PRELIMINARY AND INCOMPLETE: DO NOT CITE OR DISTRIBUTE WITHOUT AUTHOR’S PERMISSION Government Impact at Research Universities: Reactions by Alumni, Corporations, Foundations, and Others to Federal Research Expenditures

This paper examines the relationship between federal research funding and private donations at 221 private and public research and doctoral universities between 1973 and 1997. As with previous studies, there is a positive relationship between these two sources of funding for these universities. This paper extends previous research by examining the effect of federal research funding across five different types of private donors: alumni, corporations, foundations, other individuals, and donations given as bequests. The results suggest there is a positive correlation across all types of donors, but that the effect varies across the donors. After controlling for potential endogeneity and omitted variable bias, the effect of increasing federal research expenditures by one dollar ranges between 6 and 61 cents. The strongest effect is seen with respect to alumni, especially alumni from private universities. Although there are statistically significant differences in the reactions by alumni at private and public universities to changes in federal funding, I find no significant differences in the reactions by other types of donors across these types of universities. The author is grateful for research assistance from the Andrew W. Mellon Foundation and the Social Sciences and Research Council of Canada. *may be reached at: Institute of Government and Public Affairs, 815 W. Van Buren Street, Suite 525, Chicago, IL 60607. email: [email protected]