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Impacts of earmarked private donations for disaster fundraising

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  • Fuminori Toyasaki
  • Tina Wakolbinger

Abstract

Faced with large humanitarian emergencies like the earthquakes in Haiti and Japan, aid agencies have to decide how to collect money for their relief work. They can either decide to establish a special fund for the emergency and allow for earmarked donations or they can only allow for unearmarked donations. In this paper, we analyze impacts of this decision on donors, aid agencies, and policy makers. To this end, we compare two prevalent fundraising modes using optimization models: fundraising with the option of earmarking donations and fundraising without an earmarking option. In the earmarked case, we consider a new fundraising challenge, excessive funds raised for certain disaster relief projects. We find that desirable fundraising modes for donors, aid agencies, and policy makers differ depending on levels of several parameters, including an aid agency’s utility of a dollar raised, the fundraising cost factor, and donors’ unit utility of donations. Allowing for earmarking leads to a lower overall fundraising cost percentage. For emergencies with strong media attention and donor interest, allowing for earmarking of donations is likely to reduce fundraising activities of organizations with low fundraising costs, while it is likely to encourage fundraising activities among organizations with high fundraising costs. Copyright Springer Science+Business Media, LLC 2014

Suggested Citation

  • 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.
    • Handle: RePEc:spr:annopr:v:221:y:2014:i:1:p:427-447:10.1007/s10479-011-1038-5
    DOI: 10.1007/s10479-011-1038-5
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    Cited by:

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    2. Jon M. Stauffer & Subodha Kumar, 2021. "Impact of Incorporating Returns into Pre‐Disaster Deployments for Rapid‐Onset Predictable Disasters," Production and Operations Management, Production and Operations Management Society, vol. 30(2), pages 451-474, February.
    3. Nagurney, Anna & Salarpour, Mojtaba & Daniele, Patrizia, 2019. "An integrated financial and logistical game theory model for humanitarian organizations with purchasing costs, multiple freight service providers, and budget, capacity, and demand constraints," International Journal of Production Economics, Elsevier, vol. 212(C), pages 212-226.
    4. Feng Li & Qingyuan Zhu & Jun Zhuang, 2018. "Analysis of fire protection efficiency in the United States: a two-stage DEA-based approach," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(1), pages 23-68, January.
    5. Anna Nagurney & Mojtaba Salarpour & June Dong & Ladimer S. Nagurney, 2020. "A Stochastic Disaster Relief Game Theory Network Model," SN Operations Research Forum, Springer, vol. 1(2), pages 1-33, June.
    6. 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.
    7. Chong Hyun Park & Gemma Berenguer, 2020. "Supply Constrained Location‐Distribution in Not‐for‐Profit Settings," Production and Operations Management, Production and Operations Management Society, vol. 29(11), pages 2461-2483, November.
    8. Faraz Salehi & Masoud Mahootchi & Seyed Mohammad Moattar Husseini, 2019. "Developing a robust stochastic model for designing a blood supply chain network in a crisis: a possible earthquake in Tehran," Annals of Operations Research, Springer, vol. 283(1), pages 679-703, December.
    9. Nagurney, Anna & Flores, Emilio Alvarez & Soylu, Ceren, 2016. "A Generalized Nash Equilibrium network model for post-disaster humanitarian relief," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 1-18.
    10. Christian Burkart & Tina Wakolbinger & Fuminori Toyasaki, 2018. "Funds allocation in NPOs: the role of administrative cost ratios," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 26(2), pages 307-330, June.
    11. Anna Nagurney & Pritha Dutta, 2021. "A Multiclass, Multiproduct Covid-19 Convalescent Plasma Donor Equilibrium Model," SN Operations Research Forum, Springer, vol. 2(3), pages 1-30, September.
    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. Biswal, Arun Kumar & Jenamani, Mamata & Kumar, Sri Krishna, 2020. "The impact of RFID adoption on donor subsidy through for-profit and not-for-profit newsvendor: Implications for Indian Public Distribution system," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).
    15. Christoph Fuchs & Martijn G. de Jong & Martin Schreier, 2020. "Earmarking Donations to Charity: Cross-cultural Evidence on Its Appeal to Donors Across 25 Countries," Management Science, INFORMS, vol. 66(10), pages 4820-4842, October.
    16. Alem, Douglas & Clark, Alistair & Moreno, Alfredo, 2016. "Stochastic network models for logistics planning in disaster relief," European Journal of Operational Research, Elsevier, vol. 255(1), pages 187-206.
    17. Vera Z. Eichenauer & Simon Hug, 2018. "The politics of special purpose trust funds," Economics and Politics, Wiley Blackwell, vol. 30(2), pages 211-255, July.
    18. Amiya K. Chakravarty, 2018. "Humanitarian response to hurricane disasters: Coordinating flood‐risk mitigation with fundraising and relief operations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 65(3), pages 275-288, April.

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