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Kimberley Scharf

Professor of Economics

This year, I am on sabbatical from Warwick and am spending most of my time in London where I am Visiting Professor at the LSE and Visiting Scholar at the National Audit Office

  • Google Tax Row - It's All About the Base (update February 11, 2016) on my Blog
  • Slides of my Keynote Lecture for the Fifth Workshop on Foundations, Torino, October 15, 2015 (PDF Document)
  • See this December 14, 2016 Wall Street Journal article that talks about my research on Tax Incentives for Giving

About me:

I am an academic economist with a special expertise in public policy, international tax, social networks and public goods, and the economics of philanthropy and non-profit enterprises. I aim to produce rigorous academic research that is real-world relevant and that is motivated and informed by current issues. It has a broad methodological base, spanning several subfields of economics – political economy, public finance, international trade and finance, industrial organisation – and reaches out to other disciplines where research synergies can be mutually explored – e.g., neuropsychology, marketing, decision sciences. A distinctive theme that runs through many of my research projects is understanding how private behaviour and incentives, as well as government policies, shape the structure and performance of the non-profit sector – these questions have so far been little studied by academics but they are central to key debates taking place within the non-profit sector.

My research has been published in leading peer-reviewed journals, including general-interest journals such as the Economic Journal, the International Economic Review, and the Review of Economic Studies; and in top field journals such as the Journal of Public Economics and International Tax and Public Finance. It has been funded by the Economic and Social Research Council (ESRC), the Social Sciences and Research Council of Canada, the British Academy, the European Research Council (Marie Curie program), HM Treasury (HMT) and HM Revenue and Customs (HMRC). I am an Editor-in-Chief of International Tax and Public Finance, one of the top field journals in the area of public economics, and have sat, or am currently sitting, on editorial boards of other top journals in my field (Journal of Public Economics, Fiscal Studies) and special issues of the Economic Journal; I am an elected Member of Council of the Royal Economic Society (RES), elected member of the RES Women’s Committee, elected member of the Board of Management of the International Institute for Public Finance (IIPIF); I have been on a number of Scientific Committees for various academic conferences; I am currently a Research Fellow at the Centre for Economic Performance (CEPR), and the Centre for Economic Studies at the IFO Institute (CESifo) in Munich, Visiting Professor at LSE, Visiting Scholar at the National Audit Office (NAO), and I have been a Research Associate at the Institute for Fiscal Studies (IFS); I have been appointed as sub-chair on the 2014 and 2015 ESRC Transformative Research Commissioning Panel, to the Strategic Review Committee for the Royal Economics Society, to the Advisory Board of the John Templeton Foundation's “Generosity for Life” Research Funding Initiative, and to various international granting panels (e.g., the Danish Council for Independent Research International Panel 2015/2016, and the Austrian Science Fund Panel 2015).


Current research:

I am particularly interested in understanding more about how public policy should be directed towards the social economy and about how competitive forces shape the third sector, and aim to produce quantitative evidence that is central to current debate around the notion that market economies can rely on the non-profit sector’s important and complementary role in enabling economic growth. How does competition in the non-profit sector affect charity performance, entry, size, scope, technology adoption and innovation? How can charities operating in a dynamic non-profit sector put long-run plans in place that provide buffers against idiosyncratic income fluctuations, as well as more systemic fluctuations from upturns and downturns in the economy, and what is the role played by underlying mechanisms that influence the timing of donations? Does increasing income and wealth inequality mean that rich donors are driving the charitable sector’s agenda in a way that is disproportionate to their financial contributions? Does government support to private charity disproportionately promote the philanthropic aims of the rich? How effective are current government policies (such as tax reliefs) at promoting giving? These are some of the questions that I address in my research. The answers to these questions are not only useful for guiding and designing effective public policies aimed at promoting charitable activities, but also for underpinning charities’ strategies aimed at producing stable income streams in a dynamic and uncertain economic environment.

Here are three early stage projects of mine:

  1. The Price Elasticity of Charitable Donations: Evidence from UK Tax Records (joint with Miguel Almunia and Ben Lockwood): The UK tax system offers tax reliefs for contributions made to private charity. These reliefs, known as Gift Aid, are somewhat more complex than in other countries – like the US, which offers a deduction on gifts made to charity by US taxpayers that itemise their deductions; however, in practice, it can be shown that Gift Aid is economically equivalent to a deduction for gifts made to charity. There is a presumption that the effect – and aim – of such tax reliefs is to encourage private giving, resulting in a greater volume in funding for charities than that which would be achieved by delivering the same amount of public funds in the form of direct government grants to them. The key indicator that we can use to help inform us about the extent to which tax reliefs affect aggregate donations is the price elasticity of giving: a price elasticity of giving larger than unity in absolute value suggests that £1 of foregone revenue stemming from towards tax relief generates more than £1 worth of donations, and can therefore be more effective than directly transferring £1 of revenue directly to charities. A tax deduction for charitable contributions lowers the price of giving to charity – with no relief a £1 donation delivers £1 to the charity that receives the donation, thus, the price of giving is £1; if the donation can be deducted from taxable income at a rate t, then it only costs the donor £1 − t to contribute £1 to the charity – and so using standard arguments, we would expect tax relief to induce a positive donation response.

    In this project we aim to provide estimates of UK price elasticities of giving and other potentially important estimates of the effect of factors that the price elasticity of giving does not speak to – including frictions associated with non-price responses; heterogeneity in price effects across different types of taxpayers (gender, income); and substitution effects across different types of incentives. Our estimates will be the first ever for the UK that use real taxpayer responses to changes in the price of giving and they will be obtained from analysing a unique panel of UK administrative income tax returns for the period 2005-2013 to which we have been given access by the HMRC Datalab: the universe of self-assessment Income Tax returns for the fiscal years 2004/05 through 2012/2013, which comprises records of 66.8 million taxpayers.

