Kristinesargsyan's Blog

December 7, 2009

What Impact Armenian NGOs have on Armenian Economy

Filed under: My Papers and Articles — by kristinesargsyan @ 7:26 pm

Armenian NGO Sector Today

 Before discussing Armenian NGO sector let me first explain what is a Non Governmental Organization (NGO) and  What philosophy it has.  NGO is a type of civil society organization which aims at solving specific needs of some target groups. It is a mission driven organization, which depending on its mission serves certain target groups. Those organizations are non profit organizations, which mean that they cannot generate profit, or if they do generate profit, they use it only for the charity purposes, or for covering expenses for running the NGO.   NGOs usually rise funds or mobilize recourses from international or local donor. Charity is the cornerstone NGO philosophy.  Usually NGOs are established, when there is a specific need among certain targets. It should be mentioned that NGOs and other types of nonprofit organizations especially focus on such specific needs that missed from the “eye” of government or if corresponding authorities or government don’t have skills or time to address those needs.

NGOs are also considered to be the builders of civil society in any country.  This is the one of the main reasons why   many foreign donors allocate their money to NGOs all over the world. NGOS are the worriers who straggle for the better life of our societies, where won’t be violation of human rights, corruption, harassment and where society members will have access for education and other civil services.

  The first Armenian NGOs appeared following the collapse of the Soviet Union. Their importance grew following the 1988 earthquake in northern Armenia and as a result of the Kharabakh conflict. These events provided an opportunity for NGOs to contribute to relief efforts through various humanitarian aid projects. These NGOs, however, were largely project-driven. As they began to focus their efforts on more long-term development initiatives, NGOs moved away from a “humanitarian assistance” focus toward longer-term needs of various vulnerable groups. They are also beginning to understand and actively engage in support for legal, political and economic reforms.

 Currently, there are more than 5000 NGOs registered with Armenia’s Ministry of Justice. However, slightly less than one thousand of these organizations are active presently. Over the last five years, many international organizations have provided financial support to Armenia’s non-government sector to address needs different target groups. As a result, many NGOs have significant input in various aspects of improvements in our life.  They are working in different fields like: 

health, environment, legislation improvements, culture, education, politics, elections, local governance, corruption, media, community development, economy, business and so on.

Armenian NGO sector make changes in all above mentioned fields in Armenia. It has really great impact on those targets for whom it works and for the public in general as well. Anyway one important thing about Armenian NGS sector, that I want to mention is that though it is designed to be non profit and emphasize  charity  and volunteerism in its activities,  in  our country unlike  many developed countries,   majority of NGO are developed for generating income.  To explain this in other words I should say that many professional groups who are not paid properly by state, or don’t have jobs, get together, found an NGO, start doing the work they love and attract funding for what they are doing. This means that apart from different   missions that NGOs have or adopt, usually the another common mission that NGOs have is to develop better job conditions for people who are involved within NGO activities. This may sound strange, as it contradicts the basic principals and marl of NGO work, but this is in the roots of any Armenian NGO. This fact  is conditioned by the social economic situation within the country and there is nothing  we can do about it. This is the specification of Armenian NGOs.

  • One of the biggest impacts  NGOs have on economy  is  when NGO attract big funds for their activities and projects a huge inflow of money happens. To be more specific on this let me bring an example of  foreign assistance to Armenian NGOs in terms of  funding

To have a broader vision of the total funds granted to the local NGOs by different donor

community representatives, most donors relevant to Civil Society promotion in Armenia, were

asked to provide an indication of the approximate sums granted to NGOs and/or CBOs in 2003 by World Learning. According to responses that were recorded by NGO sector evaluation team (WL), the overall amount directly granted to Armenian NGOs and CBOs by these donors exceeded $12.5 million dollars for FY 2003 including other USAID funded programs in various areas.

It is interesting to note the diversity of grant making programs were available to the grant seeking

NGOs in Armenia. Each of donor organizations have a somewhat different focus and according to that they financed different activities.  Some focused on advocacy and community development others on community organizations centered around schools, while others still on fostering social partnerships in service delivery.

Along with the inflow of foreign assistance provided by different organization, the U.S. Agency

for International Development (USAID) is considered the primary donor for the development of

Civil Society Organizations. The total allocated budget for the period FY 2001 through FY 2004

approached $33.6 million under USAID’s Democracy and Governance Strategic Objective. This

included support for legislative strengthening, improvement of local and state governance, and

support for independent media. U.S. assistance supports grassroots advocacy groups and

initiatives that bring together local government officials and citizens to solve community

problems; develops civic education materials and curricula; strengthens the work of nongovernmental organizations (NGOs); and educates voters. Journalists, editors, and managers

of media outlets are trained on business management, fact-based journalism, and investigative


Additionally, between FY 2001and FY 2004 USAID funds for small grant-making programs

administered through the Eurasia Foundation reached $3.6 million.

FY 2001 $9 million $1.1 million

FY 2002 $9.45 million $872.000

FY 2003 $7.73 million $960.000

FY 2004 $7.42 million $700.000

Total $33.6 million $3.6 million

 I hope the figures stated above can approve the fact that because of such big amounts of money were allocate to Armenian NGOs, they could have huge impact on our economy in many ways.

  •  One of the impacts of NGOs on Armenian economy can be considered the fact that many   non governmental organizations opened a lot of job opportunities for many people.  

