Johannes Weisser

Acting Autonomously or Mimicking the State and Peers? A Panel Tobit Analysis of Financial Dependence and Aid Allocation by Swiss NGOs

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.

Financial Dependence and Aid Allocation by Swiss NGOs: A Panel Tobit Analysis

Aid by nongovernmental organizations (NGOs) is still widely believed to be superior to official development assistance (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. We cover the allocation of both self-financed and officially cofinanced aid for a large panel of NGOs and recipient countries. Furthermore, we offer new insights by classifying each NGO according to its financing structure and by interacting financial dependence with measures of need and merit of recipients as well as aid from other donors. It turns out that the allocation of NGO aid is much in line with that of ODA. This applies particularly to officially refinanced NGOs. Moreover, NGOs tend to locate where their peers are active. However, the poverty orientation of NGOs and their incentives to engage in difficult environments are independent of the degree of official refinancing. The allocation of self-financed aid differs in several important respects from the allocation of officially cofinanced aid.

A voluntary contribution experiment with one-way communication and income heterogeneity

One-way communication has been found to increase contributions in linear Voluntary Contribution Mechanisms (VCMs). We confirm the robustness of this result in the presence of income heterogeneity. Our analysis indicates that the communicator directs the members of his group to the highest pay-off that they may attain.