The Price of Virtue

The Price of Virtue

The Economic Value of the Charitable Sector

Vivien Foster, Susana Mourato, David Pearce and Ece Özdemiroglu

The authors of this pioneering book attempt to address this problem by utilizing survey techniques, originally developed in environmental economics, to place an economic value on the benefits provided by the voluntary sector in the UK.

Chapter 7: Choosing Fundraising Methods

Vivien Foster, Susana Mourato, David Pearce and Ece Özdemiroglu

Subjects: economics and finance, welfare economics, social policy and sociology, comparative social policy


7.1 INTRODUCTION The previous chapter showed that fiscal incentives in the UK do not have such a powerful effect on the disposition to give. Probably more effective than government efforts to promote charitable giving are those that charities make themselves in the form of fundraising. This chapter estimates the returns to these fundraising efforts, and explores the relative efficacy of alternative fundraising techniques. The charity fundraiser is a ubiquitous figure in the real world of philanthropic finance. Indeed, everyday experience suggests that most philanthropic gifts are made in response to some sort of request by a charity fundraiser. A number of voluntary sector statistics indicate that charitable organizations have developed a substantial fundraising apparatus. To give an idea of scale, among the top 500 fundraising charities in the UK, fundraising accounted for 8.8 per cent of total expenditure in 1996/97, amounting to nearly £370 million for the year (Pharoah and Smerdon, 1998). Indeed, between professional charity fundraisers and volunteers, fundraising is estimated to occupy the equivalent of over 150 000 full-time employees. Notwithstanding these fairly well-known features of voluntary sector organization, the charity fundraiser has featured surprisingly little in economic models of philanthropic behaviour, most of which assume that giving is a spontaneous decision of the utility-maximizing consumer. Although there have been some notable recent attempts to remedy this omission (Andreoni, 1998), very little attention has been devoted to the question of how the efforts of the charity fundraiser affect the potential donor’s disposition to make a charitable contribution....

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