Economics Senior Thesis The United Way’s Effects on Donor Behavior
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Economics Senior Thesis The United Way’s Effects on Donor Behavior
Economics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behavior Donor BehaviorIntroductionThe United Way of America (UWA) is one of the oldest charities in the United States. The United Way began in 1913 in Cleveland and has grown from that one branch into an organization of over 1,300 branches in the U.S.; each with local leadership from the community and a lo Economics Senior Thesis The United Way’s Effects on Donor Behaviorcal branch manager. Each community branch follows the headquarters’ guidelines and regulations. Ever)' local United Way raises its own funds in an annEconomics Senior Thesis The United Way’s Effects on Donor Behavior
ual campaign that occurs in the fall. In 2006, the combined annual campaign of all United Ways generated over S4.07 billion dollars, clearly making itEconomics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviory that allows the United Way to fundraise for their organizations. The United Way’s sole purpose is to fundraise; organizations whose purpose is to fundraise are called "federated funds”. The United Way’s service is to raise funds at a lower cost than most non-profits can on their own. The United Wa Economics Senior Thesis The United Way’s Effects on Donor Behaviory, due to economies of scale, can raise funds at a small cost of only 10 cents per dollar. Once the funds have been collected they are distributed amoEconomics Senior Thesis The United Way’s Effects on Donor Behavior
ng member organizations. Member organizations are those that have a contract with the United Way, and there are hundreds of such partners. 57% of the Economics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor BehaviorScouts, Boys Clubs, YMCAs, YWCAs, the Salvation Army, and the Red Cross.1 See: http://www.unitedway.org/annualreport/index.cfm, accessed 12/13.'O73 See: http://www.unltedway.org/annualreporvindex.cfm accessed 12/13/073 Eleanor Brilliant. The United Viũy. Dilemmas of Organized Charity (Columbia: Colu Economics Senior Thesis The United Way’s Effects on Donor Behaviormbia University Press 1990), p.302The United Way has received much criticism for its allocation process and the small number of new member organizatioEconomics Senior Thesis The United Way’s Effects on Donor Behavior
ns that are admitted every year, rhe allocation process of the United Way involves community members that democratically decide where funding is placeEconomics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviorited Way begins with the formation of panels made up of community7 volunteers from all walks of life. United Way staff members organize the panels that review memfter agencies’ programs to assess lheir importance. The panels then deliberate and complete an allocation recommendation to the boatd of g Economics Senior Thesis The United Way’s Effects on Donor Behaviorovernors (leaders of the United Way)1. The board of governors has the opportunity to amend the recommendations as it sees fit. Many criticize this proEconomics Senior Thesis The United Way’s Effects on Donor Behavior
cess because they argue that the United Way may restrict the growth of young nonprofits because of the difficultly of becoming a member agency and itsEconomics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behavior if so. whether that inhibits the amount of social welfare in the nation.In order for the United Way to allocate funds, it must first raise the funds to allocate. The major source of funding of the United Way is professional work places, rhe all branches of the United Way have adopted a weekly payro Economics Senior Thesis The United Way’s Effects on Donor Behaviorll deduction system to raise the majority of its funds? Under this system, the United Way asks a company's employees to pledge a portion of their weekEconomics Senior Thesis The United Way’s Effects on Donor Behavior
ly salary, which the employer automatically deducts from employees' weekly paychecks and then gives this amount to the local UWA blanch. Illis system Economics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behavior main access (0 this system is through the United Way; therefore giving it monopoly status in work place solicitation. This thesis will determine if the alleged monopoly status of the United Way is statistically proven by seeing what percent market share the United Way has in the nonprofit industry. Economics Senior Thesis The United Way’s Effects on Donor BehaviorOnce monopoly status has been identified, this thesis will study the effects of the monopoly on the nonprofit market. This study will answer whether tEconomics Senior Thesis The United Way’s Effects on Donor Behavior
