Crowding Out and Competition in the Religious Marketplace

Abstract

We examine charitable spending by faith-based organizations on community services. We find that government spending on such activities has a depressing or "crowding out" effect as initially found in Hungerman (2005). However, we also find that competition from other faith-based organizations also plays an important role. Specifically, we find that beyond a threshold level, greater concentration in the religious marketplace leads to less church social spending per member. This is true with respect to both inter- and intra-denominational competition. Spending on charitable services appears to be a mechanism by which churches compete.