The Effects of Congressional Appropriation Committee Membership on the Distribution of Federal Research Funding to Universities

This paper examines the impact of congressional representation of a university through district representation or an alma mater affiliation on the distribution of research funding to research and doctoral universities in the United States. Because appropriations are allocated to agencies on an annual basis, Congress and agencies may be considered strategic actors that seek to minimize as well as exploit their differences in informational asymmetries. Using a data set that covers more than twenty-five years of data, I find there are strong effects from congressional representation on the distribution of research funding. These effects vary based on the type of representation, the seniority of the member serving on the committee, as well as the type of ownership of the university (private or public). Depending on the empirical specification, political diversions of research funding range between four and forty-eight percent. Surprisingly, the diversions associated with an alma mater affiliation are more robust than the diversions associated with district representation, suggesting the existence of political slack. These results suggest that informational asymmetries play a role in the level of congressional influence on agency actions. In addition, the results suggest that actions taken by members of the appropriations committees vary based on their tenure on the committees.congressional representation, research funding, universities

Lending a Hand: How Federal Tax Policy Could Help Get More Cash to More Charities

Although total giving to charities in Canada has increased in the last two decades, the share of tax filers reporting cash donations has fallen, and the sector’s reliance on large donations by wealthy donors has risen. To broaden the donation base, the author suggests creating a single tax-credit rate for cash donations or an RRSP-like charitable gift plan.charities papers, federal tax policy, Canadian charities

Do Congressional Earmarks Increase Research Output at Universities?

For twenty years universities have been able to bypass peer-reviewed research competition for federal funding and seek a direct appropriation of funding from Congress. Proponents of this earmarking claim that this funding helps the university build the infrastructure needed to be able to compete for peer-reviewed funding. Opponents claim this funding is used poorly and is less than productive than peer-reviewed funding. This paper attempts to answer this question by examining whether earmarked funding, when treated as a stock of capital, increases the number of academic articles published and/or the number of citations per article published. Using two panel data sets that span 1980 to 1998, incorporating university and year fixed effects, and using an instrumental variables estimation, this paper shows that while the number of articles published increase, the number of citations per article decrease. Depending on the data set used the annual increase in articles ranges, on average, between 8 and 14 percent. The annual decrease in citations per article ranges between 9 and 57 percent. If we concentrate only on earmarks for agriculture, earmarks that often are for small discrete projects, the results suggest the effect from an increase in earmarked funding is not statistically different from zero for both publications and citations per publication. These results suggest that earmarked funding may increase the quantity of publications but decreases the quality of the publications and the performance of earmarked funding is lower than that from using peer-reviewed funding.congressional earmarking, research funding, universities

Estimating the Effects of Federal Research Funding on Universities using Alumni Representation on Congressional Appropriations Committees

This paper estimates the effects of federal research funding on 71 research universities. We focus on the number of and citations to articles published, patents issued, and faculty salaries. Using a panel data set that spans from 1972 to 1994, we control for potential endogeneity and omitted variables bias in our regressions by using a data set that links U.S. Congress members on the appropriations committee with their undergraduate alma mater. Alumni representation lowers the shadow price of federal funding. Using our preferred instrumental variables specification, we find an increase of $1 million in federal research funding (1993$) to a university results, on average, in 12 more articles, .34 more patents, and $152,015 more in total faculty salaries. Citations to articles publish falls by .08 citations. So when the shadow price of federal research funding falls, as a first approximation, universities buy more federal research funding and produce more but not necessarily higher quality research output.

Uncharitable Treatment? Why Donations to Private and Public Foundations Deserve Equal Tax Status

Canada’s public foundations and charities got a helping hand from Ottawa last year when the May federal budget removed the capital gains tax on listed securities given as donations. While the change facilitated gifts of stock to these public organizations, their philanthropic cousins, private foundations, did not benefit. This differential treatment potentially discourages donations to, and the development of, private foundations.governance and public institutions, charitable sector

Government Grants to Private Charities: Do They Crowd-Out Giving or Fundraising?

