Does NGO Presence Decrease Government Spending? A Look at Municipal Spending on Social Services in Brazil

Are NGOs becoming substitutes for government? In particular, as many NGOs have missions related to social outcomes such as education or health, what is their role in regard to government provision of these social goods? I examine municipal-level data from Brazil in order to explore the relationship between NGOs and social spending. I find that municipalities with higher concentrations of NGOs tend to have lower levels of social spending, except in areas of high poverty. This implies that NGOs may be crowding out the government in terms of social spending, at least in lower poverty municipalities.