Do government appropriations and tax policies impact donations to public research universities in Japan and the USA?
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Do government appropriations and tax policies impact donations to public research universities in Japan and the USA? Fumitake Fukui 1 # The Author(s) 2020
Abstract
As constraints on government funding to public universities become a trend in higher education internationally, clarifying the impact of government policies on donor behavior from a comparative perspective is an issue of higher education research. This paper aims to explore the impact of government appropriations and tax policies on macro trends in donations to public research universities in Japan and USA. Panel data of donation revenue to public research universities in both countries is used to answer the following two research questions: (1) whether the trends in capital markets affect the donation revenue of public research universities operating under different tax systems in Japan and USA, and (2) how the level of government support to higher education affects donations to American and Japanese public research universities. The primary finding is that stock prices are positively associated with donations in USA; however, there is no evidence that stock prices have a positive impact on donations to Japanese public research universities. These contrasting results imply that higher stock prices do not always induce donations to universities and that it is important to consider each country’s tax structure when looking for possible links between stock prices and donations to universities. Also, donor behavior is independent of the amount of government appropriations received by universities in both Japan and USA; therefore, the recent decreasing trends in government appropriations in both countries do not necessarily attract donors. Keywords Donations . Tax policy . Capital market . Government appropriations . Public research universities
* Fumitake Fukui f.fukui@kamakura–u.ac.jp
1
Research Institute, Kamakura Women’s University, 6-1-3 Ofuna, Kamakura, Kanagawa 247-0056, Japan
Higher Education
Introduction Higher education’s financial viability has become a common policy issue in OECD countries (OECD 2007). Due to higher education’s massification and the move toward a knowledgebased society, research universities are expected to provide students with high-quality education and to contribute to society through their research, particularly to national economic prosperity (Slaughter and Leslie 1997). The creation of world-class universities with ample financial resources has become an important government policy issue worldwide (Salmi 2009). Although Japan has 86 national, 90 public municipal, and 780 private universities, the national universities are especially important in providing high-quality teaching and research. For example, the top ten Japanese universities in the Times Higher Education Ranking in 2018 were all national universities.1 While Japanese national universities have mainly relied on government financial support unlike private universities, government funding constraints make it difficult to continue relying on government suppo
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