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This article presents the first empirical examination of giving to §501(c)(4) organizations, which have recently become important players in U.S. politics. Unlike gifts to charity, donations to a 501(c)(4) are not legally deductible. Yet, gifts to c(4) organizations are highly elastic to the after-tax price of charitable giving. At the lower end of the observed tax price range, c(4) giving falls with tax price, consistent with the hypothesis that giving to c(3) and c(4) organizations are substitutes. Over the top quarter of the distribution of tax price, however, gifts to c(4) organizations are negatively correlated with the after-tax price of giving to charity. That is, donors appear to respond as though the deduction subsidized their gift to a c(4). Donor responses to benefits for which they are not eligible may reflect the low salience of legal limitations or deliberate overclaiming. These results imply subsidies for charity can crowd out or in donations to c(4) organizations, with potential implications for U.S. politics. I cannot observe whether donors claim tax deductions for ineligible gifts, so the net results for the Treasury are unclear.
