The Free to Give Index runs from 0 to 10 with 10 representing a high score and 0 a low score. It is constructed from 33 distinct variables. These are grouped into three broad sub-indices. Each sub-index captures a different aspect of policy that might affect the freedom to give and the freedom to receive.
The first subindex measures the Broad Policy Environment. In other words, it captures policies that are not specific to the charitable sector. This environment can affect the charitable sector in several ways. If, for example, the policy environment limits the profitability of individuals and firms then it will limit the fuel that powers that philanthropic sector. Without a thriving for-profit sector, there can be no profit for a thriving non-profit sector.
It is also possible that barriers to for-profit activity might also block non-profit activity. Tax and regulatory complexity may affect all firms, both for-profit and non-profit. Whatever the causal mechanism, previous researcher has found that people in more economically free states do tend to be more philanthropic (Jackson and Beaulier 2023). So, it seems important to take account of the general policy environment.
The second subindex focuses squarely on Nonprofit Freedom. Building on previous research, it examines the degree to which charities are free to enter and operate and the degree to which they and their paid solicitors are free to solicit funds. Standard economic theory predicts that if the barriers to entry and operation are higher, there will be less charitable activity. Moreover, as charities spend more time in compliance, they are likely to spend less time on their missions. Furthermore, regulations that limit charitable activity and make each donated dollar less effective may also make donors less inclined to give to charities.
The final subindex focuses on donor incentives and protections. It is called the Donor Confidence Subindex and it measures the incentive to give through factors such as the tax treatment of charitable giving, donor privacy protections, regulatory predictability, regulation of donor-advised funds, and protections of donor intent.
We hope that in grouping the variables into these three subindices we have made it easier for future researchers to study the independent contribution that each of these distinct areas of policy has on philanthropy. We also hope that it will make it easier to study how the three areas of policy interact with and affect one another.
Each state’s score in each component is graded on a curve based on the maximum and minimum values in this year. In future editions of this report, we plan to use these same 2026 maximum and minimum values so that we can measure policy change through time. We offer a brief description of each component here. See the technical appendix for a fuller description of each variable, its source, and its calculation.
Note these scores do not represent our subjective opinions. Instead, they represent the objective reality of policy. For example, they indicate whether a state has a certain policy or not, the size of the fees (if any) that it charges, the thresholds that trigger certain requirements, etc. To gather these data, we had two independent large language models crawl state statutes, regulations, and websites. We then cross-referenced these results and when they disagreed, we hand-checked the policies ourselves to reconcile them.
The Broad Policy Environment Subindex
The Broad Policy Environment Subindex is composed of three variables:
- 1A: Occupational Freedom: A measure of state occupational licensing requirements.
- 1B: Tax Competitiveness: A measure that uses over 150 indicators of the state tax environment to account for its complexity, neutrality, and efficiency.
- 1C: Subnational Economic Freedom: A measure that uses ten indicators of taxing, spending, and labor market freedom to assess the degree to which state residents are allowed to make their own economic choices.
The Nonprofit Freedom Subindex
The Nonprofit Freedom Subindex uses twenty-two variables, many of which have been used in earlier measures of Nonprofit Freedom (Lott et al. 2016; Winegarden 2023). Our index builds on these measures by adding minimum registration and renewal fees as well as an indicator to account for whether the fee structure is tiered. We also include an indicator to account for the fact that some states require employees of paid solicitors, and not just their firms, to register with the state. These variables are grouped into four broad areas: charitable startup regulations, charitable reporting regulations, paid solicitor requirements, and audit regulations. The scores are averaged under each of these areas followed by averaging the four areas for the overall score for this subindex.
The Charitable Startup Regulations Area includes five variables:
- 2Ai: Charitable Registration Required: A measure of whether charities are required to register with the state.
- 2Aii: Top Registration Fee: A measure of the top registration fee.
- 2Aiii: Minimum Registration Fee: A measure of the minimum registration fee.
- 2Aiv: Top Incorporation Fee: A measure of the top incorporation fee.
