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A Decision Analysis Tool for Evaluating Fundraising Tiers

Author

Listed:
  • Kevin F. McCardle

    (Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095)

  • Kumar Rajaram

    (Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095)

  • Christopher S. Tang

    (Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095)

Abstract

This paper presents a utility function model of donors who need to determine their donation to a charity organization that structures and publishes donations by tiers. By considering the prestige associated with each tier level, our analysis suggests that a tiered scheme generates an incentive for donors to raise their donation to the next tier when the originally intended donation is close to the minimum amount for the next tier level. In addition, we develop a decision analysis tool to illustrate how a charity can evaluate the effectiveness of different tier structures. Using publicly available federal tax return data and actual donations to a private high school, we present a method to estimate the model parameters. By taking other nonquantifiable factors into consideration, our tool can guide a charitable organization to determine an effective fundraising tier strategy.

Suggested Citation

  • Kevin F. McCardle & Kumar Rajaram & Christopher S. Tang, 2009. "A Decision Analysis Tool for Evaluating Fundraising Tiers," Decision Analysis, INFORMS, vol. 6(1), pages 4-13, March.
    • Handle: RePEc:inm:ordeca:v:6:y:2009:i:1:p:4-13
    DOI: 10.1287/deca.1080.0132
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    References listed on IDEAS

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    Cited by:

    1. Guillaume Roels & Xuanming Su, 2014. "Optimal Design of Social Comparison Effects: Setting Reference Groups and Reference Points," Management Science, INFORMS, vol. 60(3), pages 606-627, March.
    2. Natalie Privett & Feryal Erhun, 2011. "Efficient Funding: Auditing in the Nonprofit Sector," Manufacturing & Service Operations Management, INFORMS, vol. 13(4), pages 471-488, October.
    3. L. Robin Keller, 2009. "From the Editor..," Decision Analysis, INFORMS, vol. 6(1), pages 1-3, March.
    4. L. Robin Keller & Ali Abbas & J. Eric Bickel & Vicki M. Bier & David V. Budescu & John C. Butler & Enrico Diecidue & Robin L. Dillon-Merrill & Raimo P. Hämäläinen & Kenneth C. Lichtendahl & Jason R. W, 2012. "From the Editors ---Brainstorming, Multiplicative Utilities, Partial Information on Probabilities or Outcomes, and Regulatory Focus," Decision Analysis, INFORMS, vol. 9(4), pages 297-302, December.
    5. Cartwright, Edward & Patel, Amrish, 2013. "How category reporting can improve fundraising," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 73-90.
    6. Fuminori Toyasaki & Tina Wakolbinger, 2014. "Impacts of earmarked private donations for disaster fundraising," Annals of Operations Research, Springer, vol. 221(1), pages 427-447, October.
    7. Sanjay L. Ahire & Pelin Pekgün, 2018. "Harvest Hope Food Bank Optimizes Its Promotional Strategy to Raise Donations Using Integer Programming," Interfaces, INFORMS, vol. 48(4), pages 291-306, August.
    8. L. Robin Keller, 2012. "From the Editor---Decisions over Time (Exploding Offers or Purchase Regret), in Game Settings (Embedded Nash Bargaining or Adversarial Games), and in Influence Diagrams," Decision Analysis, INFORMS, vol. 9(1), pages 1-5, March.
    9. L. Robin Keller & Kelly M. Kophazi, 2012. "From the Editors ---Copulas, Group Preferences, Multilevel Defenders, Sharing Rewards, and Communicating Analytics," Decision Analysis, INFORMS, vol. 9(3), pages 213-218, September.
    10. Jay Simon & Donald Saari & Donald Saari, 2020. "Interdependent Altruistic Preference Models," Decision Analysis, INFORMS, vol. 17(3), pages 189-207, September.
    11. Rakesh K. Sarin & L. Robin Keller, 2013. "From the Editors: Probability Approximations, Anti-Terrorism Strategy, and Bull's-Eye Display for Performance Feedback," Decision Analysis, INFORMS, vol. 10(1), pages 1-5, March.
    12. Amiya K. Chakravarty, 2021. "Humanitarian Response to Disasters with Funding Uncertainty: Alleviating Deprivation with Bridge Finance," Production and Operations Management, Production and Operations Management Society, vol. 30(9), pages 3284-3296, September.
    13. Gemma Berenguer & Zuo-Jun (Max) Shen, 2020. "OM Forum—Challenges and Strategies in Managing Nonprofit Operations: An Operations Management Perspective," Manufacturing & Service Operations Management, INFORMS, vol. 22(5), pages 888-905, September.
    14. Jay Simon, 2016. "On the existence of altruistic value and utility functions," Theory and Decision, Springer, vol. 81(3), pages 371-391, September.
    15. Edward Cartwright & Amrish Patel, 2009. "Does category reporting increase donations to charity? A signalling game approach," Studies in Economics 0924, School of Economics, University of Kent.

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