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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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  • Öhler, Hannes
  • Nunnenkamp, Peter

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 non-charitable 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.

Suggested Citation

  • Öhler, Hannes & Nunnenkamp, Peter, 2011. "Funding, Competition and the Efficiency of NGOs: An Empirical Analysis of Non-charitable Expenditure of US NGOs Engaged in Foreign Aid," Open Access Publications from Kiel Institute for the World Economy 48361, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkie:48361
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    References listed on IDEAS

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    Cited by:

    1. Gani Aldashev & Cecilia Navarra, 2017. "Development NGOs: Basic Facts," Working Papers ECARES ECARES 2017-36, ULB -- Universite Libre de Bruxelles.
    2. 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.
    3. Herzer, Dierk & Nunnenkamp, Peter, 2013. "Private Donations, Government Grants, Commercial Activities, and Fundraising: Cointegration and Causality for NGOs in International Development Cooperation," World Development, Elsevier, vol. 46(C), pages 234-251.
    4. Nunnenkamp, Peter & Öhler, Hannes & Schwörer, Tillmann, 2013. "US based NGOs in International Development: Financial and Economic Determinants of Survival," World Development, Elsevier, vol. 46(C), pages 45-65.
    5. Ly, Pierre & Mason, Geri, 2012. "Competition Between Microfinance NGOs: Evidence from Kiva," World Development, Elsevier, vol. 40(3), pages 643-655.

    More about this item

    Keywords

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

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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