Are donors to charities sensitive to changes in tax policy? This literature review and meta-analysis delves into fifty-two empirical studies spanning 1975 to 2023, exploring the intricate relationship between fiscal policy and the charitable impulse to give. Employing a diverse range of methodologies, datasets, surveys, and taxpayer income levels, we paint a comprehensive picture of how charitable giving responds to changes in its “price” – the tax benefit associated with donations. The pooled results of this analysis reveal a significant positive effect: for every $1 increase in the tax benefit, charitable donations rise by a statistically significant $1.30. This finding reinforces the long-held consensus that tax exemptions for charitable contributions are “treasury efficient,” as charities receive more donations than potential revenues forgone.
How Tax Policy Affects Charitable Giving
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