A Decision Analysis Tool for Evaluating Fundraising Tiers

Kevin F. McCardle (), Kumar Rajaram () and Christopher S. Tang ()
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Kevin F. McCardle: Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095
Kumar Rajaram: Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095
Christopher S. Tang: Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095

Decision Analysis, 2009, vol. 6, issue 1, 4-13

Abstract: This paper presents a utility function model of donors who need to determine their donation to a charity organization that structures and publishes donations by tiers. By considering the prestige associated with each tier level, our analysis suggests that a tiered scheme generates an incentive for donors to raise their donation to the next tier when the originally intended donation is close to the minimum amount for the next tier level. In addition, we develop a decision analysis tool to illustrate how a charity can evaluate the effectiveness of different tier structures. Using publicly available federal tax return data and actual donations to a private high school, we present a method to estimate the model parameters. By taking other nonquantifiable factors into consideration, our tool can guide a charitable organization to determine an effective fundraising tier strategy.

Keywords: Cobb-Douglas utility; public policy; optimization; decision analysis (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ordeca:v:6:y:2009:i:1:p:4-13

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