Abstract:
Monetary targets are highly prevalent in fundraising campaigns. Although some
theoretical research has been conducted to explain why fundraising organizations set
such targets when charities are raised to ful ll certain capital requirements, there
has been no literature that can suitably answer why a target is still announced when
such capital requirements are not present. On the other hand, empirical studies have
shown that performance-based incentive compensation has become more and more
prevalent in the nonpro t sector. Based on the empirical observations, the author
theorizes that fundraising organizations implement incentive compensation that is
dependent on whether a soft target is reached, in order to motivate the fundraising
sta to exert more e ort in reaching out to potential donors. This paper presents a
theoretical model using a game theory framework to account for the existence of "soft targets" in the fundraising industry.
