Working Paper: NBER ID: w18998
Authors: James Andreoni; Abigail Payne; Sarah Smith
Abstract: We present new evidence on the effect of grants on charities' incomes. We employ a novel identification strategy, focusing on charities that applied for lottery grant funding and comparing outcomes for successful and unsuccessful applicants. Overall, grants do not crowd out other income but the effect of grant-funding is not uniform. Looking in more detail we show first, that the positive effects of receiving a grant can persist for several years post-award; second, that grants have a stronger positive effect for small charities; and, third, that grants may have a more positive effect when they provide seed funding.
Keywords: Charitable Giving; Grants; Income Effect; Crowding Out; UK National Lottery
JEL Codes: H3; H41; H44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Receiving a grant (I28) | Charity's total income (D64) |
| Receiving a grant (I28) | Increase in revenues (H27) |
| Receiving a grant (I28) | Increase in total income for smaller charities (D64) |
| Receiving a grant (I28) | Long-term positive impact on charity income (D64) |
| Larger charities (L31) | Crowd-out effect (E62) |
| Smaller charities (L31) | Benefit significantly from grant funding (I23) |