The Minimum Distribution Requirement and Public Policy
31 Pages Posted: 22 Aug 2012 Last revised: 17 Apr 2013
Date Written: April 15, 2013
Abstract
This study examines whether the minimum distribution requirement that requires private foundations to spend at least five percent of their assets on charitable purposes should be increased or decreased. The study explicitly states an objective function that the government tries to maximize and a population of heterogeneous philanthropists that care about both distributions to charity and assets under control. An increase in the minimum distribution requirement increases the rate of charitable distributions from some foundations, but deters some philanthropists from forming foundations. Whether the minimum distribution requirement should be increased or decreased depends on the magnitudes of these two effects.
Keywords: Private foundations, minimum distribution requirement
JEL Classification: L31
Suggested Citation: Suggested Citation