Joint Supply and the Finance of Charitable Activity

Abstract

This article puts forth a joint-supply model of charity, in which the purchase of a private good yields excess revenues used to finance a public charitable output. Joint supply is an especially effective fund-raising technique when the private and public goods are Hicksian complements. Competitive advantages, gained through tax-exempt status, also allow charities to outcompete for-profit competitors. Evidence drawn from U. K. charities demonstrates that large successful charities generate a sizable portion of revenues from direct-trading activities.