Public Choice

, Volume 154, Issue 1, pp 39–58

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


  • Timm Bönke
    • Institute for Public Finance and Social PolicyFreie Universitaet Berlin
  • Nima Massarrat-Mashhadi
    • Department of Finance, Accounting and TaxationFreie Universitaet Berlin
    • Department of Finance, Accounting and TaxationFreie Universitaet Berlin

DOI: 10.1007/s11127-011-9806-y

Cite this article as:
Bönke, T., Massarrat-Mashhadi, N. & Sielaff, C. Public Choice (2013) 154: 39. doi:10.1007/s11127-011-9806-y


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 givingCrowding outPrice and income elasticityCensored quantile regressionIncome tax return data

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© Springer Science+Business Media, LLC 2011