| Summary: | 碩士 === 國立臺灣大學 === 企業管理碩士專班 === 104 === This paper explores how a nonprofit organization (NPO) can maximize the contribution its fundraising makes to social welfare. Charity watchdog groups often recommend that a nonprofit’s fundraising expenditures should not exceed a certain fixed percentage of its budget. This is likely to deviate from economic rationality. Throughout the literature on the subject, they can be seen bemoaning the influence of recommendations based on such a fundamental misunderstanding of microeconomics. Clearly, they say, net donations are maximized when the ratio of marginal contributions to marginal fundraising expenses is one. They are, of course, correct; but if fundraising by one nonprofit reduces contributions for another, then such fundraising may be reducing the total output of the two organizations combined even if it is maximizing net contributions for the first. In this paper, I propose a marginal analysis by which nonprofits set a welfare-maximizing level of fundraising, which will often result in a ratio of marginal contributions to marginal fundraising expenses of significantly greater than one. By employing strategic humility and setting their fundraising levels below the amount that would maximize net donations, nonprofits may be able to effect more positive change by doing less.
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