Marianne Bertrand, Matilde Bombardini, Raymond Fisman, Francesco Trebbi, 03 September 2018

Special interests use donations to influence the political process. This column shows that philanthropic efforts in the US are targeted, at least in part, to influence legislators. Districts with influential politicians receive more donations, as do non-profits with politicians on their boards. This is problematic because, unlike PAC contributions and lobbying, influence by charity is hard for the public to observe.

Indraneel Dasgupta, Ravi Kanbur, 02 July 2007

Rich individuals are encouraged to make large contributions to the provision of public goods in return for tax exemptions, a policy that appears to endorse the claim that philanthropy can be considered a substitute for the direct income redistribution brought about through taxation. The authors of CEPR DP6362 address the question of how voluntary provision affects welfare inequality and find that (1) philanthropy can in fact increase inequality among the non-rich, but (2) income redistribution can be more effective in reducing inequality when accompanied by philanthropy. Automatic exemption from expropriation for rich philanthropists is therefore not the right policy.

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