Public funding of interest organizations during the Covid-19 crisis: rewarding need or rent-seeking?

The Covid-19 pandemic entailed a historic high in public spending. Some of these resources were channeled through interest organizations, such as business groups and non-profits. In this paper, we gauge potential inefficiencies in their distribution. Funds may be distributed according to the logic of rent-seeking, whereby organizations use lobbying to extract benefits from the state, or a pluralist logic of disturbances, where funding allocation follows organizational grievances. These two logics might even interact, meaning that organizations in need ought to signal their needs through lobbying first. We use data from two survey waves in eight European polities to test these arguments. Our findings provide support for theories of rent-seeking, showing that lobbying activities are associated with increases in public funding, whereas organizations’ needs and survival fears are not. However, our exploration of interaction effects nuances this picture. Our study sheds light on important dynamics behind resource allocation when crisis-related public spending is high.