The Rise of School-Supporting Nonprofits

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 distributions. We find that districts with higher perpupil expenditures and higher enrollments are more likely to have one or more operating schoolsupporting charities, but that the level of per-pupil voluntary contributions declines with student enrollment. Higher-poverty school districts are less likely to be served by a school-supporting nonprofit and receive significantly lower voluntary contributions on a per-pupil basis. Finally, impressive recent growth in the number and financial size of these school supporting charities since 1995 has not offset reductions in state aid. Moreover, we do not find sufficient evidence to conclude that voluntary contributions change the distribution of funding across school districts and undo school finance equalization.