Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316845 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 11731
Publisher: 
CESifo GmbH, Munich
Abstract: 
Is charitable giving politically motivated? This article uses exhaustive administrative household panel data and a natural experiment to investigate the giving behavior of wealthy households and quantify their preferences for charitable and political donations. Our dataset includes all the households filing their income tax and/or wealth tax returns in France between 2006 and 2021. Both charitable and political donations benefit from a 66% income tax credit, but only the charitable ones are eligible for the 75% wealth tax credit. We exploit the 2017 wealth tax reform – a change in the taxable base that led to a drop of two thirds in the number of liable households and, as a result, an increase in the price of charitable giving – and show that charitable and political donations are substitute. According to our estimates, a ten-percent increase in the price of charitable giving leads to a 0:18 p.p. increase in the propensity to make a political donation, and to a large rise (corresponding to 3% of the mean) in the amount given conditional on giving. Next, using city-level information, we show that the increase in the price of charitable giving mostly benefits pro-business political parties. Finally, we document that the drop in charitable donations is mostly driven by politically involved nonprofit organizations, pointing toward political motivations behind charitable giving.
Subjects: 
charitable giving
political donations
tax incentives for giving
wealth tax credit
cross-elasticity of donations
nonprofit organizations
JEL: 
H24
H31
L38
Document Type: 
Working Paper
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