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Do grants to charities crowd out other income? Evidence from the UK

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Listed:
  • Jim Andreoni
  • Abigail Payne
  • Sarah Smith

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Abstract

We present new evidence on the effect of grants on charities’ incomes. We employ a novel identification strategy, focusing on charities that applied for lottery grant funding and comparing outcomes for successful and unsuccessful applicants. Overall, grants do not crowd out other income but the effect of grant-funding is not uniform. Looking in more detail we show first, that the positive effects of receiving a grant can persist for several years post-award; second, that grants have a stronger positive effect for small charities; and, third, that grants may have a more positive effect when they provide seed funding.

Suggested Citation

  • Jim Andreoni & Abigail Payne & Sarah Smith, 2013. "Do grants to charities crowd out other income? Evidence from the UK," The Centre for Market and Public Organisation 13/301, The Centre for Market and Public Organisation, University of Bristol, UK.
  • Handle: RePEc:bri:cmpowp:13/301
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    File URL: http://www.bristol.ac.uk/cmpo/publications/papers/2013/wp301.pdf
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    References listed on IDEAS

    as
    1. Andreoni, James & Payne, A. Abigail, 2011. "Is crowding out due entirely to fundraising? Evidence from a panel of charities," Journal of Public Economics, Elsevier, vol. 95(5), pages 334-343.
    2. Eric Lin & Shih-Ying Wu, 2007. "Lottery expenses and charitable contributions - Taiwan's experience," Applied Economics, Taylor & Francis Journals, vol. 39(17), pages 2241-2251.
    3. Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
    4. John A. List, 2011. "The Market for Charitable Giving," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 157-180, Spring.
    5. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    6. Huck, Steffen & Rasul, Imran, 2011. "Matched fundraising: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 351-362, June.
    7. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    8. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    9. Garth Heutel, 2014. "Crowding Out and Crowding In of Private Donations and Government Grants," Public Finance Review, , vol. 42(2), pages 143-175, March.
    10. James Andreoni & A. Abigail Payne, 2011. "Crowding-Out Charitable Contributions in Canada: New Knowledge from the North," NBER Working Papers 17635, National Bureau of Economic Research, Inc.
    11. A. Payne, 2001. "Measuring the Effect of Federal Research Funding on Private Donations at Research Universities: Is Federal Research Funding More than a Substitute for Private Donations?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(5), pages 731-751, November.
    12. Connolly, Laura S., 1997. "Does external funding of academic research crowd out institutional support?," Journal of Public Economics, Elsevier, vol. 64(3), pages 389-406, June.
    13. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 627-657, March.
    14. James Andreoni & A. Abigail Payne, 2003. "Do Government Grants to Private Charities Crowd Out Giving or Fund-raising?," American Economic Review, American Economic Association, vol. 93(3), pages 792-812, June.
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    Citations

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    Cited by:

    1. Ryo Ishida, 2015. "Vote with their donations : An explanation about crowding-in of government provision of public goods," Discussion papers ron272, Policy Research Institute, Ministry of Finance Japan.
    2. Nadine Chlaß & Lata Gangadharan & Kristy Jones, 2015. "Charitable Giving and Intermediation," Monash Economics Working Papers 18-15, Monash University, Department of Economics.
    3. Nathalie Monnet & Ugo Panizza, 2017. "A Note on the Economics of Philanthropy," IHEID Working Papers 19-2017, Economics Section, The Graduate Institute of International Studies.
    4. John A. List & James J. Murphy & Michael K. Price & Alexander G. James, 2019. "Do Appeals to Donor Benefits Raise More Money than Appeals to Recipient Benefits? Evidence from a Natural Field Experiment with Pick.Click.Give," NBER Working Papers 26559, National Bureau of Economic Research, Inc.
    5. Arbel, Yuval & Bar-El, Ronen & Schwarz, Mordechai E. & Tobol, Yossef, 2019. "To What Do People Contribute? Ongoing Operations vs. Sustainable Supplies," IZA Discussion Papers 12180, Institute of Labor Economics (IZA).
    6. Chandrayee Chatterjee & James C. Cox & Michael K. Price & Florian Rundhammer, 2020. "Robbing Peter to Pay Paul: Understanding How State Tax Credits Impact Charitable Giving," NBER Working Papers 27163, National Bureau of Economic Research, Inc.
    7. Daniel Jones, 2013. "Education’s gambling problem: The impact of earmarking lottery revenues for education on charitable giving and government spending," The Centre for Market and Public Organisation 13/307, The Centre for Market and Public Organisation, University of Bristol, UK.
    8. Keum, Daniel & Meier, Stephan, 2020. "License to Fire? Unemployment Insurance and the Moral Cost of Layoffs," IZA Discussion Papers 13497, Institute of Labor Economics (IZA).
    9. Chandrayee Chatterjee & James C. Cox & Michael K. Price & Florian Rundhammer, 2020. "Competition Among Charities: Field Experimental Evidence from a State Income Tax Credit for Charitable Giving," Experimental Economics Center Working Paper Series 2020-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.

    More about this item

    Keywords

    Charities; crowd out; grants; seed funding;

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets

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