When NGOs Go Global: Competition on International Markets for Development Donations

Why many large non-governmental organizations (NGOs) are becoming multinational entities? What are the welfare implications of this integration of markets for development donations? To answer these questions, we build a simple two-country model with horizontally di¤erentiated NGOs competing through fundraising e¤ort. We …nd that NGOs become multinational if the economies of scale in fundraising are su¢ciently large. In that case, national NGOs in the smaller country disappear, while some national NGOs remain in the larger country only if the di¤erence in the countries’ size is large enough. Social welfare is higher in the regime with multinationals than under autarky. Keywords: non-governmental organizations, charitable giving, globalization, multinational …rms. JEL Classi…cation: F23, L22, L31. Copyright 2008 by Gani Aldashev and Thierry Verdier. Any opinions expressed here are those of the author and not those of the Collegio Carlo Alberto. The authors thank Jean-Marie Baland, Jean-Philippe Platteau, Jakob De Haan, Luca De Benedictis, an anonymous referee, Jonathan Eaton (the editor), and the participants of the CEPR RTN Final Conference on Trade, Industrialization and Development (Paris), the World Meetings of Public Choice Societies (Amsterdam), and the seminars at Erasmus University Rotterdam, University of Urbino, and University of Rome III for useful suggestions. University of Namur (FUNDP) and CRED. Mailing address: Department of Economics, 8 Rempart de la Vierge, 5000 Namur, Belgium. Email: [email protected]. Corresponding author: Paris-Jourdan Sciences Economiques and CEPR. Mailing address: PSE, 48 Boulevard Jourdan, 75014 Paris, France. Email: [email protected].