The crowding in or out theory primarily focuses on the resource management approach and the relationships between domestic government funds and private donations contributed to nonprofit organizations (NPOs). However, the managerial approach does not capture a political approach, which theorizes the dual roles of foreign donations to domestic nonprofits. The political approach posits that foreign donations may either augment domestic contributions by supporting the coproduction of public goods or diminish them by posing a potential threat to China's authoritarian rule because they bolster civil society. Both the managerial and political approaches cannot clearly predict whether domestic supporters will welcome (crowding in) or reject (crowding out) foreign contributions to NPOs. This study utilizes a unique dataset of Chinese foundations to empirically test whether the domestic government and citizens welcome foreign donations to NPOs. Our findings reveal a substantial decline in foreign donations to Chinese foundations since 2014. Nevertheless, for nonprofits that received foreign donations, they exhibited no effects on government funding and varying degrees of crowding in private contributions.
Huafang Li is an Assistant Professor of Public and Nonprofit Management. He received his PhD from Rutgers University. His dissertation, "Information and Donations," was awarded the Public Management Research Association Best Dissertation Award in 2018. He is interested in public administration and nonprofit management. Currently, he focuses on using various methods to study public and nonprofit management, particularly how public and nonprofit organizations' information communication influences individual coproduction and giving decisions. His work appeared in Public Administration Review, Public Management Review, Nonprofit & Voluntary Sector Quarterly, among other peer-reviewed journals.
This free public lecture is part of the Global Chinese Philanthropy Research and Training Program and made possible with the support of the Cyrus Tang Foundation.