Competition, Contractibility, and the Market for Donors to Nonprofits

This article investigates theoretically and empirically theeffects of competition for donors on the behavior of nonprofitorganizations. Theoretically, we consider a situation in whichnonprofit organizations use donations to produce some commodity,but the use of donations is only partially contractible. Themain results of the model indicate that an increase in competition(i) decreases the fraction of donations allocated to perquisiteconsumption and (ii) increases the fraction of donations allocatedto promotional expenditures. Moreover, the effects of competitionare magnified by the ability to contract on the use of donations.These hypotheses are tested with data on the expenditures ofnonprofit organizations in a number of subsectors where competitionis primarily local. We use across–metropolitan statisticalareas' variation to measure differences in competition and proxycontractibility by the importance of tangible assets, whichare more easily observed by donors. The estimated effects ofcompetition and contractibility are consistent with our model.     

AN EVALUATION OF FINANCIAL INCENTIVE POLICIES FOR ORGAN DONATIONS IN THE UNITED STATES

This paper examines the association between financial incentives and organ donations. Although the National Organ Transplant Act of 1984 prohibits financial compensation for organs for transplant, we focus on the impact of laws that influence the relative cost of deceased and live organ donations on the supply of organs for transplant. First, we hypothesize that states that have relatively stringent funeral regulations, which have been associated with higher whole‐body donations, will have fewer organ donations. Second, we examine the impact of two common state laws that offer financial compensation to live donors: one that allows a tax deduction for costs incurred and the other which entitles government employees up to 30 days of paid leave. We find no evidence to support that these laws affect organ donations. (JEL I11, I18)     

A Leak in the Lifeboat: The effect of Medicaid managed care on the vitality of safety-net hospitals

States are increasingly adopting Medicaid managed care in efforts to address budgetary concerns. The intent is that by releasing Medicaid oversight to private organizations, competition will drive down healthcare expenditures so that savings may be passed to the state. Yet there are concerns that this competitive solution to cost savings might compromise safety-net hospitals. Managed care organizations cut costs by restricting the providers that enrollees are allowed to see. If movement in Medicaid patients disrupts safety-net hospitals’ casemix, this could affect their ability to cross-subsidize care. This study estimates the impact of Medicaid managed care on safety-net hospitals by exploiting a Florida pilot program that required Medicaid recipients in five counties to enroll in managed care. The results suggest this mandate led to a small reduction in safety-net hospitals’ average ratio of payment-to-cost. There is also some evidence that the effect on safety-net hospitals was disproportionate. This disproportionality was such that hospitals nearest the margin were pushed the furthest towards the edge.     

COMMERCIAL ACTIVITY AS INSURANCE: THE INVESTMENT BEHAVIOUR OF NON‐PROFIT ORGANIZATIONS

ABSTRACT ** : We provide a new explanation for commercial activities by non‐profit organizations whose primary concern is to supply mission output. Starting from the observation that donations to individual non‐profits are often highly volatile, we show how investment in commercial activity can constitute a form of insurance for mission activity. Although investment in commercial activity has an opportunity cost in terms of capacity to produce mission output, if donations turn out to be low the commercial revenue will enable cross‐subsidization of mission output. The equilibrium commercial investment is (weakly) positively related to the degree of risk aversion.     

Consumption Effects of Foreign Remittances in Jamaica

The term remittances refers to proceeds from the migration of labor that are sent to aid individuals remaining in the migrants’ home communities. In this paper, we investigate whether remittances alter the consumption pattern of recipient households in Jamaica. We present results from an Engel curve estimation specifically using the Working (1943) approach and a two-part fractional response model with instrumental variables to account for selection bias and endogeneity of remittances. The dependent variables are a subsample of the categories of consumption as defined in the Jamaican Survey of Living Conditions and include expenditures on food, schooling, health, gambling, alcohol and donations. We find that receipt of remittances significantly alters the recipient households’ expenditure allocations relative to other sources of income, although this effect occurs more through the participation decision. Overall, total effects of remittances are largest in the areas of luxury expenditures and home production, and to a lesser extent for education and grocery store purchases. These findings have significant implications for those remitting, those receiving, and governments looking to understand this large flow and less documented source of income.     

THE EFFECTIVENESS OF PRIVATE BENEFITS IN FUNDRAISING OF LOCAL CHARITIES*

This article provides an empirical analysis of the role that private benefits play in explaining charitable donations to large cultural and environmental organizations. We develop a multiple discrete choice model with differentiated products. We estimate the model using a unique data set of donor lists for the 10 largest cultural and environmental charitable organizations in the Pittsburgh metropolitan area. We find that some private benefits such as invitations to private dinner parties and special events are effective tools for fundraising. Our policy simulations suggests that the composition of private benefits has a potentially large impact on donor behavior.     

