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Increasing Fundraising Success by Decreasing Donor Choice

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Author Info

  • Stefano Barbieri

    ()
    (Department of Economics, Tulane University)

  • David A. Malueg

    ()
    (Department of Economics, UC Riverside)

Abstract

Suggested contributions, membership categories, and discrete, incremental thank-you gifts are devices often used by benevolent associations that provide public goods. Such devices focus donations into discrete levels, thereby effectively limiting the donors' freedom to give. We study the effects on overall donations of the tradeoff between rigid schemes that severely restrict the choices of contribution on the one hand, and flexible membership contracts on the other, taking into account the strategic response of contributors whose values for the public good are private information. We show flexibility dominates when i) the dispersion of donors' taste for the public good increases, ii) the number of potential donors increases, and iii) there is greater funding by an external authority. Using the number of default membership categories that National Public Radio stations offer as proxy for flexibility, we document the existence of empirical correlations consistent with our predictions: stations offer a larger number of suggested contribution levels as i) the incomes of the population served become more diverse, ii) the population of the coverage area increases, and iii) there is greater external support from the Corporation for Public Broadcasting.

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File URL: http://econ.tulane.edu/RePEc/pdf/tul1006.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Tulane University, Department of Economics in its series Working Papers with number 1006.

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Length: 39 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:tul:wpaper:1006

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Keywords: private provision; categories; restricting donations; heterogeneity; crowding out;

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References

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  1. Andreoni,J. & Vesterlund,L., 1998. "Which is the fair sex? : Gender differences in altruism," Working papers 10, Wisconsin Madison - Social Systems.
  2. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 259-76, April.
  3. Berry, Steven T. & Waldfogel, Joel, 1999. "Public radio in the United States: does it correct market failure or cannibalize commercial stations?," Journal of Public Economics, Elsevier, vol. 71(2), pages 189-211, February.
  4. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
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  7. Nitzan, Shmuel & Romano, Richard E., 1990. "Private provision of a discrete public good with uncertain cost," Journal of Public Economics, Elsevier, vol. 42(3), pages 357-370, August.
  8. Stefano Barbieri & David A. Malueg, 2009. "Threshold Uncertainty in the Private-Information Subscription Game," Working Papers 0903, Tulane University, Department of Economics.
  9. Cadsby, Charles Bram & Maynes, Elizabeth, 1999. "Voluntary provision of threshold public goods with continuous contributions: experimental evidence," Journal of Public Economics, Elsevier, vol. 71(1), pages 53-73, January.
  10. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
  11. Andreoni, James & Petrie, Ragan, 2004. "Public goods experiments without confidentiality: a glimpse into fund-raising," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1605-1623, July.
  12. Martimort, David & Moreira, Humberto, 2010. "Common agency and public good provision under asymmetric information," Theoretical Economics, Econometric Society, vol. 5(2), May.
  13. Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
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Cited by:
  1. Cartwright, Edward & Patel, Amrish, 2013. "How category reporting can improve fundraising," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 73-90.

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