Corporate Philanthropy and the Market for Altruism

Abstract

Academics and businesspeople have long debate the merits of corporate philanthropy. It is our contention that this debate is too narrowly focused on the role of corporations. There is a robust market for philanthropic works - which we call the market for altruism - in which non-profit organizations, the government, and for-profit corporations compete to do good works. We describe this market and the role corporations play in satisfying the demand for altruism. We conclude that corporations should only engage in philanthropy when they have a comparative advantage over non-profits and the government. Moreover, the government must avoid discriminating - particularly when setting tax policy - between non-profits and corporations that do good deeds.