Experimentally Disentangling Donors’ Perceptions of Government-Supported Nonprofits: Cost-Efficiency, Program Impact, and Shared Services

Abstract

This study advances understanding of the relationship between government support and private donations, by further investigating the mechanisms underlying that relationship and by examining a nonmonetary form of government support, namely, shared services. We use a survey experimental design to highlight U.S. donors’ perceptions of government-supported nonprofits. The results suggest that donors are less willing to give to government-funded nonprofits. This is not only because donors see government funding as a substitute for their donations but also because donors perceive government-funded nonprofits as cost-inefficient. The results also suggest that donors’ relative reluctance to donate to government-funded nonprofits is not because donors perceive government-funded nonprofits as less impactful and that donors’ decisions about giving do not vary according to the forms of government support nonprofits receive. Overall, our findings stress the importance of governments simplifying administrative procedures for nonprofits to apply for and manage government funding.