Toward a Theory of Charitable Fund‐Raising

Abstract

Private providers of public goods, such as charities, invariably enlist fund‐raisers to organize and collect contributions. Common in charitable fund‐raising is seed money, either from a government grant or from a group of “leadership givers,” that launches the fund drive and generates additional gifts. This paper provides a theoretical basis for fund‐raisers and seeds to charity. The primary assumption is that there is a range of increasing returns at low levels of provision of the public good. It is shown that fund‐raisers have a natural and important role, and that sometimes only a small amount of seed money can grow into a substantial charity.