More Donor Categories = More Donations

A new paper by Emily Zitek and Benoit Monin helps explain why your organization has 72 categories of donors:

Many fundraisers report donations using categories such as more than £ 1,000, more than £ 10,000 etc. One naturally wonders how we should categorise donations and whether categorising raises more than simple uncategorised reporting. To answer these questions, we employ a signalling game framework in which both the donor’s donation and his benefits of being in a higher category are determined endogenously. We find that categorised reporting can always improve fundraising. Both high and low category thresholds can increase donations, with prior beliefs determining which is better. While categorising can lead to the existence of a low donation equilibrium, it is less problematic if signalling benefits are low.

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