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Competition and strategic responses to fundraising in donative markets

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  • Gayle, Philip
  • Harrison, Teresa

Abstract

Nonprofit (NP) organizations provide key social service goods but rely on donations, obtained in a competitive environment, for that provision. Yet most research focuses on competition in the output markets without considering inter- and intra-sector competition in the markets for donations. This paper develops and estimates a model of NPs’ fundraising to secure donations. We highlight the strategic nature of the fundraising decision and show theoretically that rival NPs’ fundraising responses can be either strategic complements or strategic substitutes but find empirically that responses are predominantly strategic substitutes. We find that donors are relatively inelastic to fundraising but also that NPs have nontrivial responses to rival’s fundraising and these effects are stronger within than across sectors. However, in totality, the across sector impacts are important to consider. We find that counterfactually removing a NP from a market increases equilibrium NP-level fundraising but decreases total fundraising in the market.

Suggested Citation

  • Gayle, Philip & Harrison, Teresa, 2023. "Competition and strategic responses to fundraising in donative markets," MPRA Paper 120459, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120459
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    File URL: https://mpra.ub.uni-muenchen.de/120459/1/MPRA_paper_120459.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gayle, Philip, 2024. "The extent to which government grants to nonprofit organizations crowd-out or crowd-in private giving to them: An unresolved debate revisited within a strategic fundraising setting," MPRA Paper 120685, University Library of Munich, Germany.
    2. Gayle, Philip, 2024. "Do Nonprofits Engage in Excessive Fundraising?," MPRA Paper 120684, University Library of Munich, Germany.

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    More about this item

    Keywords

    Fundraising; Donative Markets;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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