Outside Funding and The Dynamics of Participation in Community Associations

1. Outside Funding and The Dynamics of Participation in Community Associations Mary Kay Gugerty The Evans School, University of Washington Michael Kremer Harvard University

2. It is a general rule of civil society that its stronger members get stronger. The weaker and poorer members are either unable to organize at all, or they form groups that reflect their weakness and poverty. Michael Walzer (2002)

3. Attempts to increase organization of disadvantaged • Many argue this limits political influence and economic development (Banfield 1958; Putnam 1993, 2000) • International development donors increasingly seek to strengthen associations of poor and disadvantaged

4. Criticisms • Professionalization • Elite capture

5. Establishing causality difficult • Correlation between poverty and low participation could be because: • Low participation inhibits economic development (Banfield) • Civic groups represent class interests of advantaged, exclude disadvantaged • Third causal factor: education, personality

6. Assessing Impact of Assistance • Correlation between groups’ organizational strength and external assistance could arise because • stronger groups attract more funding • funding leads to stronger organizations • third factor, like able leadership, group culture

7. Correlation between external assistance, socioeconomic status could arise because: • external assistance attracts members and leaders of higher socioeconomic status • people of higher status are more successful at securing outside funding • able leaders are likely to both attract funding and to rise in social status

8. Empirical Approach • Take advantage of opportunity created by random phase-in of NGO program to strengthen women's associations in rural Kenya • Compare groups that were supported early with those that had not yet been funded

9. Results • Little evidence of increased organizational strength • Increased entry into groups and into leadership positions by • younger, more educated women • women employed in the formal sector • Men • Increased exit • due to conflict • by older women (marginalized, isolated group)

10. Outline • Women’s groups in Kenya • Description of project and data • Outcomes • Agricultural activities, finances, group cohesion, community interaction • Entry, exit and leadership • Model of group dynamics

11. Women’s Groups • Widespread; indigenous roots • Internal Activities • Roscas, emergency assistance, labor exchange • Income generating projects, agriculture • Insurance role • Savings role (high retention of income) • Social and economic connections

12. External Benefits • Contributions to community fundraising events • Campaigns against brewing of illegal liquor, violence against women • Improve household bargaining position of women

13. Group Structure • Three unpaid executive officials • Key decisions made by consensus • Executives more educated, but largely primary education • 97% of executive are female • 20% of members are male, mostly spouses • Few ties to government or political structures

14. Project Area • Agricultural area in western Kenya • Poor, low levels of technology • Uncultivated land • Per capita GDP $328 • Estimate for district $170

15. Intervention • ICS, Dutch NGO, program • Two components: • Organizational/managerial training • Agricultural inputs and training • Value of funding: • $674 per group ($337 in agricultural inputs) • $34 per individual

16. Selection Procedure and Data • 80 candidate women’s groups selected from 100 groups • Eligibility: Pre-existing, agricultural, non-elite • Geographic stratification • 40 program groups selected randomly • Comparison groups funded two years later • Anticipation effects?

17. Data • Baseline survey undertaken: • pre-intervention data • Funding • Post-intervention surveys • 12 months after first funding • 18 months after first funding

18. Outcomes • Agricultural and financial • Group cohesion • Community interaction • Group composition and leadership

19. Potential program rationale, unintendend consequences? • Address underprovision of public goods within group; strengthen group capacity, production? • Increase external benefits? • Crowd out and diversion? • Changed incentives for membership, leadership?

20. Agriculture Outcomes (Table 2) • Limited increase in complementary inputs • Labor, land increase << 140% capital increase • Area cultivated is 14% of potential with inputs • Value of harvest only $18 higher, not significant • No significant increase in group assets

21. Use of Inputs • 70% of groups reported distributing project seeds to members • 29 % of these gave seeds to every member • 58% of groups distributed fertilizer to members • Regular members no more likely to use fertilizer at home • Executive officials 12% more likely to use fertilizer if in program groups

22. Group Cohesion(Table 3A) • Program group members report: • improved leadership • more effective meetings • No change in: • attendance rates • assistance to members • rosca activity

23. Community Interaction (Table 3B) • No difference in community contributions • No additional visits from other women’s groups • 75% more visits from Ministries of Agriculture and Health • Twice as many visits from local government officials • Lower levels of non-program assistance-$11

