Fundraising, government grants and donations to nonprofit hospital charities

Using 1982-1987 tax return data from California hospital charities, this paper investigates the relationship between fundraising expenditures, government grants and donations, during a time in which significant changes were being made in the system of hospital reimbursement. Empirical results suggest that while donations have been declining, charities have been efficient in their solicitation of donations. Results also suggest that government grants worked to reduce charitable contributions in the period before the institution of Medicare's Prospective Payment System. In more recent years, government grants have been associated with increases in donations to hospital charities.