Finding Your Crowd: The Role of Government Level and Charity Type in Revenue Crowd-Out

The literature on the relationship between government funding and private donations finds evidence of both crowd-out (a reduction in private donations due to the receipt of government funding) and crowd-in (increased donations rather than a reduction). This study uses organizational-level data and information regarding funding from multiple levels of government in Canada to provide an important contribution to the literature, which has traditionally relied upon aggregated measures of government funding. Results from dynamic panel estimations suggest that effects vary by type of charity and level of government funding source, with some subsectors displaying crowd-in, some crowd-out, and some both phenomenon depending on the level of government providing funding. These findings encourage more research into the context and variation involved in crowd-out, raising practical and theoretical questions about whether a uniform effect across subsectors or level of government funding should be expected.

Automated summary

The study found that the impact of government funding on private donations varies by type of charity and level of government funding source, with some sectors showing crowd-in, some crowd-out, and some displaying both phenomena depending on the level of government providing funding. This emphasizes the need for further research on the context and variations involved in crowd-out effects.