Economic Theory of Philanthropy

The Economic Theory of Philanthropy suggests that wealthy individuals and organizations donate resources because they seek to maximize their overall benefits while minimizing costs. They often view philanthropy as an investment that enhances their reputation, personal satisfaction, or social impact. The theory emphasizes rational decision-making—donors weigh the potential positive outcomes of their giving against the costs or sacrifices involved. It recognizes that philanthropy is driven by preferences for social good combined with strategic considerations, aiming to influence or improve societal conditions in a way that aligns with the donor’s values and goals.