Corporate Philanthropy and the Market for Altruism
Academics and businesspeople have long debated 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 nonprofit organizations, the government, and for-profit corporations compete to do good works. In this Essay, 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 nonprofits and the government. Moreover, the government must avoid discriminating--particularly when setting tax policy--between nonprofits and corporations that do good deeds.