Private contribution for public projects: Government versus NGOs

This paper addresses the allocation problem faced by an individual while deciding his contribution to the government and to nongovernmental organizations (NGOs). A typical individual tries to evade taxes but also cares about the way the government spends its revenue. The paper characterizes the equilibrium allocation rule and the amount of evasion. It also derives some comparative-static results with respect to changes in the income of the individual and in some of the government-controlled parameters like the tax rate. It questions the efficacy of measures like tax buoyancy.