During the implementation of the 1994 Law of Popular Participation (LPP) nongovernmental organizations (NGOs) assumed a new role as intermediaries between the government and the Bolivian population. The law, at the heart of a decentralization program, transferred 20% of the national budget to municipalities, established participatory planning, and mandated oversight by grass-roots territorial ... [Show full abstract] organizations. In some cases, NGOs with long-term commitments to an area have served as effective planning agents, successfully assisting a relatively democratic process of decentralization, and using their project-writing expertise to find matching grants to leverage revenue-sharing funds. Perhaps most important, some NGOs have educated residents of small municipalities about their rights to participate in local planning and budgeting. At the same time, rivalries between NGOs, NGO control of planning, and the failure to establish a permanent presence in a municipality have limited NGO effectiveness. Despite these shortcomings, NGOs have the potential to help prevent local elite cooption of the LPP and the corruption found throughout the country as small municipalities develop the technical capacity to direct local development.
Examination of the Bolivian experience offers lessons both on the opportunities and on the limitations of NGOs as partners with governments that seek efficient and more equitable solutions to problems of local development. This assessment is particularly important as multilateral donors and institutions have consistently used Bolivia over the past fifteen years to experiment with new policy models which they later apply elsewhere in the developing world.