Does the Internet Increase Fundraising Revenues of Nonprofit Organizations?: An Economic Analysis

Abstract

Nonprofit organizations have been using the Internet for disseminating information about themselves, interacting with potential donors, and fundraising. In this chapter, we focus on online service providers for nonprofits (OSPNs) that bring donors and nonprofits together in an electronic environment to help them find a suitable match. We investigate the effects of OSPNs on the outcomes of fundraising markets by developing an economic model. We compare the total net revenues of nonprofits competing for donations in two different settings: while nonprofits in the first market use both the traditional fundraising techniques and the services provided by OSPNs, those in the second market implement the traditional method only. We derive analytical conditions under which the first setting provides better outcomes than the second one can generate.