Does one size fit all in the non‐profit donation production function?

Teresa Harrison, Daniel Henderson (daniel.henderson@ua.edu), Deniz Ozabaci and Christopher A. Laincz

Oxford Bulletin of Economics and Statistics, 2023, vol. 85, issue 2, 373-402

Abstract: We attempt to reconcile two puzzles in the non‐profit (NP) literature: (i) studies often find that NPs grossly underspend on fundraising; (ii) crowd‐out effect estimates of government grants on private donations vary widely, suggesting both crowd‐out and crowd‐in. We examine these impacts via a semi‐parametric instrumental variables strategy. We find heterogeneous effects across NPs, fundraising efforts, and government grant intensity. Smaller NPs appear to drive the presence of crowd‐out; estimates for the marginal productivity of fundraising are consistent with leading theories of NP optimizing behaviour.

Date: 2023
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