- 2Av: Minimum Incorporation Fee: A measure of the minimum incorporation fee.
The Charitable Reporting Regulations Area includes seven variables:
- 2Bi: Requires Annual Report: A measure of whether charities are required to file annual reports.
- 2Bii: Top Annual Fee: A measure of the top annual fee.
- 2Biii: Minimum Annual Fee: A measure of the minimum annual fee.
- 2Biv: Additional Corporate Filing Requirement: A measure of whether charities are required to file additional corporate filings.
- 2Bv: Other Fees: A measure of other required annual fees.
- 2Bvi: Tiered Fee Structure: A measure of whether the fee structure is tiered.
- 2Bvii: Overlapping Regulators: A measure of whether the state has more than one regulator overseeing charities.
The Paid Solicitor Requirements Area includes nine variables:
- 2Ci: Commercial Fundraiser Registration: A measure of whether commercial fundraisers are required to register with the state.
- 2Cii: Paid Solicitor Registration Fee: A measure of the fee, if any, that paid solicitors must pay to register.
- 2Ciii: Paid Solicitor Renewal Fee: A measure of the fee, if any, that paid solicitors must pay to renew their registration.
- 2Civ: Surety Bond for Professional Fundraisers: A measure of surety bond, if any, that paid solicitors are required to post.
- 2Cv: Pre-Campaign Notice Requirement: A measure of whether solicitors are required to post a pre-campaign notice.
- 2Cvi: Fundraising Consultants Registration Requirement: A measure of whether fundraising counsels are required to register.
- 2Cvii: A Requirement to File Contracts Between Charities and Commercial Fundraisers: A measure of whether the contracts between charities and commercial fundraisers must be filed with the state.
- 2Cviii: Must File Contracts Between Charities and Commercial Fundraisers: A measure of whether charities must file their contracts with commercial fundraisers.
- 2Cix: Individual Solicitors Must File Separately: A measure of whether individual solicitors employed by professional fundraisers must file separately.
Charitable Audit Regulations includes 1 variable:
- 2D: Audit Threshold: A measure of the revenue threshold, if any, that triggers an audit. States without such an audit requirement receive the highest score while those with lower thresholds receive lower scores.
The Donor Confidence Subindex
The variables in this subindex capture a broad range of factors, including tax treatment of charitable giving, donor privacy protections, regulatory predictability, regulation of donor-advised funds, and protections for donor intent. This subindex uses eight variables. Each of these policies contribute to the overall climate for philanthropy.
- 3A: Donor Disclosure: A measure indicating whether state legislators have introduced donor disclosure requirements in recent years.
- 3B: Donor Privacy: A measure of whether the state has a law respecting donor privacy.
- 3C: Donor Standing: A measure of whether the state gives donors standing in legal proceedings for gifts to endowment funds.
- 3D: Uniform Prudent Management of Institutional Funds Act Protections: A measure of whether the state has adopted these protections which limit an institution’s ability to modify a restricted gift without the donor’s knowledge.
- 3E: Donations Are Generally Deductible: A measure of whether all charitable donations are deductible (specific deductions for specific types of charities such as schools do not count).
- 3F: General Sales Tax Exemption: A measure of whether all charity purchases are exempt from the sales tax (specific exemptions for purchases made by specific types of charities do not count).
- 3G: Donor-Advised Fund Restrictions: A measure of whether state legislators have proposed restrictions on donor-advised funds in recent years.
- 3H: Predictable Regulatory Environment: A measure of whether the state has adopted a requirement for new nonprofit reporting requirements to first be approved by the state legislature.
This inaugural edition provides a national snapshot rather than a time-series analysis, establishing the benchmark for future measurement. In the years ahead, as states adopt new laws or modify existing frameworks, the Free to Give Index will serve as a barometer of progress, tracking how changes in state policy enhance or restrict the incentive to give. Ultimately, the goal of this Index is to advance a richer understanding of how policy choices shape America’s patterns of voluntary action and generosity.