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Do Philanthropic Citizens Behave like Governments? Internet Platforms and the Diffusion of

Do Philanthropic Citizens Behave like Governments? Internet Platforms and the Diffusion of Private International Aid. 2009 RUBIN SYMPOSIUM The Privatization of Development Assistance December 4-5, 2009 NYU School of Law. Raj M. Desai Homi Kharas

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Do Philanthropic Citizens Behave like Governments? Internet Platforms and the Diffusion of

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  1. Do Philanthropic Citizens Behave like Governments? Internet Platforms and the Diffusion of Private International Aid 2009 RUBIN SYMPOSIUM The Privatization of Development Assistance December 4-5, 2009 NYU School of Law Raj M. Desai Homi Kharas Georgetown University Brookings Institution

  2. Outline • ODA vs. private aid • Internet-based aid (GlobalGiving and Kiva) • Comparison with official development flows • The supply of private aid and microfinance • The internet and donor fragmentation • Conclusions

  3. Overview • Provision of aid from a rapidly diversifying set of actors • Little known about cross-country and sectoral preferences/selectivity of philanthropic individuals • Collect data from two popular internet-based platforms for international giving • Use panel-regression and survival analysis to demonstrate that individuals donot behave like governments

  4. New Private Aid • Mega-charities can reduce various costs • Recent growth in private aid occurring at all levels • Proliferation of new forms of private aid • Raises questions regarding coordination and what drives preferences of individual citizen-philanthropists

  5. Public and Private Aid Total Official and Private Giving, 2007 US Official and Private Giving, 2007 Non-DAC, $10 bn. DAC-Bilateral, $73 bn. Private Sources, $60 bn. Multilateral, $28 bn.

  6. Two Peer-to-Peer Platforms • GlobalGiving • Project grants • Funds channel through “partner” organizations or direct • Unlimited grant size • Unlimited time on website to attract donors • Kiva • Loans to individuals or groups • Funds channeled interest-free through MFI (who then on-lends) • Maximum loan size between $1,200 - $3,000 • Maximum time on website limited to 30 days

  7. GlobalGiving Portal

  8. Kiva Portal

  9. P2P Giving Trends Kiva and Global Giving, Monthly Disbursements 4 Kiva Monthly Disbursements ($ millions) 2 Global Giving 0 2004m1 2005m1 2006m1 2007m1 2008m1 2009m1

  10. Summary Indicators

  11. GlobalGiving Requested/Funded Projects

  12. Kiva Requested/Funded Loans

  13. ODA vs. Private Aid Compared • GlobalGiving and Kiva disbursements vs. “project” ODA and official microfinance • Comparison in terms of sensitivities of allocations to country-specific factors:

  14. Democratic Institutions

  15. GDP per Capita GlobalGiving 10 9 Disbursements 8 7 10 20 30 40 50 60 70 80 90 Sample Percentile

  16. Survival Analysis • Panel only describes if funding happens and to what magnitude…does not capture “duration” of a project/recipient on the web-platform • Rate of funding reveals information about the preferences of donors with respect to project/recipient • Estimate the effects of covariates on the time (duration) it takes for “failure” (i.e., a project/loan being fully funded)

  17. GlobalGiving Funding Rates By region (ECA in bold) By polity score category By project size dummy (large project in bold) By investment grade dummy

  18. Kiva Funding Rates By region (ECA in bold) By polity score category (-10 to -5 in bold) By MFI Rating (1 of 5 in bold) By gender (female in bold) By project size dummy (large project in bold) By investment grade dummy (investment grade in bold)

  19. Hazard Rates

  20. SUR

  21. SUR (Funding Rates over Time)

  22. Conclusions • Countries vs. projects vs. people: new private aid transactions different on both donor and recipient sides • What doesn’t seem to matter: country-specific factors, sectors • Intermediation capabilities in the field are important, but quality is less so

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