Modeling charitable contributions of time and money

Public goods theory predicts that government spending an charity can perfectly crowd-out charitable contributions. Empirical research has found little support for the perfect crowd-out hypothesis. However, the empirical work only measures part of a contributor's total contribution: gifts of money. Contributors also volunteer labor. This article extends the public goods model to the case in which individuals contribute both time and money to a charity that in turn produces a public good. The model suggests that charitable contributions of time and money are perfectly substitutable in equilibrium. This result offers new interpretations for existing empirical observations, and suggests a new test of the crowd-out hypothesis. The implications of the model are empirically tested using a national survey of charitable activity. (C) 1999 Elsevier Science S.A. All rights reserved.