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A Model of NGO Regulation with an Application to Uganda

Author

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  • Burger, Ronelle

    (Stellenbosch University)

  • Dasgupta, Indraneel

    (Indian Statistical Institute)

  • Owens, Trudy

    (University of Nottingham)

Abstract

We develop a model of regulation of service-delivery NGOs, where future grants are conditional on prior spending of some minimal proportion of current revenue on direct project-related expenses. Such regulation induces some NGOs to increase current project spending, but imposes wasteful costs of compliance verification on all NGOs. Under a large class of parametric configurations, we find that regulation increases total discounted project expenditure over a regime of no regulation, when verification costs constitute no more than 15% of initial revenue. We characterize the optimal regulatory policy under these configurations. We apply our analysis to a large sample of NGOs from Uganda, and find regulation to be beneficial in that context.

Suggested Citation

  • Burger, Ronelle & Dasgupta, Indraneel & Owens, Trudy, 2011. "A Model of NGO Regulation with an Application to Uganda," IZA Discussion Papers 6221, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6221
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    References listed on IDEAS

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    Cited by:

    1. Ronelle BURGER & Indraneel DASGUPTA & Trudy OWENS, 2015. "Why Pay NGOs to Involve the Community?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(1), pages 7-31, March.
    2. Berta SILVA & Ronelle BURGER, 2015. "Financial vulnerability: an empirical study of Ugandan NGOs," CIRIEC Working Papers 1515, CIRIEC - Université de Liège.

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    Keywords

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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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