(image from pexels.com)
Fundraising is more than just donors. States have policies that can either support, discourage or stay out of the way of the process. According leaders at the Philanthropy Roundtable via its Free To Give Index, there are degrees to which each state’s laws, tax policies, and institutions support or hinder a robust philanthropic sector.
The states’ involvement with philanthropy is broken into three areas: The Broad Policy Environment, Nonprofit Freedom and Donor Confidence. State were scored across these dimensions with Montana, Wyoming, South Dakota, Iowa, and Indiana ranking as the five most philanthropic-friendly states for 2026. The author wrote those states offer low regulatory barriers, robust donor protections, and strong institutional respect for voluntary giving.
Illinois, Connecticut, Washington, New Jersey, and California impose the most burdensome or restrictive barriers to philanthropy, characterized by complex regulatory frameworks and weaker donor safeguards, according to the authors.
Among the bottom five states in the index, there are 63 charities per billion dollars of gross domestic product (GDP) “But among the top five states there are 122 charities per billion dollars of GDP. This underscores the point that freedom in the philanthropic sphere is not a mere abstraction. These trends demonstrate that more,” the author wrote.
“Strong though it may be, the urge to give is also rational. Like all other human actions, the philanthropic drive responds to carrots and sticks. When governments make it harder to generate the private capital that fuels philanthropy, or more difficult to form or run philanthropic organizations, or when it disincentivizes giving, then rational people will be less philanthropic, and philanthropic entrepreneurs will be less active,” the authors wrote.
Researchers found wide variation in philanthropic policy. In fact, states differ dramatically in how they treat charitable organizations and donors. Those that score the highest on the index combine economic openness, charity freedom, and strong protection of donor rights. The lowest-ranking states make it more difficult for people to make economic and philanthropic choices. They impose more regulatory barriers to charity, make it more challenging for donors to safeguard intent, and dull the incentive to give, in the opinions of the authors Matthew Mitchell and Jack Salmon.
Mitchell is senior fellow in the Centre for Human Freedom at the Fraser Institute in Vancouver, British Columbia, Canada. Salmon is a visiting fellow and research fellow at the Mercatus Center at George Mason University in Washington, D.C.
While certain regulations promote transparency and accountability, excessive compliance mandates limit the supply of philanthropy and divert resources from mission-related activities. All policy entails tradeoffs, and the index is intended to help policymakers better appreciate the downsides of too much charitable regulation.
States received an overall score and were graded in subsectors. The 2026 baseline enables future comparative analysis. You can access the full 74-page report at https://www.philanthropyroundtable.org/resource/free-to-give-a-state-by-state-regulatory-index/
