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Donations to US based NGOs in International Development Cooperation: How (Un-)Informed Are Private Donors?

Author

Listed:
  • Peter Nunnenkamp

    (Kiel Institute for the World Economy)

  • Hannes Öhler

    (Georg-August-University Göttingen)

Abstract

Apart from scaling up foreign aid by NGOs, informed choices of private donors could also encourage an efficient and targeted use of NGO funds in international development cooperation. We assess the determinants of private donations across a large sample of US based NGOs with foreign aid activities. OLS and 2SLS estimations indicate that donors hardly make use of publicly available information on NGO characteristics, notably the “price of giving” and the degree of specialization, when deciding on donations. They rather rely on the frequently offered option to designate donations to preferred purposes – even though this behavior would be rational only under conditions that are unlikely to hold.

Suggested Citation

  • Peter Nunnenkamp & Hannes Öhler, 2011. "Donations to US based NGOs in International Development Cooperation: How (Un-)Informed Are Private Donors?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 72, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:072
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    References listed on IDEAS

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    1. Payne, A. Abigail, 1998. "Does the government crowd-out private donations? New evidence from a sample of non-profit firms," Journal of Public Economics, Elsevier, vol. 69(3), pages 323-345, September.
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    4. David T. Yi, 2010. "Determinants of fundraising efficiency of nonprofit organizations: evidence from US public charitable organizations," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(7), pages 465-475.
    5. Bilodeau, Marc & Slivinski, Al, 1997. "Rival charities," Journal of Public Economics, Elsevier, vol. 66(3), pages 449-467, December.
    6. Eric Werker & Faisal Z. Ahmed, 2008. "What Do Nongovernmental Organizations Do?," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 73-92, Spring.
    7. Susan Rose-Ackerman, 1982. "Charitable Giving and “Excessive†Fundraising," The Quarterly Journal of Economics, Oxford University Press, vol. 97(2), pages 193-212.
    8. Garth Heutel, 2014. "Crowding Out and Crowding In of Private Donations and Government Grants," Public Finance Review, , vol. 42(2), pages 143-175, March.
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    Cited by:

    1. Meer, Jonathan, 2014. "Effects of the price of charitable giving: Evidence from an online crowdfunding platform," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 113-124.
    2. Metzger, Laura, 2015. "Making an impact? The importance of aid effectiveness for charitable giving. A laboratory experiment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112835, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    non-governmental organizations; specialization; private donations; informed choices; price of giving; option to designate;

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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