1 | Page NGOs are great at demanding transparency. They’re not so hot at providing it The Monkey Cage February 22, 2016 Nives Dolšak and Aseem Prakash University of Washington, Seattle Justice Brandeis famously claims that sunlight is the best disinfectant. In recent years, “transparency” has become a buzz word, almost synonymous with good governance. NGOs are in the forefront of the transparency movement, celebrating heroes such as Ed Snowden. Right-to-information laws have proliferated across the world. Journals demand transparency from scholars about their funding sources. Hillary Clinton is under pressure to reveal the content of her paid speeches to the Wall Street. Yet there is a question that most NGOs, however fearless, tend to be less interested in answering – where do they get their money from? When NGOs are asked about it, as the ongoing debate in Israel reveals, they become indignant. Political science insights can help us understand why the love affair with NGOs has soured. While they were once considered to be trustworthy and exempt from transparency demands, they are now being held to transparency and accountability standards commonly expected from governments and firms. While arguments about the importance of civil society in democracies go back as far as Tocqueville, NGOs really came to prominence as social and political actors with the collapse of the Soviet Union. Although the old socialist statist model had failed, market systems also performed poorly in many developing countries, as shown by the dismal record of the IMF’s so-called ‘structural adjustment policies.’ Many concluded that developing countries suffered from the “twin failure” problem, of market and state failure tied up together. Consequently, scholars and policy makers began looking for another institutional mechanism to promote good governance. This is where NGOs/nonprofits/civil society sector came in. Academics saw NGOs as a magic bullet solution to governance challenges that avoided the problems of both markets and states. What was the logic of reposing faith in NGOs? First, academics saw NGOs fostering communitarian, face-to-face interactions that generated social capital, and hence supported well- functioning states and markets. Others described NGOs as principled actors, without the selfish motivations of firms. Some others suggested that NGOs could be trusted (while firms could not), because NGOs could not legally distribute profits to their owners. Given these assumptions, why would anyone ask to look at NGOs’ books – after all, they were virtuous by definition. Working with this logic, academics began transforming NGOs from an analytic category to an idealized ideology. All of this academic support helped encourage Western donors including governments, intergovernmental organizations, and big foundations (which often look to academia for guidance) to begin pumping funds into developing countries with the hope to create vibrant civil societies.