Basil al-Azawi, who heads an umbrella organization called the Commission for Civil Society Enterprises, says bureaucratic delays and limited support have a negative impact on the NGO community in Iraq, the U.N. Integrated Regional Information Network reported.

"The only support local NGOs get is from international bodies, and this support is subject to annoying bureaucratic measures; it is also limited and conditional," he said.

Azawi noted international donations to Iraqi NGOs cannot be used to pay wages or other expenses, forcing the aid groups to cut corners.

"As a result, some local NGOs cheat, using the money to cover other expenditures, and this of course affects the quality of projects," he said.

The U.N. Office for the Coordination of Humanitarian Affairs said in its July 7 report the NGO community in Iraq faces major budget shortfalls and issued an appeal for $14 million in donations. It has received only $1 million in support so far.

"Coordination and support services are 80 percent funded, while the health sector has only had 15 percent of its appeal met," an OCHA quarterly report for 2008 said.