Nonprofit Fund-Raising in Competitive Donor Markets
Nonprofit and Voluntary Sector Quarterly, Vol. 35, No. 2, pp. 204-224, June 2006
39 Pages Posted: 1 Apr 2008 Last revised: 24 Jun 2009
Abstract
Fund-raising expenditures represent an important strategic decision for nonprofit managers inthe face of scarce donor resources. Privately, nonprofit managers weigh the trade-off between reaching new donors and increasing the implicit price of output to its constituents. Socially, competition among nonprofit firms for donations may produce an excessive level of fund-raising. This article empirically examines nonprofit fund-raising decisions, privately and socially, under varying market conditions. Analysis of financial data reveals that as markets become more competitive, nonprofits follow their private incentives by reducing their fund-raising expenditures. However, the author finds evidence that, collectively, nonprofits may spend an inefficiently high share of their revenues on fund-raising. As such, the author offers alternatives to the common practice of collective fund-raising through institutions such as the UnitedWay. Implications of the study include increasing price transparency to improve market discipline or raising legal and financial barriers to entry.
Keywords: nonprofit, fund-raising, market structure, efficiency
JEL Classification: L13, L31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Beauty is a Beast, Frog is a Prince: Assortative Matching with Nontransferabilities
By Patrick Legros and Andrew F. Newman
-
Incentives in Markets, Firms and Governments
By Daron Acemoglu, Michael Kremer, ...
-
Signaling and Screening of Workers' Motivation
By Josse Delfgaauw and Robert Dur
-
Incentives and Workers' Motivation in the Public Sector
By Josse Delfgaauw and Robert Dur
-
Incentives and Workers' Motivation in the Public Sector
By Josse Delfgaauw and Robert Dur