Toward a theory of charitable fund-raising

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 some times only a small amount of seed money can grow into a substantial charity.