Local Public Goods and the Crowding-out Hypothesis: Evidence from Civic Crowdfunding

We study civic crowdfunding campaigns, which leverage online platforms to raise funds for local public goods. We investigate "crowding-out" along two dimensions. We test whether an individual's contributions to a campaign are diminished by (1) the availability of another charitable cause and (2) contributions from other donors. We find strong robust evidence of a negative relationship between donating to a specific campaign and donating to the civic crowdfunding platform. Crowding out across charitable causes is most prevalent among donors who live far away from the crowdfunding campaign's location and among donors living in low-income neighborhoods. We find limited and inconclusive evidence of crowding-out across donors. The findings represent an initial empirical exploration of crowding out in civic crowdfunding.