Are Political and Charitable Giving Substitutes? Evidence from the United States

Yıldırım, Pınar; Simonov, Andrei; Petrova, Maria; Pérez-Truglia, Ricardo

doi:10.2139/ssrn.3508534

Cited by 9 publications

(14 citation statements)

References 50 publications

(68 reference statements)

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“…Overall, we show that a one-percent increase in the price of charitable giving leads to a 25.4% increase in political donations. In other words, consistently with findings by Petrova et al (2020) who deduce substituability from the fact that households react differently to natural disasters and to political ads in their giving behavior, we show that charitable and political giving as substitutes. 13 The estimated elasticity is equal to 19% when we reduce our sample of analysis to the households who face a similar tax saving.…”

Section: Introductionsupporting

confidence: 91%

“…Campaign contributions and charitable giving are indeed most often not analyzed in conjunction, while they may be considered as the two sides of the same coin. 16 An exception is Petrova et al (2020) who provide evidence that individuals substitute between political contributions and charitable contributions using data from the US and shocks on charitable and political giving (see also Yörük (2015) who uses survey data to investigate the spillover effects of charitable subsidies on political giving in the US between 1990 and 2001 and finds complementarity between the two kinds of donations). 17 We contribute to this literature by looking at substitution effects within the same donors.…”

Section: Introductionmentioning

confidence: 99%

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Is Charitable Giving Political? New Evidence from Wealth and Income Tax Returns

Cagé

Guillot

2021

SSRN Journal

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What are the determinants of philanthropic and political giving? Are donations to charities and parties driven by the same incentives? In this article, we use new administrative household panel data to quantify empirically the motivations for giving, depending on donors' characteristics and tax incentives. Our dataset includes all the households filling their income tax and/or their wealth tax returns in France between 2006 and 2019. In France, both charitable and political donations benefit from income tax deductions, but only the charitable ones are eligible to the wealth tax credit. We exploit the 2018 wealth tax reform -a change in the taxable base that led to a drop by two third in the number of liable households -to estimate the cross-price elasticity of charitable and political giving at different levels of the income and wealth distributions. We provide new evidence of substituability between charitable and political donations: according to our estimates, a one-percent increase in the price of charitable giving leads to a 19 to 25% increase in political donations. The magnitude of this effect is particularly strong among the the top 20% of the wealth taxpayers.

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Section: Introductionsupporting

confidence: 91%

Section: Introductionmentioning

confidence: 99%

Is Charitable Giving Political? New Evidence from Wealth and Income Tax Returns

Cagé

Guillot

2021

SSRN Journal

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“…Recent papers showing that charitable and political giving may be related (see, e.g. Petrova et al, 2020) suggest that these effects may be due to donor or candidate activity. In the context of political campaigns, whether decreased private donation activity is due to donor or candidate behavior is a first-order concern.…”

Section: Discussionmentioning

confidence: 99%

“…8 Third, our results on the program's effects on private contribution activity relate to the broader literature on public crowd-out of private giving. Recent evidence has suggested that political and nonprofit giving may be substitutes (Petrova et al, 2020), and thus it is natural to investigate whether public grants to political campaigns have similar effects on private giving as public grants to nonprofits.…”

Section: Introductionmentioning

confidence: 99%

The Effects of Public Campaign Funding: Evidence from Seattle's Democracy Voucher Program

Griffith¹,

Noonen²

2021

Preprint

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During each election cycle, the city of Seattle distributes four \$25 vouchers to every registered voter, which may be donated to and redeemed by campaigns for city office. Through a difference-in-differences research design, we study the causal effect of Seattle's program on various outcomes in city council elections in the first two cycles after implementation, with two comparison groups drawn from other cities in Washington and California. We find that the program led to an approximately 62-100% increase in total contributions and a 400% increase in number of unique donors. The effects on dollars and donors are entirely driven by small donors, defined as those who contribute less than $200 to a campaign. We find statistically insignificant evidence of decreases in private donations, although our point estimates suggest moderate-to-substantial crowd-out ratios. We further show that the program led to a 76-86% increase in candidates for city council. These results provide some of the first causal evidence on the effect of decentralized public campaign finance schemes, while also speaking to broader questions measuring the effects of money in politics, campaign regulation, and the effects of public funds on private giving.

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“…On the other hand, the field experiments of Karlan and List (2007) and Karlan et al (2011) find only weak evidence that even 1:3 matches increase giving. Bittschi et al (2020) study the relation between religious and charitable giving, while Yörük (2015) and Petrova et al (2020) study the relation between political and charitable giving. Randolph (1995) shows that estimates of price elasticity of giving can be exaggerated if arguments of inter-temporal shifting are ignored.…”

Section: Literaturementioning

confidence: 99%

Taxes and Business Philanthropy in Armenia

Asatryan

Joulfaian

2021

SSRN Journal

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The majority of countries around the world provide tax incentives for business philanthropy. However, little is known about the responsiveness of businesses to this tax treatment. This paper expands on this scant literature by focusing on the Armenian tax system which provides incentives for business philanthropy. The support takes the form of a deduction capped at a fraction of business receipts. This generates a kink beyond which the marginal tax subsidy drops to zero. Using administrative panel data for the years 2007 through 2017, we find strong evidence of bunching by Armenian firms at the kink, with a sizeable tax elasticity of giving at the intensive margin. The evidence on bunching is robust to whether firms have been audited, and to whether any tax deficiencies are observed. This suggests that the observed response is likely to be real rather than being driven by reporting responses.

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Are Political and Charitable Giving Substitutes? Evidence from the United States

Cited by 9 publications

References 50 publications

Is Charitable Giving Political? New Evidence from Wealth and Income Tax Returns

Is Charitable Giving Political? New Evidence from Wealth and Income Tax Returns

The Effects of Public Campaign Funding: Evidence from Seattle's Democracy Voucher Program

Taxes and Business Philanthropy in Armenia

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