Henry Peter

Taxation of philanthropy is a heterogeneous topic that extends to multiple scientific disciplines. For academics and practitioners working in philanthropy, it is not uncommon to turn to branches such as philosophy, law, sociology, and economics to obtain thorough answers to the questions they encounter in their research and work. To date, however, there has been no comprehensive multidisciplinary analysis of the interaction between taxation and philanthropy. The present volume seeks to fill this gap. Through this handbook, the editors also endeavored to contribute to the emerging multidisciplinary domain that can be referred to as “the science of philanthropy.” It is hoped that the readers will find the contributions in this volume not only useful but also thought provoking and that they will be encouraged to pursue such studies further.

This contribution presents the legal framework of income tax incentives for charitable giving in Switzerland and describes the reform putting this system in place in 2006. Using a unique data set shared by the Tax Administration of the Canton of Geneva for this purpose, we provide descriptive statistics about taxpayers’ charitable giving behavior in Geneva from 2001 to 2011. In this period, the number of taxpayers deducting charitable contributions significantly increased. In contrast, the size of individual annual deductions (both mean and median) decreased. The data show that the amount of tax deductions for charitable giving sharply increased relative to income class, and the median charitable deduction by taxpayer rose exponentially with income (i.e., years 2001 and 2011). Currently, no clear effects of the 2006 tax reform are visible; however, more in-depth studies are needed in this respect.

We introduce behavioural philanthropy, a novel interdisciplinary approach examining philanthropic decisions from the perspective of individual decision-makers. Such an approach is relevant to policymakers and law researchers who design tax-based incentives to stimulate private engagement in philanthropy. Behavioural philanthropy relies on insights from psychology, economics, and law to understand the motives that drive individuals, unveil patterns in behaviour, and identify the key forces that shape decisions in the context of philanthropy. In the first section, we highlight the relevance of individual contributions to philanthropy. Following this, we review and discuss extant research that underlies the motivations of individuals engaging in philanthropic behaviours, analyses some weaknesses of the existing approaches, and highlights the benefits of producing data in controlled environments, such as in laboratory settings. We believe that integrating the benefits of these approaches into behavioural philanthropy will: 1) promote the understanding of the psychological and affective mechanisms supporting philanthropic decision making, 2) help build new sound theories that rely on precise computational models and allow for a mechanistic understanding of the complex behaviours in philanthropy, and 3) provide implications for behaviourally informed policy that could help design efficient tax schemes to generate the most impactful giving and welfare systems across the globe.

The Routledge Handbook of Taxation and Philanthropy ventures into a territory that is still widely unexplored. It contains 30 academic contributions that aim to provide a better understanding of whether, why, and how philanthropic initiatives, understood as voluntary contributions for the common good, can and should be fostered by states through tax incentives. The topic has been addressed from a multidisciplinary and multicultural perspective – covering neuroeconomics, sociology, political science, psychology, affective sciences, philosophy, behavioral economy, and law – because of its global and multifaceted nature. It also contains the OECD report on Taxation and Philanthropy released in November 2020, which was prepared in this context as a result of a collaboration with the Geneva Centre for Philanthropy of the University of Geneva. The book is divided into four sections, exploring, respectively, the justification of tax incentives for philanthropy, theoretical and empirical insights about taxes, efficiency and donor behavior in that context, and tax incentives for cross-border philanthropy and for hybrid entities and social entrepreneurship. It is believed that this volume will be a landmark yet only the beginning of a journey in which a lot remains to be studied, learned, and said.