Joint Fundraising Appeals: Allocation Rules and Conditions That Encourage Aid Agencies' Collaboration

ABSTRACT Collaborative fundraising mechanisms—known as joint fundraising appeals—have received increasing attention as innovative ways to reduce fundraising competition between aid agencies. While some aid agencies participate in joint fundraising activities, others consider that the disadvantages outweigh the benefits. Based on the analysis of two‐stage sequential game theory models, the article identifies key factors that affect aid agencies' decisions about participation in a joint fundraising mode. Our analysis indicates that expected effects of the joint fundraising mode depend on aid agencies' efficiency levels. For efficient aid agencies, the joint mode functions as a buffer to prevent them from fierce competition. In the case of inefficient aid agencies, the competitive mode saves aid agencies from underinvestment in fundraising activities. We classify representative allocation rules currently applied in the humanitarian context into three types. Our analysis shows that these allocation rules only lead to beneficial allocations for limited circumstances. Following the analysis of the three representative allocation rules, the present work also analyzes aid agencies' negotiation‐based allocation without predetermined allocation rules, using generalized Nash bargaining.