Charity registration and reporting: a cross-jurisdictional and theoretical analysis of regulatory impact

Abstract

Governments increasingly regulate charities to restrict the number of organizations claiming taxation exemptions, reduce charities’ ability to abuse state support, and detect and deter fraud. Public interest theory arguments suggest that regulation could increase philanthropy through enhancing public trust and confidence in charities. Nevertheless, public choice theory argues that regulators seek to maximize political returns, ‘manage’ charity-government relationships, and reduce potential regulatory capture. We analyse charity regulatory regimes using these two regulatory theories and the relative costs and benefits of different regulatory regimes. Heeding these should reduce regulatory inefficiency and balance accountability and transparency demands against benefits charities receive from regulation.