Crowding-Out Charitable Contributions in Canada: New Knowledge from the North

Using data from charitable organizations in the US, authors have established that government grants to charities largely crowd out giving from other sources, but that this reduction is due mostly to reduced fundraising activities of the charity itself. We use much more detailed data from over 6000 charities in Canada, measured for up to 15 years, to provide valuable new insights into this phenomenon. In particular, dollars received from individuals is largely unchanged by government grants. Instead, the crowding out is attributable to two other sources of donations not differentiated in US data: giving from other charities and charitable foundations, and donations gained from special fundraising activities, like galas or sponsorships. Only the latter—which is about half of the measured crowding out—represents a potential loss of dollars to the charitable sector as a result of government grants. JEL Classification: H00, H32, H50 *Andreoni: Department of Economics, University of California, San Diego (email: [email protected]); Payne: Deparment of Economics, McMaster University, Hamilton, ON L8S 4M$ (email: [email protected]). This research was supported by grants from the Social Sciences and Humanities Research Council of Canada, and the National Science Foundation.