The Rise of School-Supporting Nonprofits

Source: Ashlyn Aiko Nelson, Beth Gazley, Indiana University Bloomington – School of Public & Environmental Affairs (SPEA), February 2014

From the abstract:
This paper examines voluntary contributions to public education via charitable school foundations, booster clubs and PTAs/PTOs as an alternative to local revenues generated via the property tax. We employ panel data on school-supporting charities with national coverage from 1995 to 2010, which we geocode and match to school districts. We first document the meteoric rise of school-supporting nonprofits during this panel, and then estimate a series of regression models including both reduced form and fixed effects specifications to examine the distributional consequences of voluntary contributions. We find that relatively large districts have higher probabilities of receiving revenues from a school-supporting nonprofit, but that the level of per-pupil voluntary contributions declines with student enrollment. In addition, we find that school districts with higher endowments — as measured by property tax revenues per pupil, the share of individuals with a bachelor’s degree or more, median household income, and relatively low unemployment rates — have higher probabilities of being served by at least one school-supporting nonprofit and higher levels of per-pupil contributions. Finally, we find no evidence that impressive recent growth in the number and financial size of these school supporting charities relates to reductions in the public financing of schools. Instead, we find that school districts that generate higher revenues from federal and property tax sources also generate higher revenues from voluntary contributions.