Crowding Out and Crowding In of Private Donations and Government Grants

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Garth Heutel, Assistant Professor (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: A large literature examines the interaction of private and public funding of charities, much of it testing if public funding crowds out private funding. In this article, the author looks for two alternative phenomena using a large panel data set gathered from nonprofit organizations’ tax returns. First, the author looks for crowding out in the opposite direction: increased private funding may cause reduced public funding. Second, the author tests whether one type of funding acts as a signal of charity quality and thus crowds in other funding. The author finds evidence that government grants crowd in private donations. Crowding in is larger for younger charities. This is consistent with signaling, if donors know less about younger charities and the signal value is stronger. The author finds no evidence of an effect of private donations on government grants.

Additional Information

Public Finance Review. 42, no.2 (2014): 143-175
Language: English
Date: 2014
nonprofit organizations, public goods, funding, charities, donations, government grants

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