IDEAS home Printed from https://ideas.repec.org/p/rug/rugwps/12-815.html
   My bibliography  Save this paper

The Role of Seed Money and Threshold Size in Optimizing Fundraising Campaigns: Past Behavior Matters!

Author

Listed:
  • G. A. VERHAERT
  • D. VAN DEN POEL

Abstract

Fundraising appeals often announce that some funds have already been raised in order to reach a certain threshold. This article reports results from a field experiment examining the role of seed money (i.e., no, 50%, and 67%) in combination with threshold size (i.e., low versus high) in fundraising appeals across different targets (i.e., prospects, low fidelity donors, and high fidelity donors). Based on a 2x3x3 between-subjects design we investigate charitable behavior of 25,617 households. Findings reveal a novel qualification of using seed contributions as well as the necessity of a communication differentiation by considering past behavior. We show that seed money works well if the threshold is high but with a low threshold it could have a baleful influence. More specifically, in campaigns targeted at prospects and low fidelity donors, the announcement of seed money increases donations regardless of the threshold level. However, in campaigns targeted at high fidelity donors, seed money is an effective strategy only when the threshold is rather high.

Suggested Citation

  • G. A. Verhaert & D. Van Den Poel, 2012. "The Role of Seed Money and Threshold Size in Optimizing Fundraising Campaigns: Past Behavior Matters!," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/815, Ghent University, Faculty of Economics and Business Administration.
    • Handle: RePEc:rug:rugwps:12/815
    as

