The Political Economy of the Philanthropic Enterprise

This chapter explores the political economy of the philanthropic enterprise. In the competition between the state and philanthropic provision of goods and services not provided on the market, the authors argue that there are various mechanisms at work that ensure the dominance of state provision when the activity is pushed beyond very localized provision. There is a large and wide-ranging literature on the topic of philanthropy. While others have studied the history of philanthropy, the factors that motivate giving and volunteering, and the moral issues associated with philanthropy and charity, the focus in this chapter is on applying the economic way of thinking to philanthropic enterprise. Specifically, the authors focus on the incentive and information issues facing philanthropic enterprises which, by definition, act outside the market context and build on earlier work by Boettke and Prychitko that attempts to develop an Austrian economic interpretation of nonprofit and voluntary action.

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