Technical Appendix

The Broad Policy Environment Subindex

The broad policy environment subindex is composed of three variables.

1A: Occupational Freedom: The first is a modified version of the Archbridge Institute’s State Occupational Licensing Index 2025 (Trudeau et al. 2025). The State Occupational Licensing Index reports state licensing barriers on a 0 – 10 scale where 10 indicates a high burden and 0 a low one.[2] To fit this on our 0 – 10 scale in which 10 indicates a more economically free policy environment we simply reverse the scale using the formula 10−vi10 – v_i.

1B: Tax Competitiveness: The second variable in this sub-index is a modified version of the Tax Foundation’s 2026 State Tax Competitiveness Index. The Tax Foundation’s index uses over 150 variables to measure each state’s overall tax environment based on its complexity, neutrality, and efficiency. To adjust the Tax Foundation index to our 10-point scale we use the following formula[3]: (vi−vmin)(vmax−vmin)×10\frac{(v_i – v_{min})}{(v_{max} – v_{min})} \times 10.

1C: Subnational Economic Freedom: The final component in the Broad Policy Environment subindex is subnational economic freedom as reported in the Fraser Institute’s Economic Freedom of North America 2025 report (Stansel et al. 2025). This measure employs 10 variables in taxing, spending, and labor market freedom to measure the degree to which state residents are allowed to make their own economic choices. This variable is already on a standardized 0 to 10 scale so we do not modify it.

The Nonprofit Freedom Subindex

The second subindex focuses squarely on charity freedom. It uses 21 variables, many of which have been used in earlier measures of charity freedom (Lott et al. 2016; Winegarden 2023). We group these into four broad areas: charitable startup regulations, charitable reporting regulations, paid solicitor requirements, and audit regulations. We average the scores under each of these area and then average the four areas for the overall score for this subindex.

Under charitable startup regulations, we include five variables.

2Ai: Charitable Registration Required: The first is an indicator variable that takes a value of 10 if the state does not require charities to register and 0 if it does.

2Aii: Top Registration Fee: The second is a scaler variable that measures the top registration fee. We convert this to our 10-point scale using the formula (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10, where the maximum value is $400 (Florida) and the minimum value is $0 (sixteen states).[4]

2Aiii: Minimum Registration Fee: The third is another scaler variable that measures the minimum registration fee. In 34 states this fee differs from the top fee. Like the previous variable, we convert fees to our 10-point scale using the formula (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10. Here, the maximum value is $100 (Massachusetts) and the minimum value is $0 (25 states).

2Aiv: Top Incorporation Fee: The fourth variable is the top incorporation fee which we convert to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. Here the maximum value is $125 (Pennsylvania and Vermont) and the minimum value is $0 (Maryland).

2Av: Minimum Incorporation Fee: The fifth variable is the minimum incorporation fee which differs from the maximum fee in just two states (Illinois and Washington). We convert these minimum fees to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. The maximum value is again $125 (Pennsylvania and Vermont) and the minimum value is again $0 (Maryland).

We include seven charitable reporting regulations.

2Bi: Requires Annual Report: The first is an indicator variable that takes the value 0 if the state requires charities to file annual reports and 10 if it does not.

2Bii: Top Annual Fee: The second variable is the top annual registration fee which we convert to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. The maximum value is $1,525 (New York) and the minimum value is $0 (17 states).

2Biii: Minimum Annual Fee: The third variable is the minimum annual fee which differs from the maximum fee in 16 states. We convert it to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. The maximum value is $90 (Rhode Island) and the minimum value is $0 (23 states).

2Biv: Additional Corporate Filing Requirement: The fourth variable takes the value 0 if the state requires additional annual corporate filings, 5 if it requires additional periodic filings, and 10 if it does not require any additional corporate filings.

2Bv: Other Fees: The fifth variable accounts for any additional fees. We convert it to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. The maximum value is $2,000 (Oregon) and the minimum value is $0 (17 states).

2Bvi: Tiered Fee Structure: The sixth variable measures whether the fee structure is tiered. It takes the value 10 if the state does not have a tiered fee structure and 0 if it does.

2Bvii: Overlapping Regulators: The seventh variable measures whether more than one agency oversees charities. It takes the value 10 if not and 0 if yes.

The Paid Solicitor Requirements Area includes eight variables:

2Ci: Commercial Fundraiser Registration: The first variable in this area measures whether commercial fundraisers are required to register with the state. It takes the value 0 if they do and 10 if they do not.

2Cii: Paid Solicitor Registration Fee: The second variable measures the fee, if any, that paid solicitors must pay to register. We convert it to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. The maximum value is $1,000 (Indiana and Massachusetts) and the minimum value is $0 (11 states).

