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Do public grants to American theatres crowd-out private donations?

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Abstract

This paper examines the relationship between public support and private donations by disaggregating the crowding effect into two components: one determined by level of public support and one determined by changes in public support levels. The analysis of a panel of American non-profit theatres shows that the crowding effect induced by the level of public support takes an inverted U shape: at low levels public support crowds-in private donations while at higher levels it displaces them. The change in total public support in the past year produces a constant crowding-in effect on the level of private donations. The paper finally illustrates how federal and state support have a crowding-in effect at all levels, while local support has a similar impact to total public support.

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Authors and Affiliations

  1. Centre for the Analysis of Social Exclusion, Department of Social Policy, The London School of Economics and Political Science, Houghton Street, London, WC2A 2AE

    Francesca Borgonovi

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  1. Francesca Borgonovi
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Correspondence to Francesca Borgonovi.

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Borgonovi, F. Do public grants to American theatres crowd-out private donations?. Public Choice 126, 429–451 (2006). https://doi.org/10.1007/s11127-006-3887-z

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  • DOI: https://doi.org/10.1007/s11127-006-3887-z

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