14th journées Louis-André Gérard-Varet

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The Sensitivity of Charitable Giving to the Timing and Salience of Tax Credits
Ross Hickey, Bradley Minaker, Abigail Payne

Last modified: 2015-05-14

Abstract


The January 12, 2010 Haiti Earthquake led to a strong response from donors in Canada. The federal government matched donations made by Canadians to specific charities tied to the provision of disaster relief.  The Quebec provincial government provided additional incentives by allowing donors to claim donations made between January 12th and February 28th, 2010 on their 2009 tax return. We use this natural experiment to study how the timing of tax incentives affects charitable donations. We use several different estimation techniques to cleanly and to robustly estimate the effect of the Quebec tax incentive on giving using a panel data set that captures tax-receipted giving on individual tax returns at a neighbourhood level. With these data we can measure both whether individuals report a donation and the level of reported donations. Our preferred specification uses a propensity score matching method to match neighbourhoods in Quebec with neighbourhoods in the rest of Canada. We find strong positive effects for both the share of tax-filers donating as well as on the level of giving suggesting that the increased salience and immediacy of the tax credit increased giving on the extensive margin. We explore several robustness checks, including a placebo treatment test and a test using the 2004 Indian Ocean Tsunami; both fail to find any treatment effect. This result has important policy implications given debates around the use of tax incentives to encourage charitable giving.

Keywords


Charitable giving; donations; disaster relief; tax incentives