Public Choice

, Volume 154, Issue 1, pp 39-58

First online:

Charitable giving in the German welfare state: fiscal incentives and crowding out

  • Timm BönkeAffiliated withInstitute for Public Finance and Social Policy, Freie Universitaet Berlin
  • , Nima Massarrat-MashhadiAffiliated withDepartment of Finance, Accounting and Taxation, Freie Universitaet Berlin
  • , Christian SielaffAffiliated withDepartment of Finance, Accounting and Taxation, Freie Universitaet Berlin Email author 

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There are two ways that government activities influence private charitable giving: (1) government spending on the provision of public goods may cause crowding out of private charitable contributions; and (2) tax incentives may boost private charitable giving. From a sample of German income tax returns, we estimate the elasticity of charitable giving relative to tax incentives, income, and government spending. Using censored quantile regression analysis, we derive results for different points of the underlying distribution of charitable giving. Evaluating overall treasury efficiency, the tax deductibility of charitable donations fosters enough private giving to offset foregone tax revenues.


Charitable giving Crowding out Price and income elasticity Censored quantile regression Income tax return data

JEL Classification

C31 H31 H53