Michael, I re-called the book from our library, and should get it within the next few days - so I will be able to make more specific comments on it when I have a chance to read it.
A more general point is, however, that international funding of nonprofits is very difficult to track (we tried and failed). One of the reasons is that various transnational agencies (including the UN - which does not generate revenues of its own but depends on funding coming from member-states) act as clearing houses that "change" the nature of the transfers from "governmental" to "nonprofit" or to "private." So regardless of how the revenue is recorded by the recipient organization, it is likely that the original donor was a government agency.
As far as your comments re. tax evasion and commercialization are concerned, that is indeed a well known problem. Another issue that comes to mind is that nonprofits often act as "problem non-solvers" - that is, act as convenient store-fronts for government agencies that are obliged to solve social problems, yet for various reasons do not want make any serious committment in that direction (e.g. to avoid a blacklash from opponents). In such situations, giving funds to nonprofits to "solve" a problem serves as a convenient way out by providing token support yet not alienating potential opponents.
While the reserach that I know cites mostly domestic policies as the area of such practices, it is quite likely that foreign policy might follow the same pattern - a government grant channelled through a nonprofit outfit may placate the recipient nation and its friends (e.g. Egypt), yet it is insignificant enough not to enrage potential enemies (e.g. Israel).
In such situations, blaming a nonprofit agency for the problem is missing the point that the problem was never intended to be solved. It is like blaming aspirine for not healing tuberculosis - we should instead focus on the holes in the health system that makes aspirine the only available "solution."
wojtek