Tax policies to promote private charitable giving in DAC countries
Researchers have written hundreds of papers on the causes and consequences of official foreign aid, while paying almost no attention to private overseas giving, by individuals, universities, foundations, and corporations. Yet private giving is significant—some $15.5 billion/year, compared to more than $60 billion/year in public giving—and is in no small part an outcome of public policy. In most rich countries, tax deductions and credits lower the “price” of charity to donors. And governments with low tax revenue/GDP ratios leave more money in private pockets for private charity. To correct the near-complete lack of information on this de facto aid policy, we survey officials of 21 donor nations on the use of tax incentives to promote private charity. From the results, we develop an index of the overall incentive for private charity, expressed as a percentage increase over the hypothetical giving level absent incentives. France’s tax code creates the largest price incentive while those of Austria, Finland, and Sweden offer none. Factoring in the income effect of the tax ratio, Australia, Ireland, Germany, and the United States move to the top, with combined price and income effects sufficient to double private giving. As a result, tax policy appears to have nearly doubled private overseas giving from donor countries in 2003, from a counterfactual $8.0 billion. Two-thirds of the $7.5 billion increase occurred in the United States. Of that, nearly 40% appears to be U.S. charity to Israel. According to 21-country scatter plots, countries with lower church attendance and more faith in the national legislature have lower taxes (stronger income effect), but average levels of targeted tax incentives. Income (GDP/capita) does correlate with private overseas aid/capita, but also with public aid/capita, so that the two aid flows are complementary in magnitude.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Feldstein, Martin S & Taylor, Amy, 1976. "The Income Tax and Charitable Contributions," Econometrica, Econometric Society, vol. 44(6), pages 1201-22, November.
- Clotfelter, Charles T., 1985. "Federal Tax Policy and Charitable Giving," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226110486, March.
- Kay, John A, 1990. "Tax Policy: A Survey," Economic Journal, Royal Economic Society, vol. 100(399), pages 18-75, March.
- David Roodman, 2004.
"An Index of Donor Performance,"
Development and Comp Systems
- Tiehen, Laura, 2001. "Tax Policy and Charitable Contributions of Money," National Tax Journal, National Tax Association, vol. 54(n. 4), pages 707-23, December.
- Greene, Pamela & McClelland, Robert, 2001. "Taxes and Charitable Giving," National Tax Journal, National Tax Association, vol. 54(n. 3), pages 433-53, September.
- Oecd, 2004. "Philanthropic Foundations and Development Co-operation," OECD Journal on Development, OECD Publishing, vol. 4(3), pages 73-148.
- Clotfelter, Charles T., 1997. "The Economics of Giving," Working Papers 97-19, Duke University, Department of Economics.
- Andreoni,J., 2004.
7, Wisconsin Madison - Social Systems.
- Andreoni, James, 2006. "Philanthropy," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
- Neil Gilbert, 2005. "The "Enabling State?" from Public to Private Responsibility for Social Protection: Pathways and Pitfalls," OECD Social, Employment and Migration Working Papers 26, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:cgd:wpaper:82. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Roodman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.