Corporate Presence and Charitable Giving: Evidence from Panel Data on Firms and Nonprofits

The interconnectedness of activities in and between the corporate, government, and nonprofit sectors continues to garner considerable attention in academic and public policy debates. The degree to which the presence of one sector generates positive spillovers to other sectors and thus local economies is of particular interest. In this paper, we examine specifically how the presence of corporate firms is associated with nonprofit, charitable activity in US metropolitan areas. We find evidence of a positive association consistent with Card, Hallock, and Moretti (2010) and, due to a longer time horizon with additional information on nonprofit activity, are able to provide additional investigation into how firm location affects size of the nonprofit sector and other nonprofit activities such as fundraising. Our estimates suggest a lower bound on the spillovers such that the presence of an additional firm headquarters within a metropolitan statistical area (MSA) leads to a $8.2 million increase in total charitable contributions within the same MSA. Moreover, a $1 billion rise in the aggregate market value of firms within an MSA corresponds to a $0.8 million increase in local charitable donations. We additionally find evidence that more corporate activity is associated with increased nonprofit fundraising expenditures and more active charities. Importantly, we detect no significant impact of corporate headquarters on government grants received, nor do we find significant evidence of crowding out effects of public contributions on government grants to local charities. These findings offer better understanding of the interplay between private sector growth and nonprofit sector dynamics, shedding light on the economic mechanisms that shape local philanthropic landscapes.