A Theory of Charitable Fund-Raising with Costly Solicitations

Alvaro J. Name-Correa and Huseyin Yildirim

American Economic Review, 2013, vol. 103, issue 2, 1091-1107

Abstract: We present a theory of charitable fund-raising in which it is costly to solicit donors. We fully characterize the solicitation strategy that maximizes donations net of fund-raising costs. It is optimal for the fund-raiser to target only the "net contributors" -- donors who would give more than their solicitation costs. We show that as the income inequality increases, so does the level of the public good, despite a (potentially) non-monotonic fund-raising strategy. This implies that costly fund-raising can provide a novel explanation for the non-neutrality of income redistributions and government grants often found in empirical studies.

JEL-codes: D64 L31 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.2.1091
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Citations: View citations in EconPapers (12)

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