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Inventory planning and tax incentives for charitable giving

Author

Listed:
  • Anil Arya

    (The Ohio State University)

  • Tyler Atanasov

    (Purdue University)

  • Brian Mittendorf

    (The Ohio State University)

  • Dae-Hee Yoon

    (Yonsei University)

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.

Suggested Citation

  • Anil Arya & Tyler Atanasov & Brian Mittendorf & Dae-Hee Yoon, 2025. "Inventory planning and tax incentives for charitable giving," Review of Accounting Studies, Springer, vol. 30(1), pages 287-310, March.
    • Handle: RePEc:spr:reaccs:v:30:y:2025:i:1:d:10.1007_s11142-023-09818-0
    DOI: 10.1007/s11142-023-09818-0
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    More about this item

    Keywords

    Charitable giving; Corporate philanthropy; Inventory; Tax incentives;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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