The Effect of Nonprofits' Taxable Activities on the Supply of Private Donations

Michelle H. Yetman and Robert J. Yetman

National Tax Journal, 2003, vol. 56, issue 1, 243-58

Abstract: Prior research indicates that donations respond to price and income effects as well as to alternative sources of nonprofit financing. Using a database of confidential nonprofit tax returns, we examine the effects of nonprofits’ taxable activities on the supply of donations. We find that each additional dollar of taxable revenues crowds-out approximately $0.55 of donations to arts, culture, and humanities organizations and human services and public benefit organizations, suggesting that the recent rapid expansion of nonprofits’ taxable activities comes at a financial cost. We do not find that donations to educational or medical nonprofits are sensitive to taxable activities.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:56:y:2003:i:1:p:243-58

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