  2. Are Donor's Afraid of Charities' Fixed Costs? Scale Economies and Technology Selection in the Non-Profit Sector (joint with Carlo Perroni, Ganna Pogrebna and Sarah Sandford): In this project, we study the role of overhead costs in shaping competition between charities and their technology adoption choices. The arguments we develop set out a pro-competitive based rationale for why government funding of fixed costs may be called for in the case of charities – to offset the adverse effects of scale economies in provision on entry and technology adoption incentives.

    Our theoretical analysis shows that, absent a residual claimant, donors may not select the most efficient charity: unlike in the case of for-profit firms, the presence of overhead costs may interfere with competition amongst charities and give rise to inefficient selection. Our experimental evidence suggests that donors’ coordination and contribution performance can be adversely affected by the presence of overhead costs, that this effect can be significant, and that donors can be biased against higher-fixed cost providers even if these are more efficient – which undermines contestability in charity markets. Our findings are reflected in the prominence given by charities to core funding strategies. There is ample anecdotal evidence suggesting that scale economies/fixed costs present special challenges to the not-for profit sector. Charities often lament that donors are typically unwilling to fund core costs – making it difficult for newcomer charities to get off the ground and for more established incumbent charities to cover management and general administration costs – and consistently lobby government to step in with grants to cover their fixed operating costs. Thus, the research speaks directly to the debate on the effect of government funding on the private provision of public goods and services, which has so far largely ignored the effects of government funding on inter-charity competition and market structure in the third sector.

  3. Do Disaster Appeals Reduce Other Donations? Evidence from the U.K. (joint with Mark Ottoni-Wilhelm and Sarah Smith): A key question in the economic analysis of philanthropy is whether one donation comes at the expense of another. When large sums are given in emergency relief in the aftermath of disasters such as the East Asia Tsunami or Hurricane Katrina or given in response to successful fundraising campaigns such as the Ice Bucket Challenge, there is a widespread concern that other charities might lose out. To date however there is little evidence on this issue, in the main because of a lack of suitable data. In this research we plan to exploit a unique panel dataset with detailed donation information for more than 100,000 UK donors to present new evidence on the impact of large-scale appeals in response to overseas disasters. Specifically, our data record the exact timing of donations made to individual charities, allowing us to track donations in the weeks after a disaster appeal has been made. In the UK, major disaster appeals are made by a co-ordinating committee (known as the Disasters Emergency Committee or DEC) on behalf of thirteen overseas aid charities. Preliminary findings suggest that the DEC appeals have an immediate and sizeable effect on donations made to the member charities and we find no evidence that this reduces other donations. In fact, our preliminary analysis suggests that there is an increase in donations to other charities, even those apparently unrelated to overseas aid, during the immediate aftermath of the disaster. This increase to other charities is subsequently reversed, but the net effect on giving to other charities is zero. By contrast, there is no offsetting later reduction in donations made to overseas aid charities involved in emergency relief. Thus, the combined overall effect of the appeal on total donations is positive.


Publications (from 2014)

Working Papers (from 2014)

Other Papers (from 2014)

  • "An International Comparison of the Administration of Tax Expenditures," (with Nigar Hashimzade, Chris Heady, Gareth Myles, and Lynne Oates), ESRC Tax Administration Research Centre Briefing Report prepared for the National Audit Office, September 2014.
  • "The Definition, Measurement, and Evaluation of Tax Expenditures and Tax Reliefs," (with Nigar Hashimzade, Chris Heady, Gareth Myles, and Lynne Oates), ESRC Tax Administration Research Centre Briefing Report published by the National Audit Office, June 2014.
  • "The Tax Treatment of Charitable Contributions in the UK," in Charitable Giving and Tax Policy: A Historical and Comparative Perspective (G. Fack & C. Landais eds), CEPR/Oxford University Press, forthcoming 2015. Draft

Other Dissemination (from 2014)

  • "The Ice Bucket Challenge," (with Sarah Smith) Society Now, ESRC, Autumn 2014.
  • "Fixed Costs & Non-Profits’ Efficiency," The BIG blog, WMG, Warwick, 15/08/14.
  • "Public Economics and Private Charity," Speakers for Schools, St. Francis of Assisi RCT College, 07/08/14.
  • "The Big Lottery Fund and Fixed Costs," Big Lottery Fund Blog, Big Lottery Fund, 15/07/14.
  • "How Donors Perceive Fixed Costs and What Your Charity Can Do About It: Q & A with Kimberley Scharf," JustGiving Blog, 07/01/14.
  • "Religion and Charity," More or Less, Radio 4, 13/06/14.
  • "Publishing in Peer Review Journals," Panelist at Lunchtime Session, Royal Economic Society Women's Committee, Royal Economic Society Annual Conference, Manchester, 09/04/14.
  • "Scale Economies and Innovation Slowdown in the Charitable Sector," JustGiving/Warwick/Bristol Workshop on `Academic Insights into Fundraising,' 18/03/14.
  • "Behavioural Responses of Donors to Tax Incentives for Giving," Focus, Charity Finance Group, 04/02/14.
  • "Public Policy and Private Charity," Speakers for Schools, Stratford-Upon-Avon Grammar School, 11/02/14.
  • "The Economics of Charity and Public Policy," Warwick Economics Society, 10/02/14.
  • "Panel Debate – What Area of Research or Analysis has the Potential to Most Improve the Performance of Tax Administrations?" Invited panelist HMRC/ESRC International Tax Analysis Conference, London, 25/01/14.

Unpublished Working Papers