The Impact of Voluntarily Filing Form 990 on Donations, Government Grants, and Total Contributions

We examine whether voluntary IRS Form 990 filers attract higher donations, government grants, and total contributions. We define voluntary 990 filers as charities eligible to file a Form 990EZ but instead choose to file a more exhaustive 990. The 990 provides incremental financial information, including disclosures about functional expense classifications for administrative and fundraising, charity governing bodies and governance policies, and whether a charity has engaged in an audit. Our strongest evidence shows that total contributions are almost three times higher for charities that choose to voluntarily file a 990 instead of a 990EZ. We also provide limited evidence that voluntary 990 filers are positively associated both with donations and grants as compared to those mandated to file a 990. Our findings are consistent with signaling theory and show that disclosing additional information beyond what is required increases transparency and offers benefits to charities. Data Availability: Data were collected from publicly available sources quoted in the text. JEL Classifications: L31.