Monday, June 2, 2008
Professor Russell M. Rhine (St. Mary's College of Maryland - Department of Economics) and Thomas A. Garrett (Federal Reserve Bank of St. Louis - Research Division) posted an abstract of their Federal Reserve Bank of St. Louis Working Paper about the relationship between charitable contributions and government spending on SSRN's Nonprofit and Philanthropy Law Abstracting Journal. The article is entitled "Government Growth and Private Contributions to Charity." Here is the abstract:
We exploit the time series properties of charitable giving data to provide additional insights into the relationship between charitable contributions and government spending. Our sample period covers the last half of the 20th century, a period marked by increased growth in both government spending and charitable giving. Cointegration tests reveal a significant long-run relationship between several categories of charitable giving and government spending. Granger causality tests are designed to capture any short-run giving and spending relationship, and provide the opportunity to examine whether changes in fundraising efforts by charities influence government spending. Evidence suggests that charitable contributions to education responds quite differently to state and local government education expenditures versus federal government expenditures. We argue that the government spending and charitable giving relationship is dependent upon the source of government revenue, how this revenue is used by institutions of learning, and the rational ignorance of private donors.