Research Grants Crowding Out and Crowding In Donations to Higher Education

Abstract Using a dataset that includes every private donation made to a large public university from 1938 to 2012 and demographic information on all alumni, we examine the effects of public research funding on individual donations. Our dataset allows us to examine crowding effects on a small time scale and extensive donor characteristics. We estimate effects on the total number of donations (extensive margin) and on the average size of a donation (intensive margin). National Science Foundation research grants have a positive (crowd-in) effect on the extensive margin and a negative (crowd-out) effect on the intensive margin. We find no evidence of these effects from other sources of federal research funding. Previous donors and in-state residents respond differently to grants than do new donors and out-of-state residents, respectively.