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Why Do Corporations Give to Charity?

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  • Navarro, Peter

Abstract

This paper explores whether corporate contributions should be tax dedu ctible within the more general context of an examination of the profi t and utility maximization motives driving contributions. The theoret ical section develops a formal structural model of the contributions process, illustrates comparative statics, and derives a set of empiri cally-testable hypotheses. Using a new source of firm data, the empir ical results indicate that profit maximization is an important motive driving contributions. This finding supports the current tax-deducti ble status of contributions (up to a seldom-encoun-tered ceiling) and favors a reform that allows firms to treat contributions as ordinary business expenses. Copyright 1988 by the University of Chicago.

Suggested Citation

  • Navarro, Peter, 1988. "Why Do Corporations Give to Charity?," The Journal of Business, University of Chicago Press, vol. 61(1), pages 65-93, January.
    • Handle: RePEc:ucp:jnlbus:v:61:y:1988:i:1:p:65-93
    DOI: 10.1086/296420
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