The Politics of Hidden Policy: Feedback Effects and the Charitable Contributions Deduction

Policy feedback, or the process in which policies create constituencies vested in their maintenance, is a durable feature of the American welfare state. Scholars have shown that policy visibility conditions how feedback effects unfold: for public-private policies—arrangements in which the state delegates service provision to private actors, often described as “hidden†or “submerged†—policy feedback typically galvanizes not citizens but market actors that benefit indirectly from these subsidies. This article extends theories of public-private policy feedback from market actors to charitable organizations through a case study of the charitable contributions deduction. The deduction’s incremental expansion is found to have mobilized charities as powerful stakeholders in the policy’s endurance. Charities’ efforts to protect the deduction, together with the efforts of lawmakers, have couched the policy in a politics of neoliberalism and disguised its effects, insulating it from reform even as elites have netted a greater share of its benefits over time.