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A Theory of Charitable Fund-Raising with Costly Solicitations


  • Alvaro Name Correa
  • Huseyin Yildirim


We present a theory of charitable fund-raising in which it is costly to solicit donors. We fully characterize the optimal solicitation strategy that maximizes donations net of fundraising costs. The optimal strategy dictates that the fund-raiser target only those individuals whose equilibrium contributions exceed their solicitation costs. We show that as the income inequality increases, so does the level of the public good, despite a non-monotonic fund-raising effort. This implies that costly fund-raising can provide a novel explanation for the non-neutrality of income redistributions and government grants often found in empirical studies. We also show that in large economies, only the "most willing" donors are solicited; and the average donation converges to the solicitation cost of these donors, which is strictly positive.

Suggested Citation

  • Alvaro Name Correa & Huseyin Yildirim, 2011. "A Theory of Charitable Fund-Raising with Costly Solicitations," Working Papers 11-08, Duke University, Department of Economics.
  • Handle: RePEc:duk:dukeec:11-08

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    More about this item


    fund-raising; solicitation cost; charitable giving;

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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