1

Do Philanthropic Citizens Behave

like Governments?

Internet Platforms and the Diffusion of

Private International Aid

Raj M. Desai Homi KharasGeorgetown University Brookings

Institution

2009 RUBIN SYMPOSIUMThe Privatization of Development

Assistance

December 4-5, 2009NYU School of Law

OutlineOutline• 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

2

3

OverviewOverview• 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 do not behave like governments

4

New Private AidNew 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 AidPublic and Private Aid

6

ODA, 21.8

PVOs, 10.8

Religious, 8.6

Corporations, 6.8

Universities, 3.9

Volunteerism, 3.5

Foundations, 3.3

,

0

10

20

30

40

Official Private

US

$, b

illi

on

s

Total Official and Private Giving, 2007

DAC-Bilateral, $73 bn.

Non-DAC, $10 bn.

Multilateral, $28 bn.

Private Sources, $60 bn.

US Official and Private Giving, 2007

Two Peer-to-Peer Two Peer-to-Peer PlatformsPlatformsGlobalGiving

• 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 PortalGlobalGiving Portal

8

Kiva PortalKiva Portal

9

P2P Giving TrendsP2P Giving Trends

10

Kiva and Global Giving, Monthly Disbursements

0

2

4

2004m1 2005m1 2006m1 2007m1 2008m1 2009m1

Mo

nth

ly D

isb

urs

em

en

ts (

$ m

illi

on

s)

Kiva

Global Giving

Summary IndicatorsSummary IndicatorsAverage GlobalGiving Kiva

Amount requested $5,935 $725

Funding rate ($/hour) 1.19 93.68

Hours per grant/loan 11,000 52

US-based donor share 0.78 0.70

New projects, by month (2008)

12 2,229

% funded, by project (2008)

9.5% 100%

11

GlobalGiving GlobalGiving Requested/Funded Projects Requested/Funded Projects

12

Kiva Requested/Funded Kiva Requested/Funded LoansLoans

13

ODA vs. Private Aid ODA vs. Private Aid ComparedComparedGlobalGiving and Kiva

disbursements vs. “project” ODA and official microfinance

Comparison in terms of sensitivities of allocations to country-specific factors:

1312

110

)(ˆ)/log(ˆ

)log(ˆˆ)log(

itit

itit

nsInstitutiocapitaGDP

PopulationAid

Democratic InstitutionsDemocratic Institutions

15

ODA Projects

3.5

4.5

5.5

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rse

me

nts

Official Microfinance

-3

-2

-1

0

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rse

me

nts

GlobalGiving

7

8

9

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rse

me

nts

Kiva

11

12

13

14

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rse

me

nts

GDP per CapitaGDP per Capita

16

Kiva

11

12

13

14

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rse

me

nts

ODA Projects

3.5

4.5

5.5

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rse

me

nts

Official Microfinance

-3

-2

-1

0

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rse

me

nts

GlobalGiving

7

8

9

10

10 20 30 40 50 60 70 80 90

Sample Percentile

Dis

bu

rsem

ents

Survival AnalysisSurvival 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 GlobalGiving Funding RatesRates

18

By region (ECA in bold)

By project size dummy (large project in bold)

By polity score category

By investment grade dummy

Kiva Funding RatesKiva Funding Rates

19

By region (ECA in bold)

By project size dummy (large project in bold)

By polity score category (-10 to -5 in bold)

By investment grade dummy (investment grade in bold)

By MFI Rating (1 of 5 in bold)

By gender (female in bold)

GlobalGiving Kiva   

Amount – –

Amount2 + +

No. of Borrowers +

Gender (% female) +

Loan term (months) –

Sovereign Risk 0 –

GDP per Capita (log) + +

Polity Score 0 +

ODA per Capita (log) + +

Dow Jones Change 0 –

20

Hazard RatesHazard Rates

SURSURKiva GlobalGiving

(1) (2) (1) (2)

  $/hour Herfindahl $/month Herfindahl

Amount –  – + –

Amount2 + + + +

No. of Borrowers 0 +

Gender (% female) + –

Loan term (months) – +

Sovereign Risk + 0 0 0

GDP per Capita (log) – + 0 0

Polity Score 0 0 0 0

ODA per Capita (log) 0 + + 0

21

SUR (Funding Rates over SUR (Funding Rates over Time)Time)

22

ConclusionsConclusions• 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

23