Crowding Out and Crowding In of Private Donations and Government Grants

Garth Heutel

No 15004, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A large literature examines the interaction of private and public funding of public goods and charities, much of it testing if public funding crowds out private funding. This paper makes two contributions to this literature. First, the crowding out effect could also occur in the opposite direction: in response to the level of private contributions, the government may alter its funding. I model how crowding out can manifest in both directions. Second, with asymmetric information about the quality of a public good, one source of funding may act as a signal about that quality and crowd in the other source of funding. I test for crowding out or crowding in either direction using a large panel data set gathered from nonprofit organizations' tax returns. I find strong evidence that government grants crowd in private donations, consistent with the signaling model. Regression point estimates indicate that private donations crowd out government grants, but they are not statistically significant.

JEL-codes: H4 L31 (search for similar items in EconPapers)
Date: 2009-05
New Economics Papers: this item is included in nep-pbe
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published online before print May 30, 2012, doi: 10.1177/1091142112447525 Public Finance Review May 30, 2012 1091142112447525

Downloads: (external link)
http://www.nber.org/papers/w15004.pdf (application/pdf)

Related works:
Journal Article: Crowding Out and Crowding In of Private Donations and Government Grants (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:15004

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w15004

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().