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Samaritan Bundles: Inefficient Clustering in NGO Projects

Gani Aldashev, Marco Marini () and Thierry Verdier ()

No 11931, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: clustering; foreign aid; fundraising; non-ggovernmental organizations (search for similar items in EconPapers)
JEL-codes: D64 F35 L13 L31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ppm
Date: 2017-03
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