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Keep Charity Charitable

Brian D. Galle

Boston College Law School

June 7, 2010

Texas Law Review, Vol. 88, 2010
FSU College of Law, Public Law Research Paper No. 420
FSU College of Law, Law, Business & Economics Paper No. 10-2

This Article responds to recent claims, most prominently by Malani, Posner, and Henderson, that much of the work of the charitable sector should be farmed out to for-profit firms. For-profit firms are said to be more efficient because they can offer higher-powered incentives to cut costs. I argue, however, that because of the high costs of monitoring and the presence of externalities, low-powered incentives are preferable for firms that produce public goods. Further, allowing some for-profit firms to receive charitable subsidies would raise the cost of producing those goods in government or other firms, because it would diminish the “warm glow” workers enjoy from being recognized as self-sacrificing.

Number of Pages in PDF File: 21

Keywords: nonprofit organizations, charity, for-profit charity, venture entrepreneurship, warm glow, section 170, privatization

JEL Classification: D21, D64, H41, H24, K34, L33

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Date posted: January 6, 2010 ; Last revised: June 17, 2010

Suggested Citation

Galle, Brian D., Keep Charity Charitable (June 7, 2010). Texas Law Review, Vol. 88, 2010; FSU College of Law, Public Law Research Paper No. 420; FSU College of Law, Law, Business & Economics Paper No. 10-2. Available at SSRN: http://ssrn.com/abstract=1531778

Contact Information

Brian D. Galle (Contact Author)
Boston College Law School ( email )
885 Centre Street
Newton, MA 02459-1163
United States
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