Funding Nonprofits in a Networked Society: Toward a Holistic Theory of Government Support
54 Pages Posted: 31 Oct 2018 Last revised: 13 Dec 2018
Date Written: July 17, 2018
This paper puts forward a holistic theory on the crowding process of government support -- the effect that government funding to nonprofits may crowd out or crowd in private donations. By using a novel panel dataset across 12 years from the People's Republic of China, we find no evidence to support that government funding to a nonprofit can crowd out private donations to the same organization. However, we find a substantial crosswise crowding in effect, suggesting private donations are not reduced but redirected to other nonprofits in the organizational network. Policy and practical implications are discussed.
Keywords: Crowd Out, Crowd In, Social Relation, Government Funding, Nonprofit Organization, Networked Society
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