Geographical differences in the evolutionary pattern of Nepali nongovernmental organizations and not for profit companies

Abstract

Nepal has a little over 54,000 registered Nongovernmental Organizations (NGOs) and a little over 1,700 registered Not for Profit Companies (NFCs). While the former types of organizations have existed a little over half a century, the later have a history of only fourteen years. The number of both types of organizations is on the rise; however, this rise is not even in the country. One in every three NGOs is registered within Kathmandu Valley and a similar trend persists among the not-for-profit companies. However, the phenomenon of organizational agglomeration is not new. The agglomeration of Not For Profit Organizations (NPOs) has been reported in Kenya, Brazil, and Bangladesh to name a few.

This dissertation is an attempt to explain the results of such agglomeration. What creates the geographic disparities in the founding pattern of NPOs? Can the dominant organizational founding theories explain the founding behavior of NPOs? Is there a difference in the founding pattern of traditional service delivery NGOs and modern entrepreneurial NPOs? What is the effect of community needs and the availability of financial resources when and where NPOs emerge? Furthermore, what is the effect of institutional factors such as the presence of conducive laws and a distinct historical time frame on where NPOs are founded?

The study sets out with the objective of illustrating the historical patterns and its associated factor of NPO population growth in Nepal. It further aims at developing and testing a model of NPO founding in Nepal. It also explains the effects of NPO population-level legitimacy, competition, institutional factors, the needs of the communities, and the availability of resources on the birth of NPOs. It further provides a comparative lens between two subcategories of NPOs: NGOs and NFCs.

This study relies on quantitative secondary data to test the hypothesis. In order to test the hypotheses empirically, the research traces the founding rates of NGOs in Nepal during the period of 1967 to 2018 at three different levels. It also traces the founding patterns of NFCs between 2012 and 2018 at the district level. It uses different negative binomial regression models to estimate the effect of density, the needs of the communities, institutional factors, and resource factors on the founding pattern of NPOs. The hypotheses are tested across both types of organizations.

This dissertation finds that NPOs in Nepal are urban phenomena. There is no fundamental difference in the founding patterns of NGOs and NFCs. Both types of organization tend to agglomerate in the capital and large cities of the country because of the well-built support systems there, and the availability of financial resources. Both NGOs and NFCs are located in well-off areas rather than where they are actually needed. It also finds that institutional factors such as the presence of NPO-friendly law and a democratic form of governance contribute positively to the growth of the NGO sector, while the institutional factors were not tested on the NFCs given the short organizational history. Furthermore, a twelve-year long armed internal insurgency also contributed to the growth of the NGO sector in Nepal.

The findings of this dissertation have multiple implications. First and foremost, density dependence theory can be easily applied in conjunction with institutional theory and available nonprofit explanations in explaining the founding patterns of NPOs. Second, theoretically, disaggregating the organization's population across geographical gradient helps to understand the local nature of the effect of legitimacy and competition on the vitality of organizations. The findings of the dissertation additionally assist with understanding what factors affect the birth of NPOs in large cities, and the findings of the study can help the government of Nepal devise better strategies to encourage NPOs to “go beyond” Kathmandu valley. Particularly, the government of Nepal should focus on creating a better institutional environment for NGOs in the far-flung areas, and coordinate with other donors and local agencies to provide financial and non-financial resources that are needed for organizational survival and growth in remote parts of the country.