Many governments use fiscal transfers to reduce regional inequality, yet discretionary allocation may also depend on informal communication among officials. We examine this mechanism in a large central-to-provincial transfer system, using policymakers’ shared workplace, alumni, and hometown backgrounds to measure social ties. Exploiting ministerial turnover and controlling for provincial leadership, we find that prior workplace ties significantly increase transfers. We then embed these estimates in a quantitative spatial model with trade, migration, input-output linkages, and fiscal-productivity effects. Social ties redirect resources toward richer provinces with stronger fundamentals, raising welfare and output while weakening redistribution. Under egalitarian weights, however, removing ties improves welfare.