Americans give. It’s woven into who we are. A total of 1.8 million nonprofits operate across this country, feeding the hungry, sheltering the homeless, treating the sick, educating children and rebuilding communities after disasters. Long before Alexis de Tocqueville famously marveled at Americans’ instinct to form voluntary associations, citizens were solving problems together, without waiting for government to act.

But here’s what most donors, nonprofit leaders and policymakers don’t fully appreciate: the freedom to give is not the same in every state. The rules governing how charities form, operate and raise money vary enormously from one state to the next.

We recently published the “Free to Give Index,” a comprehensive, state-by-state assessment of the policy environments that shape charitable giving and nonprofit activity across the United States. The index draws on 33 distinct variables to evaluate how well each state’s laws, tax policies, and regulations support—or hinder—a vibrant philanthropic sector.

What We Measured for the Free to Give Index

The Index is organized into three subindices, each capturing a different dimension of philanthropic policy.

The first, the Broad Policy Environment, examines the general economic conditions that power private giving. Philanthropy doesn’t emerge from a vacuum; it depends on a thriving private economy. When states pile on taxes, licensing burdens and regulatory complexity, they shrink the pool of private capital available for charitable purposes. Prior research has consistently shown that people in economically freer states are more philanthropic. Our index takes that finding seriously.

The second subindex, Nonprofit Freedom, drills into the regulations specific to nonprofits: how easy is it to start a charity? What reporting requirements must organizations meet? How are paid solicitors regulated, and what compliance burdens do charities face? Standard economics predicts that higher barriers to entry and operation mean less charitable activity, and that dollars spent on compliance are dollars not spent on mission.

The third subindex, Donor Confidence, examines the rules that shape donors’ decisions: How does the state tax charitable contributions? Does it protect donor privacy? Can donors trust that their intent will be honored? How are donor-advised funds regulated? These factors affect not just whether people give, but how much, and how confidently.

Read the full article about the Free to Give Index by Jack Salmon and Matthew Mitchell at Philanthropy Roundtable.