Complementarity or Crowding Out: The Effects of Government-Led Philanthropic Development

Abstract

At present, China regards philanthropy as an important component of social security, social governance, and the third distribution of resources. Structural changes in government expenditure can drive the adjustment of social resources; therefore, it is fundamental to investigate the macroeconomic transmission effect of government expenditure on the development of the philanthropic sector in order to promote the sustainable development of philanthropy and ensure the fairness and justice of social distribution. The results of a regression analysis on provincial panel data from 2007 to 2020 indicated the following: (1) Government expenditure exhibits crowding-out effects on various dimensions of the philanthropic sector. (2) In terms of regional development disparities, government guidance shows crowding-out effects on the development of philanthropy in the eastern and central regions; meanwhile, it demonstrates complementary effects on the dimensions of charitable donations and the number of social organizations in the western region. (3) Furthermore, in terms of the regional distribution of social organizations by industry, government guidance in the eastern region exhibits crowding-out effects on the numbers of social organizations in the fields of science and technology, education, culture, health, and sports; meanwhile, in the western region, it shows complementary effects. Additionally, in the central region, it shows a complementary effect only in the cultural sector, with crowding-out effects in other industries. Therefore, greater flexibility should be granted to the philanthropic sector, in which the construction of hub-type philanthropic organizations and the creation of regional industry cooperation platforms promote the relatively balanced development of philanthropy.