American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Do Government Grants to Private Charities Crowd Out Giving or Fund-raising?
American Economic Review
vol. 93,
no. 3, June 2003
(pp. 792–812)
Abstract
Economists have long observed that crowding out of government grants to private charities is incomplete. The accepted belief is that givers treat the grants as imperfect substitutes for private giving. We theoretically and empirically investigate a second reason: the strategic response of a charity will be to reduce fund-raising efforts after receiving a grant. Employing panel data from arts and social service organizations, we find that government grants cause significant reductions in fund-raising. This adds a new dimension to the policy discussions - analysts should account for the behavioral responses of the charity, as well as the donors, to government grants.Citation
Andreoni, James, and A. Abigail Payne. 2003. "Do Government Grants to Private Charities Crowd Out Giving or Fund-raising? ." American Economic Review, 93 (3): 792–812. DOI: 10.1257/000282803322157098JEL Classification
- H30 Fiscal Policies and Behavior of Economic Agents: General
- L31 Nonprofit Institutions; NGOs
- D64 Altruism; Philanthropy