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Using a new dataset for 41 German non-governmental organizations(NGOs), we analyze the allocation of  NGO ,aid  across  recipient  countries  in  a ,Tobit  regression  framework. ,By  identifying for each NGO the degree of public refinancing, we address the largely unresolved issue of whether financial dependence,on the government impairs the targeting of NGO aid. It turns out  that  German  NGOs  are  more  active  in  poorer  countries,  while  they  do  not  complement,official  aid  by  working ,under  difficult  local  conditions.  Beyond ,a  certain  threshold, rising  financial  dependence  weakens  their  poverty  orientation  and  provides  an  incentive to engage in “easier” environments. In addition, we find that the NGOs follow the state as  well  as  NGO  peers  when  allocating  aid.  This  herding  behavior  is,  however,  hardly  affected by the degree of public refinancing.

Aid Allocation by German NGOs: Does the Degree of Public Refinancing Matter?