2Ciii: Paid Solicitor Renewal Fee: The third variable measures the fee, if any, that paid solicitors must pay to renew their registration. We convert it to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. The maximum value is $1,000 (Massachusetts) and the minimum value is $0 (11 states).

2Civ: Surety Bond for Professional Fundraisers: The fourth variable measures the surety bond, if any, that paid solicitors are required to post. We convert it to our 10-point scale using the (vmax−vi)(vmax−vmin)×10\frac{(v_{max} – v_i)}{(v_{max} – v_{min})} \times 10 formula. The maximum value is $50,000 (Florida) and the minimum value is $0 (17 states).

2Cv: Pre-Campaign Notice Requirement: The fifth variable measures whether solicitors are required to post a pre-campaign notice. It takes the value 0 if they do and 10 if they do not.

2Cvi: Fundraising Consultants Registration Requirement: The sixth variable measures whether fundraising consultants (who do not solicit donations themselves) are required to register. It takes the value 0 if they do, 10 if they do not, and 5 if they must only register if they handle the funds.

2Cvii: Annual Financial Reporting by Commercial Fundraisers: The seventh variable measures whether commercial fundraisers must file annual reports with the state. It takes the value 0 if they do and 10 if they do not.

2Cviii: Must File Contracts Between Charities and Commercial Fundraisers: The eighth variable measures whether charities must file their contracts with commercial fundraisers. It takes the value 0 if they do, 10 if they do not, and 5 if they must produce a contract if requested.

2Cix: Individual Solicitors Employed by Professional Fundraisers Must Register Separately: The ninth variable measures whether individual solicitors employed by commercial fundraisers must register separately It takes the value 0 if they do and 10 if they do not.

Charitable Audit Regulations Area includes just one variable:

2D: Audit Threshold: This variable measures the revenue threshold, if any, that triggers an audit. We convert it to our 10-point scale using the formula (vi−vmin)(vmax−vmin)×5\frac{(v_i – v_{min})}{(v_{max} – v_{min})} \times 5 and 10 if there is no audit requirement. The maximum value is $3,000,000 (Washington) and the minimum value is $0 (several states).

The Donor Confidence Subindex

3A: State Has Not Introduced Donor Disclosure Laws: The first variable measures whether a state legislature (or attorney general, or secretary of state) has enacted or introduced legislation aimed at forcing nonprofit donor disclosure within the past 5 years. It takes the value 10 if the state has not and 0 if it has.

3B: State Has Donor Privacy Protection Laws: The second variable measures whether the state legislature has enacted legislation that prevents state agencies or other state actors from forcing nonprofits to reveal who donates to them. It takes the value 10 if the state has enacted donor privacy protections and 0 if not.

3C: State Gives Donors Standing: The third variable measures whether state law gives donors to charitable endowments standing in legal proceedings. It takes the value 10 if the state grants full donor standing, a value of 5 if the state grants limited or conditional standing, and a value of 0 if the state does not grant standing.

3D: State has UPMIFA Protections for Donors: The fourth variable measures the strength of UPMIFA protections for donors who donate gifts to endowments. UPMIFA allows a nonprofit organization to modify or release a restriction on an institutional fund if (1) the fund is valued at less than $25,000 and (2) the fund has existed for more than 20 years. This variable takes the value 10 if the state has standard UPMIFA protections, 5 for states with weaker protections (higher giving threshold or shorter period), 3 for states with ESG mandates in their UPMIFA statutes, 2 for states with very weak protections (i.e. very high giving thresholds), and 0 for states with no UPMIFA protections.

3E: Charitable Donations are Generally Deductible: The fifth variable measures whether the state allows donors to deduct the value of their charitable donations from state income taxes. It takes the value 10 if they do, 5 if deductions are subject to limits or caps, and 0 if no deduction is offered. If a state permits specific deduction for specific types of charities such as schools, it is scored as 0.

3F: General Sales Tax Exemption: The sixth variable measures whether the state allows a sales tax exemption for purchases made by charities in the state. It takes the value 10 if the state has a sales tax exemption and 0 if they do not. If a state exempts purchases made by specific types of charities such as schools, it is still scored as 0.

3G: State has Not Proposed Restrictions on Donor Advised Funds: The seventh variable measures whether the state has introduced or attempted to introduce restrictions or additional reporting burdens on DAFs within the past 5 years. It takes the value 10 if the state has not and 0 if the state has attempted to impose additional restrictions on DAFs.

3H: New Regulations Require Legislative Approval: The eighth variable measures whether the state has enacted legislation that requires any new reporting requirements for nonprofit organizations first be approved by the state legislature. It takes the value 10 if these additional regulatory burdens do require legislative approval and 0 if they do not.