When the government makes a grant to a private charitable organization, does it displace private giving? This is one of the fundamental policy questions in public finance, and much theoretical and empirical research has been devoted to understanding the relationship between private donations and government funding. Under the classic crowding-out hypothesis, donors let their involuntary tax contributions and substitute for their voluntary contributions. This paper raises the prospect of a second reason: that the stretegic response of the charity will be to pull back on its fundraising efforts after receiving a grant. We develop a theoretical model to show a charity that chooses its level of fundraising efforts strategically will reduce fundraising in response to government grants. We then analyze data on tax returns of 474 social services organizations and 245 arts organizations between 1982 and 1996. These two types of charitable organizations differ in both the nature of the services they provide and in their reliance on private donations and government grants. We find evidence that government grants to nonprofits are causing significant reductions in fundraising efforts, after looking at different types of fundraising activities. This finding is important for two reasons. First, it means that the behavior of the nonprofit organizations is consistent with the predictions of an economic model within a strategic environment. Second, it adds an important new dimension to the policy discussions on the effectiveness of government grants to increase the services of charitable nonprofit organizations. Charities are not passive receptables of contributions, as they have so often been treated in the past, but are active players in the market for donations. When the government gives a grant to charities, we shoul take into account the behavioral response of the charity itself, as well as the behavioral responses of the individual donors.nonprofit organizations, fundraising, crowd-out, private donations, government grants

Is Crowding Out Due Entirely to Fundraising? Evidence from a Panel of Charities

When the government gives a grant to a private charitable organization, do the donors to that organization give less? If they do, is it because the grants crowd out donors who feel they gave through taxes (classic crowd out), or is it because the grant crowds out the fund-raising of the charities who, after getting the grant, reduce efforts of fund-raising (fund-raising crowd out)? This is the first paper to separate these two effects. Using a panel of more than 8,000 charities, we find that crowding out is significant, at about 72 percent. We find this crowding out is due primarily to reduced fund-raising. Depending on which types of organizations are included in the analysis, crowding out attributable to classic crowd-out ranges from 30% to a slight crowd-in effect, while fund-raising crowd out ranges from 70% to over 100% of all crowd out. Such a finding could have important consequences for how governments structure grants to non-profits. Our results indicate, for example, that requirements that charities match a fraction of government grants with increases in private donations might be a feasible policy that could reduce the detrimental effects of crowding out.charitable giving; fundraising; crowd-out

Crowding-Out Charitable Contributions in Canada: New Knowledge from the North

Using data from charitable organizations in the US, authors have established that government grants to charities largely crowd out giving from other sources, but that this reduction is due mostly to reduced fundraising activities of the charity itself. We use much more detailed data from over 6000 charities in Canada, measured for up to 15 years, to provide valuable new insights into this phenomenon. In particular, dollars received from individuals is largely unchanged by government grants. Instead, the crowding out is attributable to two other sources of donations not differentiated in US data: giving from other charities and charitable foundations, and donations gained from special fundraising activities, like galas or sponsorships. Only the latter-which is about half of the measured crowding out-represents a potential loss of dollars to the charitable sector as a result of government grants.

Changing Landscapes for Charities in Canada: Where Should We Go?

Charitable giving in Canada has never been higher. Between 1992 and 2008, contributions to charitable organizations more than doubled, from $4 billion to more than$9 billion. Donations to charitable foundations grew at an even more remarkable rate: more than 250 per cent, over the same period. But those striking numbers mask more puzzling, some might say more worrying, trends. While donations overall have grown, not all charity types have shared equally in the gains. Religious charities and health-related charities have seen the lowest amount of growth. Meanwhile, the country’s larger charities and foundations have seen substantial increases in donations, but donation rates to smaller charities have been relatively flat. As for the donors, it’s almost entirely high-income Canadians who seem to be giving significantly more, while the rate of giving among middle-income and lower income Canadians has hardly grown at all. In fact, the share of people claiming tax credits for donations in each income group is actually in decline, meaning fewer of us seem to be giving to registered charities, while the richest Canadians are primarily responsible for the rise in donations. The reasons for these unusual trends are unclear — though there is some evidence that the more ethnically diverse our country has become, the less inclined we are to donate. And whether we should even be concerned about these uneven patterns — the wealthiest Canadians giving bigger cheques to the country’s biggest charities and foundations — is also an open question. But the uncertainty about what these trends mean, why they’re happening, and whether they’re even a problem, is not something we should take lightly. Changes may be coming soon to Canadian charity policy: Last year, a House of Commons committee began a sweeping study of charitable giving in Canada, and it is already evaluating dozens of suggestions for policy adjustments. But, while we can discern some patterns and trends in giving, the reality is that we actually still know very little about why Canadians give, and how we, as a society, want to change the way we give, if at all. And until we make the effort to learn considerably more, any policy changes aimed at altering the landscape for Canadian charities are at risk of being politically driven, rather than evidence-based, and they could very well end up creating more problems than they solve