But the federal money isn't what makes up challenge grants. I have never heard that that Uncle Sam will match my donations if people give $10,000 before the end of the hour. Federal subsidies are just another revenue source. They are not some magical investment that increases other revenue sources. 1 federal dollar doesn't turn into $6.50. There is no return on investment.
Not that kind of challenge grant. And perhaps I could've been more clear: it
is about economics, too, but it's about leveraging economics to then take advantage of psychology.
The federal government can, and does for arguably millions of business, give 1 federal dollar with the expectation that the business will use that dollar as part of an overall investment to become more successful financially. That financial success then translates back into increased tax revenue. So yes, in some cases 1 federal dollar does indeed turn into $6.50. Or more likely, something like $1.10 or $1.20...either way, a net positive.
The principle still holds for non-profits like public radio, albeit at a slightly more distant relationship: increased success by a non-profit probably means more employees paying payroll taxes and very likely means more consumer spending which is, of course, the driver of the entire US Economy. I'm not an economist so I can't spell out the exact connections but I think we can agree on the generic principle of the concept.
Now, the psychological aspect is tied to the base issue that nobody likes donating to a loser. Even a non-profit in dire straits, who desperately needs cash to stay afloat, will not fundraise on that platform because nobody will give. Why give to an organization that might go out of business and thus waste your gift? Instead, you fundraise based on a positive note: "we have this money and we can do a lot of good with it if you help support us today..."
That an overt way, and admittedly it's one that most public radio outlets have gotten away from because of the political climate. It's more effective to fundraise on a platform that listeners are chief source of funding, and that federal dollars are nowhere near enough to cover the costs.
That speaks more to the covert method, which is that you use those federal dollars as a way to pay for quality programming and personnel who then can be leveraged to raise more funds from other sources: corporate sponsorship, listener donations, private grants, etc. For example, you could argue that at RIPR, part of our CPB funding is helping pay for our fundraising consultants, who in turn help us execute better fund drives that net us more listener donations. (I'm not sure if the budget setup is actually like that or not at RIPR...I only see the budget for engineering and, to a limited extent, the budget as it pertains to applications for private grants for various engineering projects.)
Either way, public broadcasting, AFAIK, still comes out positive when it comes to leveraging federal funding to ultimately create enough success to provide positive ROI.