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Brothers in alms? Coordination between nonprofits on markets for donations

Author

Listed:
  • Gani Aldashev

    (CRED - Centre de recherche en économie du développement - UNamur - Université de Namur [Namur])

  • Marini Marco

    (UNIROMA - Università degli Studi di Roma "La Sapienza" = Sapienza University [Rome])

  • Thierry Verdier

    (CEPR - Center for Economic Policy Research, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

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. We show that three key characteristics determine the stability of cooperation between nonprofits: (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 nonprofits. We analyze how the interaction of these three features induces (or not) the stability of Pareto-optimal full coordination in fundraising.

Suggested Citation

  • Gani Aldashev & Marini Marco & Thierry Verdier, 2014. "Brothers in alms? Coordination between nonprofits on markets for donations," PSE-Ecole d'économie de Paris (Postprint) halshs-01109513, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01109513
    DOI: 10.1016/j.jpubeco.2014.04.009
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Kopel, Michael & Marini, Marco A., 2022. "Mandatory disclosure of managerial contracts in NGOs," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 65-85.
    2. Gallier, Carlo & Goeschl, Timo & Kesternich, Martin & Lohse, Johannes & Reif, Christiane & Römer, Daniel, 2023. "Inter-charity competition under spatial differentiation: Sorting, crowding, and spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 457-468.
    3. Krasteva, Silvana & Yildirim, Huseyin, 2016. "Information, competition, and the quality of charities," Journal of Public Economics, Elsevier, vol. 144(C), pages 64-77.
    4. Gani Aldashev & Marco Marini & Thierry Verdier, 2017. "Samaritan Bundles: Inefficient Clustering in NGO Projects," Working Papers 6/17, Sapienza University of Rome, DISS.
    5. Gani Aldashev & Marco Marini & Thierry Verdier, 2020. "Samaritan Bundles: Fundraising Competition and Inefficient Clustering in NGO Projects," The Economic Journal, Royal Economic Society, vol. 130(630), pages 1541-1582.
    6. Maccarrone, Giovanni & Marini, Marco A. & Tarola, Ornella, 2023. "Shop Until You Drop: the Unexpected Effects of Anticonsumerism and Environmentalism," FEEM Working Papers 330384, Fondazione Eni Enrico Mattei (FEEM).
    7. Gani ALDASHEV & Cecilia NAVARRA, 2018. "Development Ngos: Basic Facts," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 125-155, March.
    8. Gayle, Philip & Harrison, Teresa, 2023. "Competition and Strategic Responses to Fundraising in Donative Markets," School of Economics Working Paper Series 2024-9, LeBow College of Business, Drexel University, revised 01 Aug 2024.
    9. Lange, Andreas & Price, Michael K. & Santore, Rudy, 2017. "Signaling quality through gifts: Implications for the charitable sector," European Economic Review, Elsevier, vol. 96(C), pages 48-61.
    10. Astrid SIMILON, 2015. "Self-Regulation Systems for NPO Coordination: Strenghts and Weaknesses of Label and Umbrella Mechanisms," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(1), pages 89-104, March.
    11. Amihai Glazer & Rune Jansen Hagen & Jørn Rattsø, 2018. "Help not needed? Optimal host country regulation of expatriate NGO workers," Review of International Economics, Wiley Blackwell, vol. 26(2), pages 302-321, May.
    12. Tobias Cagala & Ulrich Glogowsky & Johannes Rincke & Anthony Strittmatter, 2021. "Optimal Targeting in Fundraising: A Causal Machine-Learning Approach," Papers 2103.10251, arXiv.org, revised Sep 2021.
    13. Michael Kopel & Marco A. Marini, 2020. "Mandatory Disclosure of Managerial Contracts in Nonprofit Organizations," Working Papers 2020.26, Fondazione Eni Enrico Mattei.
    14. Crettez, Bertrand & Hayek, Naila & Zaccour, Georges, 2020. "Do charities spend more on their social programs when they cooperate than when they compete?," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1055-1063.
    15. repec:bla:annpce:v:89:y:2018:i:1:p:125-155 is not listed on IDEAS
    16. Tobias Cagala & Ulrich Glogowsky & Johannes Rincke & Anthony Strittmatter, 2021. "Optimal Targeting in Fundraising: A Machine-Learning Approach," Economics working papers 2021-08, Department of Economics, Johannes Kepler University Linz, Austria.
    17. Faraz Usmani & Marc Jeuland & Subhrendu K. Pattanayak, 2018. "NGOs and the effectiveness of interventions," WIDER Working Paper Series wp-2018-59, World Institute for Development Economic Research (UNU-WIDER).
    18. Ester Manna, 2023. "Bad NGOs? Competition in the market for donations and workers' misconduct," UB School of Economics Working Papers 2023/457, University of Barcelona School of Economics.

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    More about this item

    Keywords

    Endogenous coalition formation; Non-distribution constraint; Coordination; Charitable giving; Nonprofits;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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