Outside Funding and The Dynamics of Participation in Community Associations

Mary Kay Gugerty

The Evans School, University of Washington

Michael Kremer

Harvard University

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)

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

Criticisms

Professionalization Elite capture

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

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

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

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

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)

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

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

External Benefits

Contributions to community fundraising events

Campaigns against brewing of illegal liquor, violence against women

Improve household bargaining position of women

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

Project Area

Agricultural area in western Kenya

Poor, low levels of technology Uncultivated land Per capita GDP $328 Estimate for district $170

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

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?

Data

Baseline survey undertaken: – pre-intervention data

Funding Post-intervention surveys

– 12 months after first funding– 18 months after first funding

Outcomes

Agricultural and financial Group cohesion Community interaction Group composition and

leadership

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?

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

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

Group Cohesion (Table 3A)

Program group members report:– improved leadership – more effective meetings

No change in:– attendance rates– assistance to members– rosca activity

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

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

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

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)

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

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

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

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

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

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

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

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

Steady State Proposition 1: There is cutoff value of Xg, denoted Xc,

such that no group with X < Xc exists in steady state:

all groups have a minimum level of group productivityall 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 > Xj implies 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 advantaged people end up in less productive groups or no groupless productive groups or no group

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

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.

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.

Conclusion

Dynamic nature of participation in organization may lead to situations where disadvantaged have weak organizations or don’t participate at all

Dilemma for development assistance