The Economic Consequences of Financial Audit Regulation in the Charitable Sector

I provide evidence on the effects of financial audit mandates in charitable sector, particular their influence donor behavior. My empirical strategy relies variation size-based exemption thresholds across states and differences size driven by nature charities’ activities. Consistent with reducing donors’ reliance charity reputation, find are associated a lower concentration donations largest, most well-known charities. show this reallocation resources allows sector to serve more diverse geographic areas social needs. In terms effect willingness give, document that higher proportion taxpayers who donate. However, only observe sizable impact total contributions dollars for charities high inherent information asymmetry. Collectively, these results suggest regulation reduces frictions thereby affects resource allocation market giving.