24. Entry into Groups(Table 4) Twice as many new entrants in program groups • Program groups have 4 new entrants; comparison groups have 2 • Short period New entrants: • Proportion with regular income 11 percentage points higher • Proportion married 4 percentage points lower • Females more likely to have secondary education • Less likely to come from village

25. Entry into Leadership (Table 5A) • 18 percentage points more likely to have new executive • 12 percentage points more likely to have a new member as an executive • Proportion of male executives increases by 4 percentage points • Proportion of female executives with secondary education increases by 4 percentage points

26. Entry Payments (Table 5B) • More individuals paid to join • 4 new members provided land for cultivation in program groups, none in comparison • Probability of promoting at least 1 individual to executive who donated land is 8 percentage points higher • But entrance fee paid is low ($3) relative to program benefits ($34), pre-program assets ($11)

27. Exit (Table 6) • Overall rate of exit similar, but • Exit for financial reasons is 67% lower • Twice as many members leave due to conflict • Exit rates for women over 50 increase by 2/3 • No clear net change in group size

28. Unintended redistribution to the more advantaged • New entrants and leaders paid far less than per capita value of NGO assistance, assets built by existing members • Exiting members not compensated for investment in labor, reinvested profits made over the years

29. Implications of Results • Little evidence that program strengthened groups • Weakened role of most disadvantaged • Changed characteristics that made them attractive to funders in the first place • Subsidizing community organizations may involve a tradeoff

30. Model of Group Dynamics • Previous results suggest a static analysis may be misleading • Model how groups evolve as old members leave and new entrants are selected

31. Main Premises of the Model • People prefer groups that deliver more benefits • Groups prefer members who can contribute more. Correlated with socioeconomic status • Turnover of members over time

32. Setup of the Model • OLG model: People live two periods, prime- age and old age • Beginning of each period new prime-age workers can apply, old members choose • Joining a group: fixed opportunity cost of time • Group size fixed at N: N/2 prime-age, N/2 old • Insurance benefits of group: initial productivity Li,p, when old Li,o = Li,p - δ +εi, where δ = average loss in productivity ε = random variation in health

33. Setup (continued) • Individual j can produce Lj on her own • Group G can produce Lg +Xg Lg= Σn/2 Li,p + Σn/2 Li,o Xg= group-specific productivity • Part of group output distributed equally • Continuous distribution of L and X • CARA utility function

34. Selection into Groups • Each period, new prime-aged chose groups to apply to, old members vote on admissions • Cannot borrow to finance entry fees • Stable matches : a) no case where a group and an applicant would prefer applicant were in the group b) no person in a group would be better off producing individually • Equilibria: assignments of people to groups such that all matches are stable

35. Steady State • Proposition 1: There is cutoff value of Xg, denoted Xc, such that no group with X < Xcexists in steady state: all groups have a minimum level of group productivity • Proposition 2: There is a steady state equilibrium where - all sustainable groups have N members - for any two groups i and j, Xi> Xjimplies Liavg> Ljavg - if fewer spaces than people: cutoff level of productivity, individuals below that level are in no group  Less advantaged people end up in less productive groups or no group

36. Implications of the Model • Those of higher socioeconomic status belong to groups that provide greater benefits, i.e. higher X. • Those of lower socioeconomic status will be in weaker groups or no group. • Even small difference in individual productivity L can lead to large differences in participation • Socioeconomic status and participation can correlate, even if the less advantaged start groups at same rate and have same preferences as the more advantaged

37. Can Constitutional Provisions Help? • Regulation may limit membership or leadership disadvantaged groups. But • Only groups with strong commitment to disadvantaged will make such provisions • These restrictions can create costly inflexibility • Hard to make such provisions stick: future members may admit (marginally) more advantaged members.

38. Unequal Benefits for More Equal Participation? • Model assumes organization deliver benefits independently of social status • If benefits greater for disadvantaged, joining is less attractive for advantaged • This may allow keeping strength of groups of disadvantaged over long term • Kenyan women’s groups: may have survived because disadvantaged may value insurance more. Intervention provided agricultural inputs that are valuable to advantaged.

39. Conclusion • Dynamic nature of participation in organization may lead to situations wheredisadvantaged have weak organizations or don’t participate at all • Dilemma for development assistance