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A Model of NGO Regulation with an Application to Uganda

Author Info

Listed author(s):
  • Ronelle Burger

    ()

    (Department of Economics, University of Stellenbosch)

  • Indraneel Dasgupta

    ()

    (Centre for Studies in Social Sciences,Calcutta)

  • Trudy Owens

    ()

    (School of Economics, 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.

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File URL: https://www.ekon.sun.ac.za/wpapers/2011/wp222011/wp-22-2011.pdf
File Function: First version, 2011
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Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 22/2011.

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Date of creation: 2011
Handle: RePEc:sza:wpaper:wpapers150
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Keywords: Regulation of non-governmental organizations; developing countries; Uganda;

Other versions of this item:

Find related papers by JEL classification:
  • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
  • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
  • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy

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  1. Mookherjee, Dilip & Png, I P L, 1995. "Corruptible Law Enforcers: How Should They Be Compensated?," Economic Journal, Royal Economic Society, vol. 105(428), pages 145-159, January.
  2. Martens,Bertin & Mummert,Uwe & Murrell,Peter & Seabright,Paul, 2008. "The Institutional Economics of Foreign Aid," Cambridge Books, Cambridge University Press, number 9780521055390, February.
  3. Rachel M. McCleary & Robert J. Barro, 2006. "U.S.-Based Private Voluntary Organizations: Religious and Secular PVOs Engaged in International Relief & Development," NBER Working Papers 12238, National Bureau of Economic Research, Inc.
  4. Robinson, Mark & Riddell, Roger C., 1995. "Non-Governmental Organizations and Rural Poverty Alleviation," OUP Catalogue, Oxford University Press, number 9780198233305.
  5. Spiros Bougheas & Indraneel Dasgupta & Oliver Morrissey, 2011. "Repayment versus Investment Conditions and Exclusivity in Lending Contracts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(2), pages 247-265, June.
  6. Jeremy Thornton, 2008. "Competition, Contractibility, and the Market for Donors to Nonprofits," Journal of Law, Economics and Organization, Oxford University Press, vol. 24(1), pages 215-246, May.
  7. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
  8. Guriev, Sergei, 2004. "Red tape and corruption," Journal of Development Economics, Elsevier, vol. 73(2), pages 489-504, April.
  9. Aldashev, Gani & Verdier, Thierry, 2010. "Goodwill bazaar: NGO competition and giving to development," Journal of Development Economics, Elsevier, vol. 91(1), pages 48-63, January.
  10. Barr, Abigail & Fafchamps, Marcel & Owens, Trudy, 2005. "The governance of non-governmental organizations in Uganda," World Development, Elsevier, vol. 33(4), pages 657-679, April.
  11. Spiros Bougheas & Indraneel Dasgupta & Oliver Morrissey, 2007. "Tough love or unconditional charity?," Oxford Economic Papers, Oxford University Press, vol. 59(4), pages 561-582, October.
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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, 03.
  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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