A Decision Analysis Tool for Evaluating Fundraising Tiers

Decision Analysis, Vol. 6, No. 1, pp. 4-13, March 2009

Posted: 24 Oct 2008 Last revised: 28 Apr 2009

See all articles by Kevin F. McCardle

Kevin F. McCardle

University of California, Los Angeles (UCLA) - Anderson School of Management

Kumar Rajaram

University of California, Los Angeles - Anderson School of Business

Christopher S. Tang

University of California, Los Angeles (UCLA) - Decisions, Operations, and Technology Management (DOTM) Area

Date Written: March 2009

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 non-quantifiable 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

JEL Classification: C44

Suggested Citation

McCardle, Kevin F. and Rajaram, Kumar and Tang, Christopher S., A Decision Analysis Tool for Evaluating Fundraising Tiers (March 2009). Decision Analysis, Vol. 6, No. 1, pp. 4-13, March 2009, Available at SSRN: https://ssrn.com/abstract=1288324

Kevin F. McCardle (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Kumar Rajaram

University of California, Los Angeles - Anderson School of Business ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Christopher S. Tang

University of California, Los Angeles (UCLA) - Decisions, Operations, and Technology Management (DOTM) Area ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://www.anderson.ucla.edu/x980.xml

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