Toward a Theory of Charitable Fund‐Raising

Abstract

Private providers of public goods, such as charities, invariably enlist fund-raisers to organize and collect contributions. Common in charitable fund-raising is seed money, either from a government grant or from a group of ''leadership givers,'' that launches the fund drive and generates additional gifts. This paper provides a theoretical basis for fund-raisers and seeds to charity. The primary assumption is that there is a range of increasing returns at low levels of provision of the public good. It is shown that fund-raisers have a natural and important role, and that sometimes only a small amount of seed money can grow into a substantial charity.

Fundraising in Ophthalmology

“…It is important to create a menu of opportunities. Examples include help building a new eye institute, helping develop a new service line, donations to a new research initiative, investment in a novel technology [1].…”

“…It is a team effort and the team is diverse. Ophthalmology is going to need philanthropy more than ever before in our specialties history [1,3].…”

The geography of giving: The effect of corporate headquarters on local charities

“…They frequently offer substantial subsidies to 1 There is now a vast literature on the economics of charitable giving. See Bremer (1988) and Friedman and McGarvie (2002) for historical overviews of American philanthropy, Himmelstein (1997) for a broad discussion of corporate giving, Andreoni (1990Andreoni ( , 1998, Bergstrom, Blume, and Varian (1986), Roberts (1984) and Rose-Ackerman (1996) for theoretical analyses of individual incentives to give and the economic role of non-profits, and Andreoni and Payne (2003) for a recent analysis of the problem of "crowding out" by government funding of charitable organizations. 2There are quite a bit of popular press on charities and corporate giving including some that focus on heaquarters moves.…”

A theory of outsourced fundraising: Why dollars turn into “Pennies for Charity”

“…The top 50 totalled $970.6 million while allocating less than 4% of collected donations in direct cash aid to their intended causes. 5 2 The Pennies reports are available at <www.charitiesnys.com>. From 2002 to 2012, around 580 telemarketing campaigns were run on behalf of 438 charities annually.…”

“…Apart from the papers mentioned above, our paper relates to a growing theoretical literature on strategic fund-raising by means of: providing prestige and status to donors (Glazer and Konrad, 1996;Harbaugh 1998;Romano and Yildirim, 2001; Barbieri and Malueg, 2014); coordinating donations (Andreoni, 1998;Marx and Matthews, 2000); facilitating informed giving (Vesterlund, 2003;Andreoni 2006;Krasteva and Yildirim, 2013); and organizing lotteries (Morgan, 2000). These papers, however, do not model fundraising as an endogenous, costly undertaking.…”