I dont think the increasing number of NGOs as a good sign.
I think NGOs Lead to misallocation and under-utilisation of resources not all but it is applicable to 70% of NGOs, from my prospective.
There are inherent flaws when we see NGOs as an entity dealing with social issues because:
1. Most of them dont have to borne the cost associated with it, the cost is usually borne by the third party, who donates to NGO. As the cost associated with acquiring such resources are not to be borne by NGOs it lead to under-utilisation of resources due to lack of motivation to save the cost associated with it.
2. ACCOUNTABILITY
NGOs are not accountable whether they deal with issues/cause or not, whether their action yield result or not. They are not accountable to people.
3. Policies to regulate the functioning of NGOs are liberal, as such liberal Policies & regulations allows one to manipulate the use of resources. Again the work of NGOs in most of the cases are not transparent.
4. It leads to mis-allocation of resources. A person whether poor or rich performs well in the competition when a person got the sense of security of his well-being he tends to perform at low-level. NGOs indirectly promote such sense of feelings among poor through their noble cause by giving away. However, action of giving away allows an individual to get reward without hard-work in economic term paying cost to achieve such reward.
In real those NGOs only are helpful to solve the issue who not provide food to poor but provide means to earn food, who dont give education to all irrespective of the person competitiveness (though, education to all is the right of each & every individual) because the person with less self motivation is taking away the chance of the one who is motivated to get educated.
In simple sense, NGOs promote feelings dont worry we're there to care of you (again not all, but here in 90% of cases) and such feelings never eradicate/ alleviate social issues existing in the society. Infact, from my point of view NGOs is one of the best way to earn money ( opportunity cost, one has to pay to themselves, whether owner or employed) and to convert black money to white also to have tax advantage and again to take unfair advantage due to lack of strict regulations.