Does the NEA Crowd Out Private Charitable Contributions to the Arts?

• Published in: National tax journal Vol. 62; no. 1; pp. 57 - 75
• Main Author: Dokko, Jane K.
• Format: Journal Article
• Language: English
• Published: Chicago National Tax Association 01-03-2009; The University of Chicago Press; University of Chicago Press
• Subjects: Arts; Arts organizations; Charitable contributions; Charitable giving; Crowding out; Cultural organizations; Donations; Federal funding; Fund raising; Funding; Government; Government aid to the arts; Government grants; Grants; Nonprofit organizations; Public goods; Studies; Taxation; United States > US
• ISSN: 0028-0283; 1944-7477
• DOI: 10.17310/ntj.2009.1.03

This paper investigates the mechanism by which the federal government's funding of the arts through the National Endowment for the Arts (NEA) displaces private charitable contributions to non-profit arts organizations. I estimate that private charitable contributions to arts organizations increased by 50 to 60 cents due to a major funding cut to the NEA during the mid-1990s. These increases, however, also coincided with, on average, a 25 cent increase in fund-raising expenditures by arts organizations for every dollar decrease in government grants. The estimate of crowding out found in this paper is relatively large, particularly for a study using a micro-data set. I argue that an appropriate interpretation of an estimate of a crowding-out parameter, in general, depends crucially on the context.