Abstract
Official development assistance provides an immense flow of financial funding to educational nonprofit organizations (NPOs). This source of funding faces criticism because of the unintended indirect effects it has in lowering the relative level of local NPOs’ capacities. Our contribution addresses NPOs’ financial capacities in an OECD country that receives a vast inflow of EU funding; namely the Czech Republic. To answer the research question on what impact the external financial assistance has on capacities in NPOs, we applied propensity score matching to a sample consisting of 633 educational NPOs covering the years 2006–2013. EU-funded NPOs report higher levels of real revenues, but not real assets, than non-funded NPOs. The EU funding helps in the short-term to improve NPOs’ budgets, but not to increase assets.
Highlights
Our research confirmed that the situation of recipient nonprofit organizations (NPOs) in an OECD country is very similar to the situation of NPOs in low-income countries
We conducted our research on one of the richer countries in the world, we found that the effects of EU financial assistance on NPOs were very similar to the effects that Official development assistance (ODA) has on NPOs in low-income countries
The effects of assistance on NPOs relates to the dependence of some NPOs on external international funding and the endangered financial viability of the projects where there is volatility in the provision of international financial assistance
Summary
NPOs play an essential role in both donors and recipient groups. By delivering almost one-third of all the international financial help that is received by low-income countries, the private philanthropy sector plays a fundamental role in delivering development assistance [1], especially in education [2]. NPOs form a crucial group of stakeholders that implement international assistance in the recipient countries. Questions relating to the role of the local NPOs who implement international projects remain. Some studies comment that ODA damages the recipient country’s local capacities. This problem relates to situations where local capacities are employed to manage foreign projects [3] and where nonindigenous knowledge has to be implemented [4]. Education seems to be less vulnerable to the crowding out effects [6] than other fields of ODA, still it is a component of international financial assistance within the framework of ODA
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