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Brothers in alms? coordination between nonprofits on markets for donations

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  • Gani Aldashev
  • Marco Marini
  • Thierry Verdier

Abstract

Mission-driven nonprofi?t organizations compete for donations through fundrais- ing activities. Such competition can lead to inefficient outcomes, if nonpro?fits impose ex- ternalities on each others? output. This paper studies the design of sustainable voluntary cooperation agreements, using a game-theoretic model of alliance formation. Two key char- acteristics determine the stability of cooperation: the alliance formation rule and whether the fundraising efforts of nonprofi?ts are strategic complements or substitutes. Both affect the incentives to deviate from the cooperative agreement (by one or several nonpro?ts). We propose conditions on the alliance formation protocols that facilitate the stability of Pareto-optimal cooperation in fundraising.

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Bibliographic Info

Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 293.

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Length: 33 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:cca:wpaper:293

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Keywords: nonprofits; giving; coordination; endogenous coalition formation; non-distribution constraint.;

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  1. Philip Brown & Jessica Minty, 2006. "Media Coverage & Charitable Giving After the 2004 Tsunami," William Davidson Institute Working Papers Series wp855, William Davidson Institute at the University of Michigan.
  2. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
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  5. Aldashev, Gani & Verdier, Thierry, 2009. "When NGOs go global: Competition on international markets for development donations," Journal of International Economics, Elsevier, vol. 79(2), pages 198-210, November.
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  8. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
  9. Jeremy Thornton, 2008. "Competition, Contractibility, and the Market for Donors to Nonprofits," Journal of Law, Economics and Organization, Oxford University Press, vol. 24(1), pages 215-246, May.
  10. Edwards, Michael & Hulme, David, 1996. "Too close for comfort? the impact of official aid on nongovernmental organizations," World Development, Elsevier, vol. 24(6), pages 961-973, June.
  11. Lester M. Salamon, 2010. "Putting The Civil Society Sector On The Economic Map Of The World," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 81(2), pages 167-210, 06.
  12. Aldashev, Gani & Verdier, Thierry, 2010. "Goodwill bazaar: NGO competition and giving to development," Journal of Development Economics, Elsevier, vol. 91(1), pages 48-63, January.
  13. James Andreoni & A. Abigail Payne, 2003. "Do Government Grants to Private Charities Crowd Out Giving or Fund-raising?," American Economic Review, American Economic Association, vol. 93(3), pages 792-812, June.
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