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This paper explores how the charitable deduction affects fundraising by cultural nonprofit organizations in The Netherlands. Based on the literature on fundraising, organizational change, market orientation and cultural entrepreneurship, we will test the hypothesis that the effects of the deduction depend on the organizational capacity for fundraising in a large sample of cultural institutions. This research will provide new knowledge about the influence of organizational practices and characteristics that determine the effects of the charitable deduction reform on cultural nonprofit organizations. This knowledge helps organizations determine the bandwidth and their degrees of freedom in the expected return on investment in fundraising.