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Increasing Fundraising Success by Decreasing Donor Choice

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  • STEFANO BARBIERI
  • DAVID A. MALUEG

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 at discrete levels, thereby effectively limiting the donors' freedom to give. We study the effects on overall donations of the trade-off 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. Our theoretical results are consistent with three basic patterns we discover in the membership schemes of National Public Radio stations: stations offer a larger number of suggested contribution levels—a proxy for flexibility—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.

Suggested Citation

  • Stefano Barbieri & David A. Malueg, 2014. "Increasing Fundraising Success by Decreasing Donor Choice," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(3), pages 372-400, June.
    • Handle: RePEc:bla:jpbect:v:16:y:2014:i:3:p:372-400
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    File URL: http://hdl.handle.net/10.1111/jpet.12068
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    Cited by:

    1. Diederich, Johannes & Epperson, Raphael & Goeschl, Timo, 2021. "How to Design the Ask? Funding Units vs. Giving Money," Working Papers 0698, University of Heidelberg, Department of Economics.
    2. Tajika, Tomoya, 2020. "Contribute once! Full efficiency in a dynamic contribution game," Games and Economic Behavior, Elsevier, vol. 123(C), pages 228-239.
    3. Jingping Li & Yohanes E. Riyanto, 2017. "Category Reporting In Charitable Giving: An Experimental Analysis," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 397-408, January.
    4. Stefano Barbieri & David A. Malueg, 2014. "Increasing Fundraising Success by Decreasing Donor Choice," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(3), pages 372-400, June.
    5. 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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    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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