Public subsidies and charitable giving: Crowding out, crowding in, or both?

Arthur C. Brooks
Additional contact information
Arthur C. Brooks: Assistant Professor of Public Administration and Economics, Andrew Young School of Policy Studies, Georgia State University, Atlanta., Postal: Assistant Professor of Public Administration and Economics, Andrew Young School of Policy Studies, Georgia State University, Atlanta.

Journal of Policy Analysis and Management, 2000, vol. 19, issue 3, 451-464

Abstract: Abstract Whether government subsidies to nonprofit organizations leverage (crowd in) private donations, or rather crowd them out has been actively debated for some time. A third hypothesis, explored theoretically and tested empirically in this paper, is that the two phenomena are actually not inconsistent with one another: At low levels of subsidies, government support may stimulate private giving, whereas at high levels it could have just the opposite effect. The model presented is based on this idea, which yields implications relevant to nonprofit management and public policy, and tests it with data on symphony orchestras. The conclusion is that the maximization of private donations and total “unearned” revenues are not compatible goals. Further, nonprofits that suffer from short-term liquidity problems or managerial shortsightedness may face a “subsidy trap,” in which they are forced to rely on suboptimal levels of subsidies in terms of maximizing the firm's revenues. © 2000 by the Association for Public Policy Analysis and Management.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:wly:jpamgt:v:19:y:2000:i:3:p:451-464

DOI: 10.1002/1520-6688(200022)19:3<451::AID-PAM5>3.0.CO;2-E

Access Statistics for this article

More articles in Journal of Policy Analysis and Management from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().