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Samaritan Bundles: Inefficient Clustering in NGO Projects

Author

Listed:
  • Gani Aldashev
  • Marco Marini
  • Thierry Verdier
Abstract
We build a model with non-governmental organizations competing through fundraising for donations and choosing their project types. Donors’ willingness to give differs across project types. Each NGO chooses whether to compete in the larger donation market or to monopolize the smaller one. The resulting equilibrium configuration crucially depends on the asymmetry in potential donation market size and on donors’ perceived substitutability or complementarity between giving to two different projects. We analyze the welfare properties of the decentralized equilibrum and characterize the conditions under which such equilibrium is inefficient. We also develop a variant of the model with inter-temporal choices of NGOs, analyze settings where NGOs can coordinate their fundraising activities and/or project type choices, extend the model to allow for spillovers between NGO fundraising activities, and illustrate the mechanisms of the model with several case studies.

Suggested Citation

  • Gani Aldashev & Marco Marini & Thierry Verdier, 2017. "Samaritan Bundles: Inefficient Clustering in NGO Projects," Working Papers ECARES ECARES 2017-12, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:eca:wpaper:2013/249913
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    References listed on IDEAS

    as
    1. Aldashev, Gani & Marini, Marco & Verdier, Thierry, 2014. "Brothers in alms? Coordination between nonprofits on markets for donations," Journal of Public Economics, Elsevier, vol. 117(C), pages 182-200.
    2. Donkers, Bas & van Diepen, Merel & Franses, Philip Hans, 2017. "Do charities get more when they ask more often? Evidence from a unique field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 58-65.
    3. Auriol, Emmanuelle & Brilon, Stefanie, 2014. "Anti-social behavior in profit and nonprofit organizations," Journal of Public Economics, Elsevier, vol. 117(C), pages 149-161.
    4. Gani ALDASHEV & Cecilia NAVARRA, 2018. "Development Ngos: Basic Facts," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 125-155, March.
    5. Timothy Besley & Maitreesh Ghatak, 2001. "Government Versus Private Ownership of Public Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1343-1372.
    6. Aldashev, Gani & Verdier, Thierry, 2010. "Goodwill bazaar: NGO competition and giving to development," Journal of Development Economics, Elsevier, vol. 91(1), pages 48-63, January.
    7. Ronelle Burger & Indraneel Dasgupta & Trudy Owens, 2015. "A Model of Nongovernmental Organization Regulation with an Application to Uganda," Economic Development and Cultural Change, University of Chicago Press, vol. 64(1), pages 71-111.
    8. Aldashev, Gani & Verdier, Thierry, 2009. "When NGOs go global: Competition on international markets for development donations," Journal of International Economics, Elsevier, vol. 79(2), pages 198-210, November.
    9. Scharf, Kimberley, 2014. "Impure prosocial motivation in charity provision: Warm-glow charities and implications for public funding," Journal of Public Economics, Elsevier, vol. 114(C), pages 50-57.
    10. Reinstein David A, 2011. "Does One Charitable Contribution Come at the Expense of Another?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-54, June.
    11. Anna Fruttero & Varun Gauri, 2005. "The Strategic Choices of NGOs: Location Decisions in Rural Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 759-787.
    12. 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.
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    14. Abigail Barr & Marcel Fafchamps, 2006. "A client-community assessment of the NGO sector in Uganda," Journal of Development Studies, Taylor & Francis Journals, vol. 42(4), pages 611-639.
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    16. Christina M. Fong & Erzo F. P. Luttmer, 2009. "What Determines Giving to Hurricane Katrina Victims? Experimental Evidence on Racial Group Loyalty," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 64-87, April.
    17. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
    18. Astrid SIMILON, 2015. "Self-Regulation Systems for NPO Coordination: Strenghts and Weaknesses of Label and Umbrella Mechanisms," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(1), pages 89-104, March.
    19. Eric Werker & Faisal Z. Ahmed, 2008. "What Do Nongovernmental Organizations Do?," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 73-92, Spring.
    20. Gauri, Varun & Galef, Julia, 2005. "NGOs in Bangladesh: Activities, resources, and governance," World Development, Elsevier, vol. 33(12), pages 2045-2065, December.
    21. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    22. Gilles Nancy & Boriana Yontcheva, 2006. "Does NGO Aid Go to the Poor? Empirical Evidence from Europe," IMF Working Papers 2006/039, International Monetary Fund.
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    24. Robinson, Mark & Riddell, Roger C., 1995. "Non-Governmental Organizations and Rural Poverty Alleviation," OUP Catalogue, Oxford University Press, number 9780198233305.
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    Cited by:

    1. Kopel, Michael & Marini, Marco A., 2022. "Mandatory disclosure of managerial contracts in NGOs," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 65-85.
    2. Vallino, Elena & Aldahsev,Gani, 2013. "NGOs and participatory conservation in developing countries: why are there inefficiencies?," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201318, University of Turin.
    3. Michael Kopel & Marco A. Marini, 2020. "Mandatory Disclosure of Managerial Contracts in Nonprofit Organizations," Working Papers 2020.26, Fondazione Eni Enrico Mattei.
    4. Aldashev, Gani & Vallino, Elena, 2019. "The dilemma of NGOs and participatory conservation," World Development, Elsevier, vol. 123(C), pages 1-1.

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    More about this item

    Keywords

    non-governmental organizations; fundraising; foreign aid; clustering;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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