Is Crowding Out Due Entirely to Fundraising? Evidence from a Panel of Charities

James Andreoni and A. Payne

Department of Economics Working Papers from McMaster University

Abstract: When the government gives a grant to a private charitable organization, do the donors to that organization give less? If they do, is it because the grants crowd out donors who feel they gave through taxes (classic crowd out), or is it because the grant crowds out the fund-raising of the charities who, after getting the grant, reduce efforts of fund-raising (fund-raising crowd out)? This is the first paper to separate these two effects. Using a panel of more than 8,000 charities, we find that crowding out is significant, at about 72 percent. We find this crowding out is due primarily to reduced fund-raising. Depending on which types of organizations are included in the analysis, crowding out attributable to classic crowd-out ranges from 30% to a slight crowd-in effect, while fund-raising crowd out ranges from 70% to over 100% of all crowd out. Such a finding could have important consequences for how governments structure grants to non-profits. Our results indicate, for example, that requirements that charities match a fraction of government grants with increases in private donations might be a feasible policy that could reduce the detrimental effects of crowding out.

Keywords: charitable giving; fundraising; crowd-out (search for similar items in EconPapers)
JEL-codes: H00 H32 H50 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://socserv.mcmaster.ca/econ/rsrch/papers/archive/2010-08.pdf (application/pdf)

Related works:
Journal Article: Is crowding out due entirely to fundraising? Evidence from a panel of charities (2011)
Journal Article: Is crowding out due entirely to fundraising? Evidence from a panel of charities (2011)
Working Paper: Is Crowding Out Due Entirely to Fundraising? Evidence from a Panel of Charities (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2010-08

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