This chapter considers several under-explored questions relating to the regulation of not-for-profits. What might justify state regulation of the sector? Under what circumstances might self-regulation be preferable to state regulation? What role does enforcement play in a sound framework of not-for-profit regulation, and who ought optimally to be given the standing on which such enforcement depends? If the value of the not-for-profit sector lies in the diverse range of perspectives that it nurtures and facilitates, then to what extent does government regulation of the sector interfere with that value? To what extent do not-for-profit organizations comply with regulatory and other requirements and why? The chapter suggests that the ideal regulatory framework for not-for-profits is likely to be one in which the state and the sector each play a key role, and to which law, policy and culture make seminal contributions.
I present for the first time in the literature a quantitative analysis of the efficacy of the “political safeguards of federalism.” I also test the popular theory that congressional control of state authority to tax maximizes national welfare. Both analyses rely on a hand-collected data set of every federal statute from 1789 to 2011 affecting state power to tax. Overall, the data suggest that federal decisions to curtail state autonomy are influenced by congressional self-interest. Conditional on enactment, statutes affecting state taxing power are more likely to reduce state authority when a concentrated special interest group stands to benefit and also when the reduction would diminish competition between states and Congress. I argue that these results suggest that state power to influence Congress is not absolute, and that they should cast doubt on recent calls to grant control of state taxing authority solely to Congress.
Richard Steinberg and Brian Galle
This chapter addresses a range of questions and topics that have engaged economists in relation to the not-for-profit sector since the pioneering work of Burton Weisbrod and Henry Hansmann was first published several decades ago. The chapter discusses the non-distribution constraint (usually viewed by economists as the sine qua non of the not-for-profit sector), the so-called ‘three failures’ view of the role of the sector in a modern mixed economy, numerous regulatory questions about not-for-profits and those who support them, and other matters such as the optimal scale and diversity of not-for-profit organizations. The chapter provides a snapshot of the state of economic scholarship on the sector today, and points the way to future research in that tradition.