Charity and Public Libraries: Does Government Funding Crowd-Out Donations?

Abstract

There are over 9,000 public libraries in the United States servicing more than 1.5 billion people and raising over $11.5 billion dollars in revenue with approximately 8% of this total coming from donations. This paper analyzes the determinants of donations to public libraries testing the following hypothesis: is there a crowding-out effect from government funding of public libraries? I address this issue by looking at novel data, the Public Library Survey, and use panel from 2000 to 2013. The results suggest a crowding in effect in all levels of government: 4 to 6 cents in local government, 20 to 23 cents in state government and 75 cents to 1 dollar and 33 cents in federal government. Also, the government expenditure has an inverted U shape.