The extent to which government grants to nonprofit organizations crowd-out or crowd-in private giving to them: An unresolved debate revisited within a strategic fundraising setting

Philip Gayle ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the extent to which government grants to nonprofits crowd-out or crowd-in private giving to them. Grants influence private giving via two channels: (i) “directly” through donors’ preference-induced optimal change in their giving in response to the grants; and (ii) “indirectly” through nonprofits’ optimally changing their fundraising efforts, which in turn influence private giving. I use a structural model that disentangles the two channels and explains the mixed empirical results in the literature on the crowd-out/crowd-in hypothesis. Relative strengths of the “direct” and “indirect” channels depend on the presence of strategic interaction among nonprofits with respect to fundraising.

Keywords: Nonprofit Organizations; Crowd-out; Crowd-in; Government Grants; Private Donations; Fundraising (search for similar items in EconPapers)
JEL-codes: L13 L22 L30 (search for similar items in EconPapers)
Date: 2024-04-09
New Economics Papers: this item is included in nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:120685

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