Handbook of Research on Nonprofit Economics and Management
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Handbook of Research on Nonprofit Economics and Management

Second Edition

Edited by Bruce A. Seaman and Dennis R. Young

Building on the success of the first edition, this thoroughly revised and expanded edition explores (1) areas of general agreement from previous research; (2) areas of conflicting results and unexplored questions; (3) the relative roles of theory, data availability and empirical analysis in explaining gaps in our knowledge; and (4) what must be done to improve our knowledge and extend the literature. Selected original chapters addressing especially challenging topics include the value of risk management to nonprofit decision-making; nonprofit wages theory and evidence; the valuation of volunteer labor; property tax exemption for nonprofits; when is competition good for the third sector; and product diversification and social enterprise; international perspectives; the application of experimental research and the macroeconomic effects of the nonprofit sector.
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Chapter 2: Revenue interactions: crowding out, crowding in, or neither?

Daniel Tinkelman and Daniel Gordon Neely

Abstract

This chapter reviews the literature on revenue interactions, in particular whether government funding ‘crowds in’ or ‘crowds out’ private donations. At an economy-wide level, we conclude that total giving in the US is independent of the growth in other revenue forms. At the ‘cause’ level, the results are mixed. While standard theoretical models predict full crowd-out of private donations by government funding, modifying key assumptions of the model leads to support for incomplete crowd-out and even crowd-in in certain cases. Finally, at the organization level the picture is mixed. Most of the 54 empirical studies reviewed find very little crowd-in or crowd-out. Recent innovations in methodology and expanding studies to countries outside the US have the potential to improve our understanding of nonprofit revenue interactions.

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