Handbook of Research on Nonprofit Economics and Management

Handbook of Research on Nonprofit Economics and Management

Elgar original reference

Edited by Bruce A. Seaman and Dennis R. Young

Nonprofit organizations are arguably the fastest growing and most dynamic part of modern market economies in democratic countries. This Handbook explores the frontiers of knowledge at the intersection of economics and the management of these entities. The authors review the role, structure and behavior of private, nonprofit organizations as economic units and their participation in markets and systems of public service delivery, assess the implications of this knowledge for the efficient management of nonprofit organizations and the formulation of effective public policy, and identify cutting edge questions for future research.

Chapter 20: Federal Tax Policy

Michael Rushton

Subjects: business and management, public management, social entrepreneurship, economics and finance, industrial economics, politics and public policy, public administration and management, public policy


Michael Rushton Introduction This chapter is concerned with the state of recent economic research on the impacts of the tax policy of the US federal government on nonprofit organizations. For comprehensive surveys of the laws governing tax exemption readers are directed to Fishman and Schwarz (2003) and Simon et al. (2006). The chapter will cover three significant aspects of tax policy: the exemption for nonprofits from the corporate income tax, with the exception of those net revenues subject to the unrelated business income tax (UBIT); the deduction of charitable donations from the base of the personal income tax; and the deduction of charitable gifts from the base of the estate tax. Of these three topics, the first deals with the tax treatment of earnings of nonprofits, and the second and third deal with the effects on donations to nonprofits. What do we know? What remains to be studied? Nonprofit organizations in the USA with section 501(c)(3) status do not pay corporate income taxes on their net revenues. The tax exemption is granted when the nonprofit can establish that it is for a charitable purpose, which is defined by the Internal Revenue Code to include ‘religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals’, and also that the nonprofit abides by the...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information