IDEAS home Printed from https://ideas.repec.org/p/not/notcre/12-08.html
   My bibliography  Save this paper

How do Donors Allocate Funds to NGOs? Evidence from Uganda

Author

Listed:
  • Spiros Bougheas
  • Alessia Isopi
  • Trudy Owens

Abstract

We analyse the selectivity criteria used by institutional donors when they allocate funds to NGOs. A simple screening model predicts that donors who care more about efficiency will screen NGOs and concentrate their funding on those that operate accordingly while donors who care less about efficiency and more about local connections will not screen NGOs and disperse their funds independent of these criteria. We then test these predictions of the model using a unique survey data set of 412 NGOs in Uganda interviewed in two waves: 2002 and 2008. Our results indicate that local donors do not implement any selectivity criteria when allocating funds: what is of importance to them is how well connected the manager is locally, the geographic location of the NGO and whether the NGO is indigenous. This behaviour better fits with the interpretation that they are more interested in the ability of NGO to access beneficiaries. International donors, instead, when allocating funds rely more on characteristics that proxy the efficiency of both the NGO and the manager, including the manager's level of education, the appointment procedure, the external feedback on community needs, and whether the NGO respects or complies with monitoring and transparency procedures, such as being registered to pay taxes, or having their accounts audited. This behaviour is more consistent with that of a donor who cares about efficiency.

Suggested Citation

  • Spiros Bougheas & Alessia Isopi & Trudy Owens, 2012. "How do Donors Allocate Funds to NGOs? Evidence from Uganda," Discussion Papers 12/08, University of Nottingham, CREDIT.
    • Handle: RePEc:not:notcre:12/08
    as