Unfortunately there is no research on this. According to “Armenian NGO Sector Assessment” study conducted by World Learning on 2004 the number of NGOs in Armenia exceeded tree thousand five hundreds. At that time only one third of this number were considered as active NGOs. According to the same study on 2004 the average NGO had   from 5 – 10 workers, out of which 2-3 could be considered permanently paid workers. Other workers had paid job during projects funded by donors and worked on voluntary bases when the NGO didn’t have funds to pay them.  So we can ruffle imagine that the NGO sector highly supports the employment ratio in Armenia. (Example of exceptional big NGO – Mission Armenia NGO in 2004 had a  staff of 300 employees)

  •  Another observation about NGOs impact is that usually in Armenia local and international NGOs pay higher salaries then state of business organizations.
  •  When people get higher salaries they buy more things then usually. Of course this fact will influence the Consumers Price Index:  CPI will raise.
  •  When people demand more things usually inflation happens and prices of different products demanded by household’s raise.      
  • When people earn more, they are able to make more savings and followingly more investment, which in its turn shift the country budget to deficit.   

So here we see a whole range of impacts that NGOs make through the fund inflow to the country in form of grants for Armenian NGOs from foreign countries. Unfortunately there is no research on these above mentioned points as well. Here we can not say that the NGOs do it all by themselves. They do surly influence to the process like inflow of money, higher salaries, raising CPI, causing inflation, more savings and investments. They influence on this processes directly and indirectly along with other factors.

  •  Another big impact that the NGOs make in Armenia is the development and strengthening of business sector through educating small and medium businesses. In Armenia e   should have small and medium businesses as well apart  form monopolies and oligopolies.

 NGOs make huge impact on economy helping the small and medium business in Armenia. World Bank, GTZ, Eurasia Foundation, Fund for Small and Medium Businesses,  UMBA, USAID MAP project and  different Chambers of Commars  acting within  Armenia do a great job trying to educate small and medium businesses. Professional development is one of the cornerstones of effectiveness and economy of scale.  Those above mentioned organizations develop different learning and experience sharing opportunities locally and internationally for local businesses and produces.  They teach them different innovations from world best practices and do professional  trainings on how to establish and  run a business, how to make a business plans, how to do marketing and promote sells, how to do quality management and client surveys and  so on.   All this foster local business development and production.

  • Apart form  this NGOs also do a lot of changes in the legislation, which will support not only small and medium businesses, but  is also directed to the changes in taxation.  Many businesses in Armenia shut down because of ineffective taxation policy that the country uses.

GTZ, Eurasia Foundation, Fund for Small and Medium Businesses, UMBA, Gegarkunik Chambers of Commars  have supported, initiated and implemented a lot of  amendments in existing laws, related to  small and medium businesses and taxation, for improving them.

I also want to mention that there are NGOs that work on adopting and installing different institutional systems such as ADR system, Property right and copy right concepts

and so on.

  •  Another huge impact of NGOs is that many businesses and producers develop unions and associations,   which becomes coalitions and networks for businessmen and manufacturers to solving common needs and problems, as well as for advocating for legislative changes.  
  • In Armenia we have a big problem concerning rural development and decentralization.  Nearly everything is concentrated in the capital of Armenia: Yerevan. Presently NGOs   do a lot on rural development, community development of isolated regions like Synik, Vayk  and agricultural reforms. The improvement of all those aspects will definitely impact the domestic economy.  
  • NGOs also have a huge impact on such social – economic issue like poverty reduction.  The poverty reduction strategy has been developed and is implemented with the participation and support of strong Armenian NGOs like: Mission Armenia, Astghik, SCDC, Araza, EDRC, HRDC and other NGOs.

 In the UNDP Poverty Reduction Report for 2005 the Prime Minister of Armenia Andranik Margaryan have mentioned that NGOs have incredible  impact on  poverty reduction process and state wouldn’t be able to do it without NGO sector support. 

  • Another economic problems for which NGOs straggle in Armenia is corruption. For this Issue we can say that local and international NGOs are the only organization that does really try to do something about salvation of this issue.

 Transparency International, Eurasia Foundation, UN, USAID,  Akhiles and Husastgh   NGOs and international organizations are bright examples for these.   

  • NGOs like EDRC (Economy Development and Research Center) have a significant impact doing different independent researches and studies on the field of economy. Such organizations serve as experts in the field not only for local government but also for foreign donors and governments.  

One of the NGO representatives who is working with businesses brought up to my attention tree important observation, that I would like to motion in my paper work:

  • One is that NGOs in marzes usually collect all qualified human recourses, because they pay higher salaries then businesses. This factor affects businesses effectiveness of course.
  • Another thing that he mentioned was that sometimes NGO providing grants to business organizations kill the entrepreneurial skills that entrepreneurial businesses have.
  • And last point that he has mentioned was that NGO also do a great job trying to keep balance between rich layers of out society and poor layers of it. They encourage reach people to support poor people.  They also help poor people educating them, giving them food, opening jobs for them and constructing houses for them.  

I think in addition to this NGOs can also organize collection and redistribution of resources from people who don’t need those resources to those who need those resources.   (This is my point)


 The observations that I brought are more related to the impact of NGOs on Armenian Economy, but apart from that I should emphasis that Armenian NGO sector is the builder of civil society and democracy in our country. Hundreds of NCOs do incredible work on issues like defense of human rights, struggle against domestic violation,  fostering free media, constituency engagement, legislative changes,   support to reforms in health, agriculture, civil services, struggle against corruption and poverty,  opening borders  and many other issues.

My hypothesis for this paper is “NGOs have huge impact in Armenian economy. They have and positive and negative impacts. But one thing is obvious; our life wouldn’t get better without their support”

I think the examples I brought are enough to imaging how NGOs impact our economy and our life.

I personally believe that the salvation of human problems lay in the heart of our citizens and that neither state not other institutions can do more than simple ordinary and independent citizen, who don’t belong to any political parties and don’t follow any specific benefit from their actions.

Today in Armenia NGOs are the only institutions and organizations, where Armenian citizens can protect their viewpoints and have comparatively more democratic working environment to work for what they strongly believe.    






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