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

Gayle, Philip (2024): 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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Nonprofit Organizations; Crowd-out; Crowd-in; Government Grants; Private Donations; Fundraising
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L30 - General

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