    Download full text from publisher

    File URL: https://www.nottingham.ac.uk/credit/documents/papers/12-08.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Axel Dreher & Florian Moelders & Peter Nunnenkamp, 2007. "Are NGOs the Better Donors? A Case Study of Aid Allocation for Sweden," KOF Working papers 07-180, KOF Swiss Economic Institute, ETH Zurich.
    2. Reinikka, Ritva & Svensson, Jakob, 2007. "Working for God? Evidence form a Change in Financing of not-for-profit Health Care Providers in Uganda," Seminar Papers 754, Stockholm University, Institute for International Economic Studies.
    3. Martina Björkman & Jakob Svensson, 2010. "When Is Community-Based Monitoring Effective? Evidence from a Randomized Experiment in Primary Health in Uganda," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 571-581, 04-05.
    4. Mihir A. Desai & Robert J. Yetman, 2005. "Constraining Managers without Owners: Governance of the Not-for-Profit Enterprise," NBER Working Papers 11140, National Bureau of Economic Research, Inc.
    5. Moreira, Marcelo J., 2009. "Tests with correct size when instruments can be arbitrarily weak," Journal of Econometrics, Elsevier, vol. 152(2), pages 131-140, October.
    6. Burger, Ronelle & Owens, Trudy, 2010. "Promoting Transparency in the NGO Sector: Examining the Availability and Reliability of Self-Reported Data," World Development, Elsevier, vol. 38(9), pages 1263-1277, September.
    7. Svensson, Jakob & Reinikka, Ritva, 2007. "The Returns from Reducing Corruption: Evidence from Education in Uganda," CEPR Discussion Papers 6363, C.E.P.R. Discussion Papers.
    8. Svensson, Jakob & Reinikka, Ritva, 2004. "Working for God?," CEPR Discussion Papers 4214, C.E.P.R. Discussion Papers.
    9. Nunnenkamp, Peter & Weingarth, Janina & Weisser, Johannes, 2009. "Is NGO aid not so different after all? Comparing the allocation of Swiss aid by private and official donors," European Journal of Political Economy, Elsevier, vol. 25(4), pages 422-438, December.
    10. John List & Michael Price, 2012. "Charitable Giving Around the World: Thoughts on How to Expand the Pie," Natural Field Experiments 00470, The Field Experiments Website.
    11. Marcel Fafchamps & Trudy Owens, 2009. "The Determinants of Funding to Ugandan Nongovernmental Organizations," The World Bank Economic Review, World Bank, vol. 23(2), pages 295-321, March.
    12. Edwards, Michael & Hulme, David, 1996. "Too close for comfort? the impact of official aid on nongovernmental organizations," World Development, Elsevier, vol. 24(6), pages 961-973, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Spiros Bougheas & Alessia Isopi & Trudy Owens, 2022. "NGOs and donors' funding: Evidence from Uganda," Discussion Papers 2022-04, University of Nottingham, CREDIT.
    2. Axel Dreher & Peter Nunnenkamp & Hannes Öhler & Johannes Weisser, 2009. "Acting Autonomously or Mimicking the State and Peers? A Panel Tobit Analysis of Financial Dependence and Aid Allocation by Swiss NGOs," CESifo Working Paper Series 2617, CESifo.
    3. repec:elg:eechap:15325_15 is not listed on IDEAS
    4. Metzger, Laura & Nunnenkamp, Peter & Omar Mahmoud, Toman, 2008. "Does corporate aid really help fighting worldwide poverty? A case study of Nestlé's aid allocation," Kiel Working Papers 1414, Kiel Institute for the World Economy (IfW Kiel).
    5. Gani ALDASHEV & Cecilia NAVARRA, 2018. "Development Ngos: Basic Facts," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 125-155, March.
    6. repec:bla:annpce:v:89:y:2018:i:1:p:125-155 is not listed on IDEAS
    7. Metzger, Laura & Nunnenkamp, Peter & Mahmoud, Toman Omar, 2010. "Is Corporate Aid Targeted to Poor and Deserving Countries? A Case Study of Nestlé's Aid Allocation," World Development, Elsevier, vol. 38(3), pages 228-243, March.
    8. Hagen, Rune Jansen, 2014. "Rents and the Political Economy of Development Aid," Working Papers in Economics 07/14, University of Bergen, Department of Economics.
    9. Dreher, Axel & Nunnenkamp, Peter & Thiel, Susann & Thiele, Rainer, 2010. "Aid allocation by German NGOs: Does the degree of public refinancing matter?," University of Göttingen Working Papers in Economics 92, University of Goettingen, Department of Economics.
    10. Lewis, Maureen & Pettersson, Gunilla, 2009. "Governance in health care delivery : raising performance," Policy Research Working Paper Series 5074, The World Bank.
    11. Gani Aldashev & Esteban Jaimovich & Thierry Verdier, 2018. "Small is Beautiful: Motivational Allocation in the Nonprofit Sector," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 730-780.
    12. Axel Dreher & Florian Mölders & Peter Nunnenkamp, 2010. "Aid Delivery through Non‐governmental Organisations: Does the Aid Channel Matter for the Targeting of Swedish Aid?," The World Economy, Wiley Blackwell, vol. 33(2), pages 147-176, February.
    13. John‐Michael Davis & Liam Swiss, 2020. "Need, Merit, Self‐Interest or Convenience? Exploring Aid Allocation Motives of Grassroots International NGOs," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(8), pages 1324-1345, November.
    14. Nunnenkamp, Peter & Öhler, Hannes, 2011. "Aid Allocation through Various Official and Private Channels: Need, Merit, and Self-Interest as Motives of German Donors," World Development, Elsevier, vol. 39(3), pages 308-323, March.
    15. Morales, Joaquin & Serfilippi, Elena, 2017. "When NGOs fail: A model of advocacy and services provision in weak democracies," MPRA Paper 91506, University Library of Munich, Germany.
    16. Peter Nunnenkamp & Rainer Thiele, 2009. "Sind Nichtregierungsorganisationen die besseren Entwicklungshelfer?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(3), pages 266-289, August.
    17. Hyman Zyl & Frederik Claeyé, 2019. "Up and Down, and Inside Out: Where do We Stand on NGO Accountability?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(3), pages 604-619, July.
    18. 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.
    19. Nunnenkamp, Peter & Weingarth, Janina & Weisser, Johannes, 2009. "Is NGO aid not so different after all? Comparing the allocation of Swiss aid by private and official donors," European Journal of Political Economy, Elsevier, vol. 25(4), pages 422-438, December.
    20. Axel Dreher & Peter Nunnenkamp & Hannes Oehler & Johannes Weisser, 2009. "Acting autonomously of mimicking the state and peers?," KOF Working papers 09-219, KOF Swiss Economic Institute, ETH Zurich.
    21. Raschky, Paul A. & Schwindt, Manijeh, 2012. "On the channel and type of aid: The case of international disaster assistance," European Journal of Political Economy, Elsevier, vol. 28(1), pages 119-131.
    22. Koch, Dirk-Jan & Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2009. "Keeping a Low Profile: What Determines the Allocation of Aid by Non-Governmental Organizations?," World Development, Elsevier, vol. 37(5), pages 902-918, May.

    More about this item

    Keywords

    Funding application; NGO;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:not:notcre:12/08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hilary Hughes (email available below). General contact details of provider: https://edirc.repec.org/data/cenotuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.