Exploring philanthropic behavior and tax incentives: Motivations and trends in individual giving in the Czech Republic

Abstract

Philanthropy is defined as accommodating behaviour towards other members of society, usually through charitable donations. Charity forms a significant part of the income for the non-profit sector in many countries and is often directly supported through government tax policies. This article focuses on new empirical findings and applicable conclusions. It discusses the development of individual giving, motives, causes, and effects of philanthropic behaviour of individual donors in the Czech Republic. The tax incentive in the form of a tax deduction for donations means that the taxpayer bears part of the value of the donation, and part is transferred to the state by the taxpayer using the tax savings equal to the tax rate. Emphasis is placed on how current government policy, through charitable tax deductions from income tax, directly affects the volume of philanthropy in the economy. Philanthropy in the Czech Republic has unique characteristics influenced by its historical, cultural and economic context. This paper examines the motivations behind individual giving in the Czech Republic and evaluates the role of tax incentives compared to other motivators such as personal satisfaction and altruism. Utilizing a survey of 1,050 respondents, combined with regression and correlation analyses, the study reveals that tax incentives are a minor motivator for most donors, with only 2% identifying them as their primary reason forgiving. Instead, personal satisfaction and altruism dominate as the most significant motivations. Additionally, while higher-income donors are more likely to utilize tax benefits, many remain unaware of these opportunities. The findings suggest the need for increased awareness campaigns and better integration of tax benefits into fundraising strategies. The study contributes to philanthropy by providing empirical insights specific to the Czech Republic and comparing these findings with existing literature.