A Theory of Charitable Fund-Raising with Costly Solicitations
- (pp. 1091-1107)
AbstractWe present a theory of charitable fund-raising in which it is costly to solicit donors. We fully characterize the solicitation strategy that maximizes donations net of fund-raising costs. It is optimal for the fund-raiser to target only the "net contributors" -- donors who would give more than their solicitation costs. We show that as the income inequality increases, so does the level of the public good, despite a (potentially) non-monotonic fund-raising strategy. This implies that costly fund-raising can provide a novel explanation for the non-neutrality of income redistributions and government grants often found in empirical studies.
Citation2013. "A Theory of Charitable Fund-Raising with Costly Solicitations." American Economic Review, 103(2): 1091-1107. DOI: 10.1257/aer.103.2.1091
- D64 Altruism; Philanthropy
- L31 Nonprofit Institutions; NGOs