Catholics versus Protestants: On the Benefit Incidence of Faith-Based Foreign Aid

The article focuses on the welfare consequences of using evangelical faith organizations as foreign aid partners. Despite the great variety of religions in the developing world, the distribution of international faith-based organizations is strongly biased toward Christian organizations, most of which are evangelical. Almost a fifth of all nongovernmental organizations receiving funding from USAID are Christian, whereas other religious organizations receive virtually nothing. When confronted with this question, field personnel of international faith organizations typically answer that everyone is welcome to participate in their social programs, regardless of religious affiliation. The number of social programs run by the ELCT has expanded rapidly during the last 20 years, largely due to an inflow of foreign aid. The estimates are robust to numerous alternative specifications. However, the fact that the ELCT targets aid to villages in ways that are not fully documented is a challenge to identification.