According to the (Feldstein &Taylor, 1976) the charitable contribution approaches depends on the theory ofconsumer demand for non-durable goods and services which is focuses on theprice and income effects and also enables to evaluate how changes in tax policyaffect the level of endowment contributions.
Meanwhile, (Glenday, Gupta andPawlak, 1986) predict the price and income elasticities of demand forcharitable donations in Canada, which were used to analyse the’cost-effectiveness’ of tax incentives for contributions. In that way, the sizeof contribution is depending on the house-hold income. Besidesthat, on the desires of graduates to make contribution to their universitieswill depending on their attachment of income levels. Students may be lesslikely to “get lost” at smaller institutions and therefore as alumni morelikely to remain attached. Due to it, based on several researchers which is(Clotfelter, 1985), (Auten, Cilke, and Randolph, 1992), and (Auten, Sieg, andClotfelter, 1999), they agreed on the degree of attachment and income levels,national and state tax policies will affect the funds they have available todonate and the “price” of each dollar that they contribute. Furthermore, according to the(Bruggink & Siddiiqui, 1995), (Clotfelter, 2003), and (Monks, 2003), alumniincome is the vital factor that contribute to the endowment fund, so itsomission could bias the research results concerning the impact of financialaid.
However, the student upcoming income does not directly enter financial aidformulas but instead of a student’s parents’ past income and family wealthprimarily determine the amount of financial aid received during college. Inaddition, belief about scholastic performance administer the division of thatfund between loans and scholarships. In that way, according to the (Altonji& Dunn, 1991), (Behrman & Taubman, 1990), and (Jones & Jackson,1990) there have positively correlation with future income between both offamily wealth and scholastic performance. Therefore, the research results areonly robust as their controls for these variables