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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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  • Nunnenkamp, Peter
  • Öhler, Hannes
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 - i.e., 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

  • Nunnenkamp, Peter & Öhler, Hannes, 2010. "Funding, competition and the efficiency of NGOs: An empirical analysis of non-charitable expenditure of US NGOs engaged in foreign aid," Kiel Working Papers 1640, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1640
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gani ALDASHEV & Cecilia NAVARRA, 2018. "Development Ngos: Basic Facts," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 125-155, March.
    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.
    6. Norbert Laurisz, 2019. "The Role of Stakeholders in Development of Social Economy Organizations in Poland: An Integrative Approach," Administrative Sciences, MDPI, vol. 9(4), pages 1-17, September.
    7. Amanda Murdie & David Davis, 2012. "Looking in the mirror: Comparing INGO networks across issue areas," The Review of International Organizations, Springer, vol. 7(2), pages 177-202, June.
    8. Andreas Fuchs & Hannes Öhler, 2021. "Does private aid follow the flag? An empirical analysis of humanitarian assistance," The World Economy, Wiley Blackwell, vol. 44(3), pages 671-705, March.
    9. Berta SILVA & Ronelle BURGER, 2015. "Financial vulnerability: an empirical study of Ugandan NGOs," CIRIEC Working Papers 1515, CIRIEC - Université de Liège.
    10. Jakub Dostál, 2020. "Revealed value of volunteering: A volunteer centre network," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(2), pages 319-345, June.
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    12. Marzena Rydzewska & Bozena Nadolna, 2021. "Financial Dimension of the Activity of Faith-based Organizations with the Status of Public Benefit Organizations in Poland: Research Results," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 3), pages 149-170.

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    More about this item

    Keywords

    Non-governmental organizations; foreign aid; administrative costs; fundraising; United States;
    All these keywords.

    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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