Resource Dependence and Effects of Funding Diversification Strategies Among NGOs in Cambodia

Abstract

This article assesses how strategies applied by Cambodian NGOs to reduce their dependence on external resources affect the sustainability of their mission, program and funding. At the empirical level, the findings suggest that NGO dependence on foreign aid has mixed effects on the organizations such as unpredictability of funding, goal displacement, reduced organizational autonomy, and top-down accountability. Funding from commercial activities is more predictable and potentially promotes bottom-up accountability and increases organizational autonomy but may conflict with the mission-drift of NGOs. At the theoretical level, this article contributes to resource dependence theory by introducing a perspective from developing countries, which implies large power differentials between international funding agencies and receiving local NGOs. The strategic responses employed by local NGO leaders to reduce external resource dependence entail a paradigm shift from external control to local embeddedness and increased autonomy. The findings have important policy implications regarding the regulation of NGO-related and unrelated business activities.