By Helin Gai
Monetary targets are highly prevalent in fundraising campaigns. Although some theoretical research has been conducted to explain why fundraising organizations set such targets when charities are raised to fulfill certain capital requirements, there has been no literature that can suitably answer why a target is still announced when such capital requirements are not present. On the other hand, empirical studies have shown that performance-based incentive compensation has become more and more prevalent in the nonprofit sector. Based on the empirical observations, the author theorizes that fundraising organizations implement incentive compensation that is dependent on whether a soft target is reached, in order to motivate the fundraising staff to exert more effort in reaching out to potential donors. This paper presents a theoretical model using a game theory framework to account for the existence of \soft targets” in the fundraising industry.
Advisor: Huseyin Yildirim