he allocation process of the United Way prohibits entry, it will also answer whether the fundraising efforts of the United Way are more efficient thanEconomics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviorl will be constructed to see if the existence of the monopoly affects the demand and supply of the market. I hypothesize that the United Way is a monopoly that engages in exclusionary pricing, which reduces the price to donate below the average variable costs of potential entrants into the market. T Economics Senior Thesis The United Way’s Effects on Donor Behaviorhis exclusionary pricing deters entry and fewer nonprofits enter the market. I hypothesize that the reduction in nonprofits will cause less aggregateEconomics Senior Thesis The United Way’s Effects on Donor Behavior
donations to occur, and social welfare will be reduced.Section 1: Literature ReviewAccording to the findings of an anonymous article (1982) in The YalEconomics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviornonprofit that can solicit in the workplace creates a barrier to entry into the nonprofit market. To charities that are unable to join federated funds like the United Way, the existence of federated funds represents a large threat. The United Way exists to conduct joint fundraising on the4https://kh Economics Senior Thesis The United Way’s Effects on Donor Behaviorothuvien.cori!behalf of (heir member agencies6 * *. The United Way has adopted a very effective solicitation system: the payroll deduction system. ThiEconomics Senior Thesis The United Way’s Effects on Donor Behavior
s article found that this system accounted for approximately 2.4 billion dollars of the United Way’s revenues, which account for 60% of the overall reEconomics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviorween the cost efficiency of the payroll deductions and the disruption of workplace solicitation lead to single-fund drives headed by the United Way. This article finds that most employers allow the United Way to solicit giving in the workplace because of their name recognition; this gives the United Economics Senior Thesis The United Way’s Effects on Donor Behavior Way a natural advantage. .Furthermore, this article finds that federated funds only admit organizations under their umbrella that have proven their vEconomics Senior Thesis The United Way’s Effects on Donor Behavior
alidity as an independent charily for several years, therefore making it very difficult to gain the support of the United Way. In addition federated fEconomics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviors behavior excludes many nonprofits from entering the nonprofit market. The article demonstrates that many nonprofits that have beeti denied membership in a federated fund or direct access to workplace solicitation, have filed lawsuits claiming that the federated fund has violated the Sherman Act. T Economics Senior Thesis The United Way’s Effects on Donor Behaviorhe Yale Law Journal article brings attention to the possible legal actions that could be taken if the United Way continues to deter entry into the marEconomics Senior Thesis The United Way’s Effects on Donor Behavior
ket.’ Anonymous, “United Charities and the Sherman Act,” The Yale Law Journal, Vol.91, No. 8 (July 1982): 1593.The Yale Law Journal p. 15956 The Yale Economics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviornor Markets, argues the opposite of the Yale Law Journal and states that the noncompetition is beneficial for the market. Thorton bases his argument on solicitation costs. He suggests that donors are sensitive to expense ratios and therefore the demand curve for donations is downward sloping. Thorto Economics Senior Thesis The United Way’s Effects on Donor Behaviorn’s theory is that an increase in competition may force fundraising costs to inefficiently high levels, meaning donors will donate less due to the incEconomics Senior Thesis The United Way’s Effects on Donor Behavior
rease in overhead costs10. Thorton is implying that the donation market is a natural monopoly where it is more efficient to have less competition and Economics Senior ThesisThe United Way’s Effects on Donor BehaviorBy Matt BonniwellUniversity of Puget Sound Class of 20081The United Way’s Effects on Economics Senior Thesis The United Way’s Effects on Donor Behaviorex to prove the concentration of the market and that as the concentration of the market increases, aggregate solicitation decreases. The model in this paper suggests that as the HH1 index becomes more concentrated, more donations are received. This suggests that the lack of competition reduces the a Economics Senior Thesis The United Way’s Effects on Donor Behaviormount of solicitation as Thorton suggests, and increases the number of donations because there is less competition. According to Thorton, the market sEconomics Senior Thesis The United Way’s Effects on Donor Behavior
hould be highly concentrated because it is more efficient.Solicitation and its costs have a large impact on the nonprofit market. According to GreenleGọi ngay
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