The Design of Charitable Fund-Raising Schemes: Matching Grants or Seed Money?
46 Pages Posted: 10 Mar 2008 Last revised: 14 Jul 2014
Date Written: July 13, 2014
For a fixed large donation a matching scheme that simply uses a one-for-one match ratio can actually raise less money than a seed money scheme. But when the match ratio is chosen to reflect the characteristics of the small donor base so as to exhaust the large donor’s willingness to give, matching schemes always raise more money and are preferred by both charities and large donors. However, when the large donor chooses the size of her donation, a conflict can arise. The large donor can prefer a smaller leadership gift and more reliance on small donor matching while the charity can prefer seed money.
Keywords: Charitable fundraising, matching grants, public goods
JEL Classification: H41, L31
Suggested Citation: Suggested Citation