This dissertation assesses the impact of government funding, resulting from the passage of the charitable choice provision, on private donations to faith-based organizations (FBOs). It tests the tenets of the crowding-out hypothesis, which posits that government funding to nonprofit organizations (including FBOs) decreases or crowds-out private donations, in forty FBOs in Ohio. The main research questions of the study are as follows: 1. To what extent does government funding to FBOs, as supported by the charitable choice provision, affect the overall level of private charitable donations to these organizations?
2. Is there a difference between the mean level of private donations in government funded and non-government funded FBOs?
3. What factors do FBOs consider when deciding whether to receive government funding (and take advantage of charitable choice)? and
4. What mechanisms, if any, do FBOs employ to disseminate information to their donors regarding their organizations funding sources?
A mixed research methods approach was employed in this project, which included the use of the cross-sectional, longitudinal, and case study research designs to collect and analyze the data and interpret the results of the statistical analyses. Primary research data consisted of responses to face-to-face interviews with FBO administrators. Secondary data consisted of financial data for a seven year period (1999-2005) as reported by FBOs to the Internal Revenue Service on the Return of Organization Exempt from Income Tax (Form 990).
The results of the case study show that fundraising activities enable FBOs to fulfill the mission of their organizations. Also, they suggest that FBOs are likely to provide direct services to homeless people or administer homeless prevention programs. Additionally, they indicate that public subsidies are generally associated with bureaucracy and seen as a threat to FBOs faith related activities. The quantitative results do not support the crowding-out hypothesis, as they indicate that the relationship between government funding and private donations is not statistically significant. They also show that there are no statistically significant differences between government and non-government funded FBOs based on private donations. The conclusion is that public subsidies do not diminish the level of donations FBOs receive from private donors.