https://doi.org/10.1177/0899764017737384 Nonprofit and Voluntary Sector Quarterly 1–18 © The Author(s) 2017 Reprints and permissions: sagepub.com/journalsPermissions.nav DOI: 10.1177/0899764017737384 journals.sagepub.com/home/nvs Article Do Donors Reduce Bilateral Aid to Countries With Restrictive NGO Laws? A Panel Study, 1993-2012 Kendra Dupuy 1,2 and Aseem Prakash 3 Abstract Foreign aid contributes to about 10% of gross domestic product (GDP) of developing countries. To distribute aid in recipient countries, Western donors increasingly rely on nongovernmental organizations (NGOs). Yet, since the mid-1990s, 39 developing countries have adopted laws restricting the inflow of foreign aid to NGOs operating in their jurisdictions. In response to these restrictions, have bilateral donors reduced aid, either as a punishment or because they cannot find appropriate NGOs for aid delivery? We explore this question by examining a panel of 134 aid-receiving countries for the years 1993-2012. We find that all else equal, the adoption of a restrictive NGO finance law is associated with a 32% decline in bilateral aid inflows in subsequent years. These findings hold even after controlling for levels of democracy and civil liberties, which suggests that aid reduction responds to the removal of NGOs from aid delivery chains, and not to democracy recession. Keywords civil society, NGO, foreign aid, law Introduction Foreign aid is a critical component of global public policy and contributes to about 10% of the gross domestic product (GDP) of developing countries. Although 1 Chr. Michelsen Institute, Bergen, Norway 2 Peace Research Institute Oslo, Norway 3 University of Washington, Seattle, USA Corresponding Author: Kendra Dupuy, Senior Policy Advisor, Chr. Michelsen Institute, P.O. Box 6033 Bedriftssenteret, Bergen N-5892, Norway. Email: kendup@gmail.com 737384NVS XX X 10.1177/0899764017737384Nonprofit and Voluntary Sector QuarterlyDupuy and Prakash research-article 2017