Do profits “crowd out” donations, or vice versa? the impact of revenues from sales on donations to local chapters of the American Red Cross

This article examines the relationship between donations to the American Red Cross and the profits, sales, costs, and prices of health and safety classes offered by local chapters. Two important questions are examined: Do profits from sales of services “crowd out” donations to local chapters of the American Red Cross? Do managers respond to changes in donations by changing prices, output, or costs of saleable services? The results suggest that nonprofit managers should pay close attention to the potential impact on donations of any change in the prices charged for saleable goods and services, and that profits, costs, and prices of services are influenced by donations.