Funding, Competition and the Efficiency of NGOs: An Empirical Analysis of Non-Charitable Expenditure of US NGOs Engaged in Foreign Aid

Center for European, Governance and Economic Development Research Working Paper No. 109

32 Pages Posted: 21 Jul 2010 Last revised: 27 Dec 2013

See all articles by Peter Nunnenkamp

Peter Nunnenkamp

University of Kiel

Hannes Öhler

University of Goettingen (Gottingen)

Date Written: July 20, 2010

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.

Keywords: Non-Governmental Organizations, Foreign Aid, Administrative Costs, Fundraising, United States

JEL Classification: F35, L31

Suggested Citation

Nunnenkamp, Peter and Öhler, Hannes, Funding, Competition and the Efficiency of NGOs: An Empirical Analysis of Non-Charitable Expenditure of US NGOs Engaged in Foreign Aid (July 20, 2010). Center for European, Governance and Economic Development Research Working Paper No. 109. Available at SSRN: https://ssrn.com/abstract=1645881 or http://dx.doi.org/10.2139/ssrn.1645881

Peter Nunnenkamp (Contact Author)

University of Kiel ( email )

D-24100 Kiel
Germany

Hannes Öhler

University of Goettingen (Gottingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

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