Learning by Fund-raising

Abstract

From experience, fund-raisers learn to become more efficient solicitors. This paper incorporates fund-raising technology into the theory of charitable giving. A full characterization of the solicitation strategy that maximizes donations net of fund-raising costs is provided. The strategy identi.es a fundraiser incentive to invest in learning by soliciting some early donors who would give less than their solicitation costs. A notion of “excessive” fund-raising is introduced. It is shown that this may worsen with learning. Our model also accomodates a technology with overhead costs. An extension with rising solicitation costs is also considered.