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Article
A Theory of Charitable Fund-raising with Costly Solicitations
American Economic Review (2013)
  • Alvaro Name Correa, Duke University
  • Huseyin Yildirim, Duke University
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.
Disciplines
Publication Date
2013
DOI
DOI: 10.1257/aer.103.2.1091
Citation Information
Alvaro Name Correa and Huseyin Yildirim. "A Theory of Charitable Fund-raising with Costly Solicitations" American Economic Review Vol. 103 Iss. 2 (2013) p. 1091 - 1107
Available at: http://works.bepress.com/huseyin_yildirim/2/