NGO staff and donors is also key to unleashing the potential of these organizations, and to the effectiveness of international aid efforts in general. A recent post of mine explores why we should re-orient international assistance to place these groups at its center:

    1) Local indigenous organizations are key to the elusive “scale-up.”
 (WiserEarth.org has already registered over 110,000 local organizations and movements working on a wide variety of issues in 243 countries. They estimate that they may well be over 1,000,000 such local groups operating across the globe.)
    2) Local indigenous organizations have capacities that larger aid agencies just don’t have–namely, rootedness.
    3) Local indigenous organizations have vital expertise about how poor people cope day-to-day.

    4) Local indigenous organizations are better positioned to make communities more resilient and adaptive.
    5) Local indigenous organizations fill existing gaps in the government and international aid sectors.
    (Read more at: http://www.how-matters.org/2010/11/08/missing-from-diy-aid-debate/)

    Donors continue to refer to the absorptive capacity needed to implement large-scale programs. However, I believe we must strive to create capacity building strategies that are fully grounded in the strengths that grassroots groups already have, like their deep contextual knowledge, community embeddedness, resourcefulness, language and cultural capacities, and the ability to operate in a responsive manner to local needs, which are those that NGOs and international donors often lack. These are all intimately tied to politics and collective action, as you point out.

    Hence, the inter-dependence between grassroots and larger organizations should be acknowledged and thus both sides need to enhance their dialogue and relational capacities in order to engage with each other fruitfully. NGO and donor staff should first focus on building their own skills to accompany and support these organizations, rather than overpower or co-opt them. As such, a new set of fundamental skills are necessary for development practitioners. I believe the ability and penchant to understand and work with organizations of any size or type can and should become a core capacity of donors, governments, and all key stakeholders working on behalf of change.

    NGOs and donors must also require power asymmetries to be a larger part of their staff’s consciousness and performance measure in a more comprehensive and meaningful way. Also, donors and NGOs need to restructure and revise their accountability requirements to focus on the minimum structure and financial controls necessary, rather than asking grassroots organizations to change.

    While many may lack the accountability mechanisms and “sophisticated” procedures that would make them more recognizable or esteemed in the development sectors, more humility is needed to acknowledge the vision, structure, and impact that so many under-recognized and under-resourced local indigenous groups do have. Rather than being the lowest common denominator of international development assistance, it’s time to recognize local indigenous organizations as vital to supporting genuine, demand-driven development that can genuinely challenge power asymmetries and unleash social change.

    A couple of recommendations for research on this subject include:

    Wilkinson-Maposa, S. & Fowler, A. (2009). The poor philanthropist I-IV: How and why the poor help each other. Cape Town: Southern Africa-United States Center for Leadership and Public Values. http://www.gsb.uct.ac.za/clpv/default.asp?intPageNr=37

    Campbell, C., Nair, Y. and S. Maimane. (2007). Building contexts that support effective community responses to HIV/AIDS: a South African case study. American journal of community psychology, 39 (3-4). pp. 347-363. http://eprints.lse.ac.uk/2795/