Private Aid and Development: Evidence from Million Dollar Donations

Abstract

This paper investigates the role of private aid in meeting global challenges in developing countries in the 21st century. We use a newly available data set that provides unique information about publicly announced private donations of a million dollars or more between 2000 and 2010 from U.S. individuals, foundations, and corporations to international causes. In the past decade, there has been a significant growth in private aid; however, only a handful of studies have examined the size and composition of private aid to developing countries. Our analysis reveals that private aid toward developing countries is focused on key subsectors, with a significant share of private aid targeted at health and education. In general, we find that private aid to developing countries is positively associated with population size, incidence, and the severity of natural disasters, with more populous countries and countries that experienced more severe disasters receiving more private aid. Interestingly, while aggregate incidence and levels of private aid are positively associated with disasters, private aid is less responsive to development indicators and other factors that have been shown to be of importance for official development assistance (ODA).