This paper provides a theoretical framework to understand the tendency of non governmental organisations (NGOs) to cluster and the circumstances under which such clustering is socially undesirable. NGOs compete through fundraising for donations and choose issues to focus their projects on. Donors have latent willingness-to-give that may differ across issues, but they need to be ”awakened” to give. Raising funds focusing on the same issue creates positive informational spillovers across NGOs. Each NGO chooses whether to compete in the same market (clustering) with spillovers, or to face weaker competition under issue specialization. We show that equilibrium clustering is more likely to occur when the share of multiple-issue donors is relatively large, and when the fundraising technology is sufficiently efficient. Moreover, this situation is socially inefficient when the cost of fundraising takes intermediate values and the motivation for donors’ giving is relatively high. We illustrate the mechanisms of the model with several case studies.

Samaritan Bundles: Fundraising Competition and Inefficient Clustering in NGO Projects / Gani, Aldashev; Marini, Marco; Verdier, Thierry. - In: THE ECONOMIC JOURNAL. - ISSN 1468-0297. - 639:130(2020), pp. 1541-1582. [10.1093/ej/ueaa031]

Samaritan Bundles: Fundraising Competition and Inefficient Clustering in NGO Projects

Marco Marini;
2020

Abstract

This paper provides a theoretical framework to understand the tendency of non governmental organisations (NGOs) to cluster and the circumstances under which such clustering is socially undesirable. NGOs compete through fundraising for donations and choose issues to focus their projects on. Donors have latent willingness-to-give that may differ across issues, but they need to be ”awakened” to give. Raising funds focusing on the same issue creates positive informational spillovers across NGOs. Each NGO chooses whether to compete in the same market (clustering) with spillovers, or to face weaker competition under issue specialization. We show that equilibrium clustering is more likely to occur when the share of multiple-issue donors is relatively large, and when the fundraising technology is sufficiently efficient. Moreover, this situation is socially inefficient when the cost of fundraising takes intermediate values and the motivation for donors’ giving is relatively high. We illustrate the mechanisms of the model with several case studies.
2020
Altruism; Philanthropy; Foreign Aid; Oligopoly and Other Imperfect Markets; Nonprofit Institutions; NGOs; Social Entrepreneurship
01 Pubblicazione su rivista::01a Articolo in rivista
Samaritan Bundles: Fundraising Competition and Inefficient Clustering in NGO Projects / Gani, Aldashev; Marini, Marco; Verdier, Thierry. - In: THE ECONOMIC JOURNAL. - ISSN 1468-0297. - 639:130(2020), pp. 1541-1582. [10.1093/ej/ueaa031]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1374988
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