Kiel Working Papers, Kiel Institute for World Economics
No 1769:
Private Donations, Government Grants, Commercial Activities, and Fundraising: Cointegration and Causality for NGOs in International Development Cooperation
Peter Nunnenkamp Dierk Herzer
Abstract: NGOs could help scale up foreign aid efforts by mobilizing
private donations. However, fundraising activities do not necessarily
result in higher donations, and substitution effects between different
sources of revenue may diminish the overall pool of NGOs’ resources. This
paper examines the determinants of private donations to US-based NGOs
engaged in international development cooperation. We employ panel
cointegration and causality techniques to analyze the interactions between
private donations, government grants, commercial revenues and fundraising
expenditures. According to our results, a marginal dollar spent on
fundraising yields almost five dollars in new donations in the long run.
Government grants crowd in private donations in the long run, whereas
commercial revenues crowd out donations in the long run. Moreover, our
panel vector error correction model reveals complex short-run dynamics
Keywords: non-governmental organizations; development cooperation; private donations; panel cointegration; (follow links to similar papers)
JEL-Codes: L31,; F35,; C23; (follow links to similar papers)
30 pages, April 2012
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