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AbstractMost studies on project‐based aid effectiveness rely on subjective evaluation ratings to measure projects' performance. Using the example of drinking water projects, this study compares evaluation ratings to objective, quantitative project indicators based on water supply to better understand the drivers of evaluation ratings. We find that evaluation ratings are only weakly correlated with improvements in water supply. Whereas the water supply‐based project indicators are best explained by project design variables, evaluation ratings put more weight on project management and implementation. © 2015 UNU‐WIDER. Journal of International Development published by John Wiley & Sons, Ltd.

A considerable and increasing share of foreign aid stems from private donations. Hence, individual donors can increase social welfare in developing countries by directing their funds to the most effective NGOs. Surprisingly few studies have analyzed whether private donors care about aid effectiveness when they donate to an international charity. In a laboratory experiment, we investigate if private donors seek information about the exact impact of their donation to an international NGO before they donate. Furthermore, we investigate how relevant private donors find information about aid impact compared to information about administrative costs, and the recipient type who benefits from a donation. First, we find that a relatively small share of individuals makes a well-informed donation decision. Second, the demand for information about aid impact is lowest, and it is highest for information about the recipient type. Third, exact information about aid impact did not lead to a significant change in average donation levels, while information about the exact recipient type and administrative costs led to a significant change in donation levels. In the recipient type group, informed participants donated significantly more than uninformed participants because they "rewarded" the preferred recipient with higher-thanaverage transfers. In the administration costs group, informed participants donated significantly less than uninformed participants because they used the information to "punish" NGOs with high administration costs.

Having passed the "market test", private aid is claimed by its proponents to be better-targeted than official development assistance (ODA). But empirical evidence is largely lacking. We contribute to closing this gap by performing a case study of Nestlé, one of the frontrunners among multinational corporations being actively involved in the alleviation of poverty. The targeting of Nestlé's aid is compared to that of Swiss ODA and NGO aid, testing for both altruistic and selfish aid motivations. It turns out that Nestlé favored more democratic but also more corrupt recipient countries. Moreover, Nestlé's aid clearly lacks focus in terms of targeting poor countries, which appears to be the downside of the strong link between commercial presence and aid. By contrast, Swiss ODA and NGO aid is more altruistic and poverty-oriented.