Acting Autonomously or Mimicking the State and Peers? A Panel Tobit Analysis of Financial Dependence and Aid Allocation by Swiss NGOs
University of Heidelberg
University of Kiel
affiliation not provided to SSRN
Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics
KOF Working Paper No. 219
NGO aid is still widely believed to be superior to official aid (ODA). However, the incentives of NGOs to excel and target aid to the poor and deserving are increasingly disputed. We contribute to the emerging literature on the allocation of NGO aid by performing panel Tobit estimations for Swiss NGOs. The analysis offers new insights in two major regards: First, we cover the allocation of both self-financed and officially co-financed aid for a large panel of NGOs and recipient countries. Second, by classifying each NGO according to its financing structure, we address the unresolved question of whether financial dependence on the government impairs the targeting of NGO aid. It turns out that NGOs mimic the state as well as NGO peers. Officially refinanced NGOs are more inclined to imitate the allocation of ODA. However, the degree of financial dependence does not affect the poverty orientation of NGO aid and the incentives of NGOs to engage in easier environments. The allocation of self-financed aid differs in several respects from the allocation of officially co-financed aid, including the role of financial dependence for imitating the state and herding among NGOs.
Number of Pages in PDF File: 35
Keywords: NGO aid, aid allocation, official co-financing, financial dependence
JEL Classification: F35working papers series
Date posted: March 18, 2009
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