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The design of charitable fund-raising schemes: Matching grants or seed money

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  • Gong, Ning
  • Grundy, Bruce D.

Abstract

For a fixed large donation a matching scheme that simply uses a one-for-one match ratio can actually raise less money than a seed money scheme. But when the match ratio is chosen to reflect the characteristics of the small donor base so as to exhaust the large donor's willingness to give, matching schemes always raise more money and are preferred by both charities and large donors. However, when the large donor chooses the size of her donation, a conflict can arise. The large donor can prefer a smaller leadership gift and more reliance on small donor matching while the charity can prefer seed money.

Suggested Citation

  • Gong, Ning & Grundy, Bruce D., 2014. "The design of charitable fund-raising schemes: Matching grants or seed money," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 147-165.
    • Handle: RePEc:eee:jeborg:v:108:y:2014:i:c:p:147-165
    DOI: 10.1016/j.jebo.2014.09.007
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    Cited by:

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    3. Müller, Stephan & Rau, Holger A., 2020. "Motivational crowding out effects in charitable giving: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 76(C).
    4. Luca Corazzini & Christopher Cotton & Enrico Longo & Tommaso Reggiani, 2022. "Pro-Rich and Progressive: Policy Selection and Contributions in Threshold Public Goods Experiments," Working Paper 1471, Economics Department, Queen's University.
    5. Müller, Stephan & Rau, Holger A., 2018. "Motivational crowding out effects in charitable giving: Experimental evidence," University of Göttingen Working Papers in Economics 338, University of Goettingen, Department of Economics.
    6. Saboury, Piruz & Krasteva, Silvana & Palma, Marco A., 2022. "The effect of seed money and matching gifts in fundraising: A lab experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 425-453.

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    More about this item

    Keywords

    Charitable fund-raising; Matching grants; Public goods;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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