What do non-governmental organizations do?

Taken literally, a "non-government organization" could describe just about anything from social groups like Mensa to educational institutions like Harvard University to for-profit firms like Wal-Mart. Borrowing liberally from the World Bank's necessarily vague Operational Directive 14.70, we define NGOs as private organizations "characterized primarily by humanitarian or cooperative, rather than commercial, objectives ..." This paper argues that both the strengths of NGOs and their weaknesses easily fit into the economists' conceptualization of not-for-profit contractors. In addition, the paper will argue that the increased presence of NGOs in the last fast few decades can be explained by three factors: a time trend to outsource government services, new ventures by would-be not-for-profit "entrepreneurs," and the increasing professionalization of existing NGOs.