A Theoretical Model of the Effects of Public Funding on Saving Decisions by Charitable Nonprofit Service Providers

Why do charitable nonprofit, service‐providing organizations save? What are the tradeoffs between using income to build up cash reserves and serving more clients? Saving may generate income, protect the organization against a drop in donations, and increase the organization's chances of survival. Saving, though, may affect the likelihood that nonprofits receive private and public funding. We model the relationship among private and public income, economic conditions, and nonprofit savings. We find that anticipation of government help during difficult times tends to reduce the amount of saving done by the nonprofit. This effect is strengthened if government officials view unspent donations as indicative of a lack of need. Both these effects provide a strong incentive for nonprofits to spend on current consumption rather than to save for the future, and thus to increase the burden on the public purse.     

Earmarking lottery proceeds for public goods: Empirical evidence from U.S. lotto expenditures

This study examines motives for lottery play using a state-level panel of lottery expenditures. We find that expenditures per capita are greater in states that earmark proceeds for public goods. Further, we find that casino gambling only impacts lotto play in general fund states.     

The nonprofit sector in international perspective: The case of Sri Lanka

Sri Lanka, a developing country, has a small but growing nonprofit sector that engages in the formation of social overhead and human capital, as well as in more traditional social services. The most active multipurpose organizations combine large foreign monetary donations with domestic donations of volunteer labor. Smaller organizations depend primarily on modest government grants for financial support. Private domestic monetary contributions, unlike in the U. S., play only a minor role. Origins of these nonprofit institutions, motivations of foreign donors and of volunteer labor, interactions with the government, and implications for economic development and social welfare are examined.     

The impact of taxes and wasteful government spending on giving

We examine how taxes impact charitable giving and how this relationship is affected by the degree of wasteful government spending. In our model, individuals make donations to charities knowing that the government collects a flat-rate tax on income (net of charitable donations) and redistributes part of the tax revenue. The rest of the tax revenue is wasted. The model predicts that a higher tax rate increases charitable donations. Surprisingly, the model shows that a higher degree of waste decreases donations (when the elasticity of marginal utility with respect to consumption is high enough). We test the model’s predictions using a laboratory experiment with actual donations to charities and find that the tax rate has an insignificant effect on giving. The degree of waste, however, has a large, negative and highly significant effect on giving.

     

Time vs. money — The supply of voluntary labor and charitable donations across Europe

In spite of its importance for civil society, we know relatively little about the way in which individuals spend their time and money in the charitable provision of goods and services. In this paper, we provide a comprehensive picture of the philanthropic behavior in Europe by analyzing both, the correlates of individuals' charitable cash donations and volunteer labor as well as their interdependence. Using data from the European Social Survey, we document a positive correlation between time and money contributions on the individual as well as on the country level. In addition, we find evidence that individuals substitute time donations by money donations as their time offered to the market increases. Moreover, analyzing philanthropic behavior on the disaggregated level reveals large differences in the determinants and the relationship of time and money donations in Europe – both across different types of voluntary organizations and across different welfare regimes.     

THE IMPACT OF GOVERNMENT FUNDING ON PRIVATE CONTRIBUTIONS TO NONPROFIT PERFORMING ARTS ORGANIZATIONS

ABSTRACT ** :  This paper tests the crowding-out hypothesis for a balanced panel of nonprofit performing arts organizations between 1998 and 2003. This research uses a number of model specifications and estimating techniques to appropriately capture the relationship between government grants and private donations. Under alternative specifications, the relationship between government grants and private donations suggests crowding-in between $0.14 and $1.15. The crowd-in relationship does change according to art type: symphony orchestras and music companies experience a modest crowd-in while dance and ballet companies experience a small crowd-out. Although the crowd-in falls to zero under the strictest condition, there is a lack of evidence of crowd-out for nonprofit performing arts organizations as a group.     

HETEROGENEOUS EFFECTS OF THE ACA MEDICAID EXPANSION ON HOSPITAL FINANCIAL OUTCOMES

This study examines the effect of the Affordable Care Act's Medicaid expansion on hospital financial outcomes. A key innovation relative to prior studies is that we explicitly account for heterogeneity across states in the timing and extent of the expansion as well as across hospital types. We find that Medicaid expansion led to a decrease in uncompensated care expenditures and an increase in average operating margins. The effects were larger in states where the Medicaid expansion led to a greater increase in program eligibility. Operating margins improved most for public hospitals and facilities located in rural areas. (JEL I11, I13, I18)     

Coalition governments,cabinet size,and the common pool problem: Evidence from the German states

The theoretical literature on common pool problems in fiscal policy suggests that government fragmentation increases public expenditures. In parliamentary regimes, the fragmentation hypothesis refers to (i) coalition governments and (ii) cabinet size. This paper explores the effect of coalition governments and cabinet size on public expenditures with panel data covering all 16 German states over the period 1975–2010. Identification is facilitated by the large within-variation in the incidence of coalition governments and the size of the cabinet in the German states. In addition, I exploit a feature of state electoral laws to construct a credible instrument for the likelihood of coalition governments.     

