The Role of Philanthropy in Local Government Finance

Nonprofit organizations thrive on the altruism of citizens, and actively court donors for major gifts. Yet individual gifts to government agencies are often unexpected, sporadic, and initiated by the donor. This article introduces the phenomenon of private giving to local governments and tests hypotheses regarding the expected forms of giving to public agencies. Results indicate that philanthropy is and will likely remain a minor and highly variable source of revenue, making it an ill‐suited replacement for broad‐based tax revenue. However, deliberate government efforts to provide a suitable environment for private donations appear to succeed in attracting more gifts per capita.