A Theory of Outsourced Fundraising: Why Dollars Turn into 'Pennies for Charity'

dc.contributor.author

Paskalev, Z

dc.contributor.author

Yildirim, H

dc.date.accessioned

2016-12-05T23:58:41Z

dc.date.issued

2014-12-06

dc.description.abstract

Charities frequently rely on professional solicitors whose commissions exceed half of total donations. To understand this practice, we propose a principal-agent model in which the charity optimally offers a higher commission to a more “efficient” solicitor, raising the price of giving significantly. Outsourcing is, therefore, profitable for the charity only if giving is very price-inelastic. This, however, clashes with empirical evidence. We show that paid solicitations can benefit the charity if: (1) donors are unaware; (2) donors have intense “warm-glow” preferences; or (3) the charity worries mostly about watchdog ratings. We argue that informing the public of the mere existence of paid solicitations may be the most effective policy available.

dc.identifier.uri

https://hdl.handle.net/10161/13165

dc.publisher

Elsevier BV

dc.relation.ispartof

Economic Research Initiatives at Duke (ERID) Working Paper

dc.subject

fund-raising

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solicitation

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outsourcing

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charitable giving

dc.title

A Theory of Outsourced Fundraising: Why Dollars Turn into 'Pennies for Charity'

dc.type

Journal article

pubs.issue

189

pubs.notes

Source info: Economic Research Initiatives at Duke (ERID) Working Paper No. 189

pubs.organisational-group

Duke

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Economics

pubs.organisational-group

Trinity College of Arts & Sciences

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