Has regulation of charitable foundations thrown the baby out with the bath water?

Research output: Contribution to journalArticlepeer-review

Abstract

Regulations to curb tax avoidance and evasion through charitable foundations have been in place since the Tax Reform Act of 1969. Newly-compiled longitudinal data makes it possible to estimate the effects of these regulations by comparing affected and unaffected foundations before and after the reform. Donations and entry dropped precipitously. Proxy variables suggest significant deterrence of abuses, but half of the decline in donations can be explained by the increased cost of running a foundation. The results highlight the potential for large reductions in the benefits of regulation when the cost of compliance affects externality-producing actions such as charitable giving.

Original languageEnglish (US)
Pages (from-to)63-76
Number of pages14
JournalJournal of Public Economics
Volume129
DOIs
StatePublished - Sep 1 2015

Keywords

  • Avoidance
  • Charitable
  • Compliance
  • Donation
  • Foundations
  • Regulation

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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