Do Government Transfers Crowd out Private Transfers to Non‐profit Organizations? The Israeli Experience

Considers the importance of private contributions to not‐for‐profit organizations (NPOs) in capitalistic welfare states but notes that the share of national income donated to NPOs is significantly lower in Israel than in the USA. Focuses on donations to NPOs in Israel and provides an empirical analysis of the interrelationship of private donations and Government transfers to NPOs. Describes the analytical background relating private contribution to Government activity, examining particularly the possibility that Government expenditure exerts a “crowding‐out” effect on private contributions. Concludes that, with special reference to Israel, Government budgets and private donations to NPOs should co‐exist, in order to maximise the sources devoted to social services or to obtain an adequate variety of such services.