Should we worry about the reduction in private donations collected by a non- pro…t in reaction to a government grant? We present a simple model of a nonprot founded by a social entrepreneur that decides on the allocation of her time between leisure, fund-raising, production of the public good. If the funds and time are strongly complementary inputs in the production function of the nonpro…t, an increase in the government grant has the following e¤ects: the social entrepreneur reduces her time allocated for leisure, there is a large crowding out of private donations, and, if the char- ity was devoting a large fraction of its time budget to fund-raising before the increase in the grant, the e¤ectiveness of the grant in terms of increasing the production of the charity’s service is very high. These …ndings call into question the desirability of using the extent of crowding out as an indication of low e¤ectiveness of government grants.