The Design of Charitable Fund-Raising Schemes: Matching Grants or Seed Money?

46 Pages Posted: 10 Mar 2008 Last revised: 14 Jul 2014

See all articles by Ning Gong

Ning Gong

Deakin University; Financial Research Network (FIRN)

Bruce D. Grundy

University of Melbourne

Date Written: July 13, 2014

Abstract

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

Gong, Ning and Grundy, Bruce D., The Design of Charitable Fund-Raising Schemes: Matching Grants or Seed Money? (July 13, 2014). Available at SSRN: https://ssrn.com/abstract=1103680 or http://dx.doi.org/10.2139/ssrn.1103680

Ning Gong (Contact Author)

Deakin University ( email )

Department of Finance
Faculty of Business and Law
Burwood, Victoria 3125
Australia
+61 3 9246 8492 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Bruce D. Grundy

University of Melbourne ( email )

Faculty of Economics & Commerce
Department of Finance
Victoria, 3010
Australia
+61 3 8344 9083 (Phone)
+61 3 8344 6914 (Fax)

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