    Download full text from publisher

    File URL: http://wps-feb.ugent.be/Papers/wp_12_815.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Rondeau & John List, 2008. "Matching and challenge gifts to charity: evidence from laboratory and natural field experiments," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 253-267, September.
    2. John List, 2008. "Introduction to field experiments in economics with applications to the economics of charity," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 203-212, September.
    3. John A. List & David Lucking-Reiley, 2002. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 215-233, February.
    4. James Andreoni, 2006. "Leadership Giving in Charitable Fund‐Raising," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 1-22, January.
    5. Dean Karlan & John A. List, 2007. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," American Economic Review, American Economic Association, vol. 97(5), pages 1774-1793, December.
    6. Croson, Rachel & Fatas, Enrique & Neugebauer, Tibor, 2005. "Reciprocity, matching and conditional cooperation in two public goods games," Economics Letters, Elsevier, vol. 87(1), pages 95-101, April.
    7. Malthouse, Edward C. & Derenthal, Kirstin M., 2008. "Improving predictive scoring models through model aggregation," Journal of Interactive Marketing, Elsevier, vol. 22(3), pages 51-68.
    8. Bruno S. Frey & Stephan Meier, 2004. "Social Comparisons and Pro-social Behavior: Testing "Conditional Cooperation" in a Field Experiment," American Economic Review, American Economic Association, vol. 94(5), pages 1717-1722, December.
    9. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 627-657, March.
    10. Rachel Croson & Jen Shang, 2008. "The impact of downward social information on contribution decisions," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 221-233, September.
    11. Verhaert, Griet A. & Van den Poel, Dirk, 2011. "Empathy as added value in predicting donation behavior," Journal of Business Research, Elsevier, vol. 64(12), pages 1288-1295.
    12. repec:feb:natura:0053 is not listed on IDEAS
    13. Jonker, J.-J. & Piersma, N. & Van den Poel, D., 2002. "Joint optimization of customer segmentation and marketing policy to maximize long-term profitability," Econometric Institute Research Papers EI 2002-18, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    14. repec:feb:artefa:0105 is not listed on IDEAS
    15. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
    16. W. Buckinx & E. Moons & D. Van Den Poel & G. Wets, 2003. "Customer-Adapted Coupon Targeting Using Feature Selection," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/201, Ghent University, Faculty of Economics and Business Administration.
    17. Roland T. Rust & Peter C. Verhoef, 2005. "Optimizing the Marketing Interventions Mix in Intermediate-Term CRM," Marketing Science, INFORMS, vol. 24(3), pages 477-489, December.
    18. Louro, M.J.S. & Pieters, R. & Zeelenberg, M., 2007. "Dynamics of multiple goal pursuit," Other publications TiSEM fcfc1f8f-6eae-41bb-af23-0, Tilburg University, School of Economics and Management.
    19. Bruno Frey & Stephan Meier, 2004. "In a field experiment," Natural Field Experiments 00243, The Field Experiments Website.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Minguez, Ana & Javier Sese, F., 2022. "Why do you want a relationship, anyway? Consent to receive marketing communications and donors’ willingness to engage with nonprofits," Journal of Business Research, Elsevier, vol. 148(C), pages 356-367.
    2. Matthew Donazzan & Nisvan Erkal & Boon Han Koh, 2016. "Impact of Rebates and Refunds on Contributions to Threshold Public Goods: Evidence from a Field Experiment," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 69-86, July.
    3. Diana Barro & Luca Barzanti & Marco Corazza & Martina Nardon, 2023. "Machine Learning and Fundraising: Applications of Artificial Neural Networks," Working Papers 2023: 33, Department of Economics, University of Venice "Ca' Foscari".
    4. Corina Haita-Falah, 2021. "Bygones in a public project," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(2), pages 229-256, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huck, Steffen & Rasul, Imran, 2011. "Matched fundraising: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5), pages 351-362.
    2. Krasteva, Silvana & Saboury, Piruz, 2021. "Informative fundraising: The signaling value of seed money and matching gifts," Journal of Public Economics, Elsevier, vol. 203(C).
    3. Karlan, Dean & List, John A. & Shafir, Eldar, 2011. "Small matches and charitable giving: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5), pages 344-350.
    4. John A. List, 2011. "The Market for Charitable Giving," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 157-180, Spring.
    5. Daniel Rondeau & John List, 2008. "Matching and challenge gifts to charity: evidence from laboratory and natural field experiments," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 253-267, September.
    6. Martin, Richard & Randal, John, 2009. "How Sunday, price, and social norms influence donation behaviour," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 722-727, October.
    7. Simon Gaechter & Daniele Nosenzo & Elke Renner & Martin Sefton, 2009. "Sequential versus simultaneous contributions to public goods: Experimental evidence," Discussion Papers 2009-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    8. Saboury, Piruz & Krasteva, Silvana & Palma, Marco A., 2022. "The effect of seed money and matching gifts in fundraising: A lab experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 425-453.
    9. Simon Gaechter & Daniele Nosenzo & Elke Renner & Martin Sefton, 2009. "Sequential versus simultaneous contributions to public goods: Experimental evidence," Discussion Papers 2009-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    10. Indranil Goswami & Oleg Urminsky, 2018. "No Substitute for the Real Thing: The Importance of In-Context Field Experiments In Fundraising," Natural Field Experiments 00660, The Field Experiments Website.
    11. Adena, Maja & Huck, Steffen, 2022. "Personalized fundraising: A field experiment on threshold matching of donations," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1-20.
    12. Bracha, Anat & Menietti, Michael & Vesterlund, Lise, 2011. "Seeds to succeed?," Journal of Public Economics, Elsevier, vol. 95(5), pages 416-427.
    13. Matthew Donazzan & Nisvan Erkal & Boon Han Koh, 2016. "Impact of Rebates and Refunds on Contributions to Threshold Public Goods: Evidence from a Field Experiment," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 69-86, July.
    14. John List, 2008. "Introduction to field experiments in economics with applications to the economics of charity," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 203-212, September.
    15. Edwards, James T. & List, John A., 2014. "Toward an understanding of why suggestions work in charitable fundraising: Theory and evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 114(C), pages 1-13.
    16. Sánchez, Ángela, 2022. "Group identity and charitable contributions: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 542-549.
    17. Castillo, Marco & Petrie, Ragan, 2020. "Optimal Incentives to Give," IZA Discussion Papers 13321, Institute of Labor Economics (IZA).
    18. Carlsson, Fredrik & Johansson-Stenman, Olof & Pham Khanh, Nam, 2011. "Funding a New Bridge in Rural Vietnam: A field experiment on conditional cooperation and default contributions," Working Papers in Economics 503, University of Gothenburg, Department of Economics.
    19. Deck, Cary & Murphy, James J., 2019. "Donors change both their level and pattern of giving in response to contests among charities," European Economic Review, Elsevier, vol. 112(C), pages 91-106.
    20. Indranil Goswami & Indranil Goswami, 2020. "No Substitute for the Real Thing: The Importance of In-Context Field Experiments in Fundraising," Marketing Science, INFORMS, vol. 39(6), pages 1052-1070, November.

    More about this item

    Keywords

    Charitable giving; Differentiated communication; Field experiments; Fundraising; Seed money; Threshold size;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rug:rugwps:12/815. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nathalie Verhaeghe (email available below). General contact details of provider: https://edirc.repec.org/data/ferugbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.