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- Title
KIDS OR CASH? EXPLORING CHARTER SCHOOL RESPONSES TO DECLINING GOVERNMENT REVENUES.
- Authors
Grosskopf, Shawna; Hayes, Kathy; Razzolini, Laura; Taylor, Lori
- Abstract
While the literature is extensive on school districts' revenue sources, less research has been done on the impact of donations on school district funds. In this paper, we extend the theoretical literature on crowding out of private donations by government grants for one type of nonprofit firm, namely charter schools. The theoretical model leads us to focus on the key relationships among fundraising effort, enrollment (which is tied to federal and state funding) and donations. Using a dataset on Texas charter schools we adopt a two‐stage approach to examine the empirical relationship between changes in nondonor revenues and the donations received by charter schools. Like the extensive empirical estimates of the effects of government grants on donations for other types of nonprofit firms, we find evidence of crowding‐out with respect to our sample of charter schools. We also find a significant, positive effect of fundraising on donations with a $1 increase in fundraising associated to a $0.58 increase in donations, a pattern consistent with overinvestment in fundraising. Enrollments exhibit a robust inverse relationship to changes in nondonor revenues.
- Subjects
CHARTER schools; GOVERNMENT revenue; EDUCATIONAL fundraising; NONPROFIT organizations
- Publication
Economic Inquiry, 2020, Vol 58, Issue 2, p802
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/ecin.12853