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Brothers in Alms? Coordination Betwen Nonprofits on Markets for Donations

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  • Gani Aldashev

    ()
    (Department of Economics and CRED, University of Namur)

  • Marco Marini

    ()
    (University of Rome "La Sapienza" and CREI)

  • Thierry Verdier

    ()
    (Paris School of Economics and CEPR)

Abstract

Mission-driven nonprofit organizations compete for donations through fundraising activities. Such competition can lead to inefficient outcomes, if nonprofits impose externalities on each others' output. This paper studies the sustainability of fundraising coordination agreements, using a game-theoretic model of coalition formation. Three key characteristics determine the stability of cooperation: (i) the alliance formation rule, (ii) the extent to which fundraising efforts are strategic complements/substitutes, and (iii) whether deviation from the agreements is by an individual or by a group of nonprots. We also characterize necessary and su¢ cient conditions for the stability of Pareto-optimal full coordination in fundraising.

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Bibliographic Info

Paper provided by University of Namur, Department of Economics in its series Working Papers with number 1406.

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Length: 38 pages
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:nam:wpaper:1406

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

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  1. 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.
  2. 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.
  3. 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.
  4. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  5. 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.
  6. 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.
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  8. Bilodeau, Marc & Slivinski, Al, 1997. "Rival charities," Journal of Public Economics, Elsevier, vol. 66(3), pages 449-467, December.
  9. 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.
  10. 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.
  11. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
  12. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
  13. Ray, Debraj, 2007. "A Game-Theoretic Perspective on Coalition Formation," OUP Catalogue, Oxford University Press, number 9780199207954, September.
  14. Gani Aldashev & Thierry Verdier, 2008. "When NGOs Go Global: Competition on International Markets for Development Donations," Carlo Alberto Notebooks 93, Collegio Carlo Alberto.
  15. Rose-Ackerman, Susan, 1982. "Charitable Giving and "Excessive" Fundraising," The Quarterly Journal of Economics, MIT Press, vol. 97(2), pages 193-212, May.
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