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We examine a previously untapped dataset which quantifies NGO Capacity, or the ability of NGOs to formulate and implement their goals. We explore these data, and compare them with another little-used dataset - the mechanism donor states use to deliver their foreign aid to intended beneficiaries. Utilizing a sample selection model, we investigate how recipient governance and NGO Capacity affect donor states' aid allocation and channel of delivery decisions. We hypothesize that donors will choose non-state channels in recipients with poor governance, and that they will choose NGOs more often in recipients with high NGO Capacity. We find that while donors respond to poor recipient governance in the predicted way at a global level, they do not do so at a regional level in Central and Eastern Europe or in Africa. Furthermore, we find little evidence that donors take NGO Capacity into account when making aid allocation and channel of delivery decisions. Donors appear to either ignore NGO Capacity entirely or utilize NGOs more often in the recipients with the worst NGO Capacity. [ABSTRACT FROM AUTHOR]