Family model of contributions to non-profit organizations and labour supply

In this article a model is presented in which the family decides the labour supply of both spouses and their time donations to non-profit organizations. For the estimation, Spanish data was used which showed that family size and pre-school children influence decisions made about time distribution of husband and wife. Women with fewer family responsibilities work longer hours and donate more time, whilst the effect on men is the contrary. Also, monetary donations by the family are directly related to time donations by the spouses.     

INDIVIDUAL SPECIES-STATE ANALYSIS OF NATURESERVE'S "AT-RISK" CATEGORIES: HUNTING AND FISHING'S ROLE

We examine the impact of hunting and fishing on rankings in NatureServe's 2005 "at-risk" list using 24,291 observations on individual vertebrate animal species for 47 states (we omit Alaska, Hawaii, and Missouri). We use 1) a probit analysis of the binary "at-risk" designation and 2) an ordered probit analysis of the five categories of endangerment. We control for species type (mammals, birds, reptiles, amphibians, fish, and turtles), population density, farming area, forest cover, coastline existence, endemism, and per capita income. We find that states with higher hunting and fishing participation (or higher per capita expenditures) have fewer "at-risk" species. States with larger per capita big game spending have fewer "at-risk" non–big game species. States with larger wildlife agency budgets have fewer endangered species. ( JEL Q57)     

The cost of procuring market-inalienable human organs

The principal regulatory instrument and the defining feature of organ procurement in the United States is a ban on markets. This study finds the average variable cost of procuring organ donations to have been $1,650 per organ in 1990. Virtually no difference is found between more and less successful procurement organizations in obtaining consent from next-of-kin; what distinguishes successful organizations is their ability to generate more and better quality referrals. These data suggest that procuring organs by donation may be cheap and that more procurement effort might yield more donations. The findings imply that it may be the obstacles to adequate effort, rather than the inefficiency of appeals to donor altruism, that are responsible for shortages.I am grateful to Alvin Klevorick, Susan Rose-Ackerman, and Joel Waldfogel for their many comments and suggestions and to the staff of the Washington Regional Transplant Consortium, especially Laurie Brigham, for allowing me access to the internal workings of a procurement organization. I would like to thank Judy Braslow for suggesting the data set that made the project possible and Sylvie Muldoon for her patient explanations that gave context to the data.     

Are state–local government expenditures converging? New evidence based on sequential unit root tests

Large and persistent gaps in subnational public expenditure have important implications regarding growth, equity, and migration. In this context, we revisit the question of expenditure convergence across the American states to provide more nuanced evidence than found by a small number of previous studies. We employ a methodology due to Smeekes (Bootstrap sequential tests to determine the stationary units in a panel, 2011) that sequentially tests for unit roots in pairwise (real per capita) expenditure gaps based on user specified fractions. In a panel of 48 combined state–local government units (1957–2008), we found that expenditures on highways, sanitation, utility, and education were far more convergent than expenditures on health and hospitals, police and fire protection, and public welfare. There was little evidence of “club convergence” based on the proportion of intraregional convergent pairs. Several historically high-grant receiving states showed relatively strong evidence of convergence. Our results bode well for future output convergence and opportunities for Tiebout-type migration across jurisdictions. They also imply a diminished role for public infrastructure and education spending in business location choices over time and a mixed role for federal grants in inducing convergence.     

中美两国基础研究社会捐赠比较及对我国的启示

鼓励多元化投入基础研究的国家政策频繁出台，使社会捐赠作为基础研究投入来源引起学者普遍关注。美国运用社会资本进行科研捐赠具有多年发展经验，在支持生命科学、数学、物理学等前沿基础研究领域取得较好成效。为考察我国基础研究社会捐赠现状，对中美两国社会捐赠框架、科研投入多元化格局、捐赠激励政策、非营利机构布局及社会捐赠瓶颈等内容进行对比，从增设基础研究捐赠类目、成立基础研究专项基金会、完善基础研究捐赠税收优惠政策和积极吸收社会小额捐款4个方面提出适合我国国情的基础研究社会捐赠政策措施。     

School Finance Litigation, Tax and Expenditure Limitations, and Education Spending

Since the early 1970s, litigation in many U.S. states has led to education finance reform. Over the same period, many states have imposed new tax and expenditure limitations (TELs) on local governments. The imposition of a TEL may alter how local and state education expenditures change subsequent to court-mandated decreases in spending inequality. Similarly, the effectiveness of TELs in limiting local education expenditures may be influenced by reform. To better evaluate the effects of reform and TELs on education spending, this article considers them jointly and finds that reform has a negative effect on local own-source education expenditures only in the presence of TELs. In the absence of court-ordered reform, TELs decrease own-source expenditure, but the effect is less pronounced than when TELs are present with reform. When both are present, state government spending on education is higher. Also TELs and court-ordered reform independently increase state government spending on education. (JEL H72 , I22 )