Brothers in Alms? Coordination between NGOs on Markets for Development Donations

Thierry Verdier, Marco Marini and Gani Aldashev

No 8109, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies the stability of coordination between mission-driven non-governmental organizations (NGOs) competing for donations. We build a non-cooperative game-theoretic model of alliance formation between NGOs that compete through fundraising activities and impose externalities on each others? output. We derive general results on the stability of full coordination under two classes of alliance-formation rules: unanimity and aggregative. If fundraising activities are strategic complements, the grandcoalition (i.e. full coordination) is always individually stable and, under the unanimity rule, coalitionally stable. When fundraising activities are strategic substitutes, the grandcoalition can be unstable and the instability is more likely, the steeper are NGOs? (negatively sloped) best-reply functions. Under the aggregative rule, the grandcoalition is stable: (i) individually, if there are negative coalitional externalities; (ii) coalitionally, if breaking an alliance requires the majority of NGOs involved in the alliance.

Keywords: Ngos; Giving; Coordination; Endogenous coalition formation; Non-distribution constraint (search for similar items in EconPapers)
JEL-codes: C72 D74 L31 L44 (search for similar items in EconPapers)
Date: 2010-11
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Working Paper: Brothers in alms? coordination between nonprofits on markets for donations (2013)
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