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Funding, Competition and the Efficiency of NGOs: An Empirical Analysis of Non-charitable Expenditure of US NGOs Engaged in Foreign Aid

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  • Peter Nunnenkamp
  • Hannes Öhler

Abstract

We assess the determinants of the wide variation in the efficiency of foreign aid activities across US-based non-governmental organizations (NGOs). In particular, we analyze whether noncharitable expenditures for administration, management and fundraising depend on the intensity of competition among NGOs and on the degree to which they are refinanced by governments. We control for NGO heterogeneity in various dimensions as well as major characteristics of recipient countries. We find that fiercer competition is associated with more efficient foreign aid activities of NGOs, rather than leading to “excessive” fundraising. Official funding tends to increase administrative costs. Nevertheless, officially financed NGOs spend relatively more on charitable activities since they are less concerned with collecting private donations through fundraising efforts.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 11-026.

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Length: 27 p.
Date of creation: Jun 2011
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Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/91261

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Keywords: non-governmental organizations; foreign aid; administrative costs; fundraising; United States;

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References

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  1. Janos Kornai & Eric Maskin & Gerard Roland, 2002. "Understanding the Soft Budget Constraint," Economics Working Papers 0019, Institute for Advanced Study, School of Social Science.
  2. Axel Dreher & Peter Nunnenkamp & Susann Thiel & Rainer Thiele, 2010. "Aid Allocation by German NGOs: Does the Degree of Public Refinancing Matter?," Kiel Working Papers 1584, Kiel Institute for the World Economy.
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  5. Arnab Acharya & Ana Teresa Fuzzo de Lima & Mick Moore, 2006. "Proliferation and fragmentation: Transactions costs and the value of aid," The Journal of Development Studies, Taylor and Francis Journals, vol. 42(1), pages 1-21.
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  7. Khanna, Jyoti & Sandler, Todd, 2000. "Partners in giving:: The crowding-in effects of UK government grants," European Economic Review, Elsevier, vol. 44(8), pages 1543-1556, August.
  8. Aldashev, Gani & Verdier, Thierry, 2007. "Internationalization of NGOs and Competition on Markets for Development Donations," CEPR Discussion Papers 6511, C.E.P.R. Discussion Papers.
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  11. Riber, D.C. & Wilhelm, M.O., 1996. "Altruistic and Joy-of-Giving Motivations in Charitable Behavior," Papers 1-96-4, Pennsylvania State - Department of Economics.
  12. James Andreoni & A. Abigail Payne, 2003. "Do Government Grants to Private Charities Crowd Out Giving or Fund-raising?," American Economic Review, American Economic Association, vol. 93(3), pages 792-812, June.
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  14. Dreher, Axel & Nunnenkamp, Peter & Thiel, Susann & Thiele, Rainer, 2010. "Aid allocation by German NGOs: Does the degree of public refinancing matter?," Center for European, Governance and Economic Development Research Discussion Papers 92, University of Goettingen, Department of Economics.
  15. Suzanne McCoskey, 2005. "NGOs in the Aid Community: Do Funding Source or Economic Conditioning Matter to Decisions of Country Involvement?," Development and Comp Systems 0508004, EconWPA.
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Cited by:
  1. Peter Nunnenkamp & Hannes Öhler & Tillmann Schwörer, 2011. "US based NGOs in International Development Cooperation: Survival of the Fittest?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 83, Courant Research Centre PEG.

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