Do Charitable Donors Know Enough—and Care Enough—About Government Subsidies to Affect Private Giving to Nonprofit Organizations?

Abstract

A large body of research has examined the effect of government subsidies to nonprofit organizations on philanthropy, with the preponderance of evidence suggesting that government funding partially displaces or “crowdsout”private giving. Such studies assume that charitable donors are aware of the amount of government funding received by their beneficiary charitable organizations and that they act on this information when determining how much money to donate. This study assesses the validity of these heretofore untested assumptions. After comparing the “best guesses” of survey respondents (N = 675) to the actual amount of government funding received by the charitable organizations to which they have donated money, the assumption of donors’ knowledge about government funding is found to be met only very weakly. Furthermore, few respondents anticipate changing giving behavior due to government subsidies. These findings suggest the need to explore explanations of crowding out beyond those assumed under current theory.