Inventory planning and tax incentives for charitable giving

Anil Arya, Tyler Atanasov, Brian Mittendorf () and Dae-Hee Yoon
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Anil Arya: The Ohio State University
Tyler Atanasov: Purdue University
Brian Mittendorf: The Ohio State University
Dae-Hee Yoon: Yonsei University

Review of Accounting Studies, 2025, vol. 30, issue 1, No 8, 287-310

Abstract: Abstract Many of America’s top corporate donors share a common feature: the bulk of their giving is in the form of in-kind products, not cash. This phenomenon is not a coincidence but rather closely tied to the tax code creating such a preference due to an enhanced deduction for inventory donations. We examine a model of inventory choice under uncertainty and demonstrate that enhanced tax deductions not only promote giving, they also notably influence inventory planning and accelerate learning of customer demand. The results confirm that enhanced deductions can be used to promote pro-social behaviors such as boosting charitable giving, aligning inventories with consumer needs, and alleviating supply chain shortages. The results also demonstrate the potential risks of excessive tax preferences for inventory donations, including inflated retail prices and additional environmental waste.

Keywords: Charitable giving; Corporate philanthropy; Inventory; Tax incentives (search for similar items in EconPapers)
JEL-codes: D21 D64 G31 H25 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-023-09818-0

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