Optimal Targeting in Fundraising: A Causal Machine-Learning Approach
This addresses resource waste in charity fundraising, offering a practical solution with incremental improvements based on existing methods applied to new data.
The paper tackles the problem of ineffective fundraising by charities, using a causal machine-learning approach to optimize targeting of fundraising efforts, resulting in a substantial increase in donations net of costs compared to uniform benchmarks.
Ineffective fundraising lowers the resources charities can use to provide goods. We combine a field experiment and a causal machine-learning approach to increase a charity's fundraising effectiveness. The approach optimally targets a fundraising instrument to individuals whose expected donations exceed solicitation costs. Our results demonstrate that machine-learning-based optimal targeting allows the charity to substantially increase donations net of fundraising costs relative to uniform benchmarks in which either everybody or no one receives the gift. To that end, it (a) should direct its fundraising efforts to a subset of past donors and (b) never address individuals who were previously asked but never donated. Further, we show that the benefits of machine-learning-based optimal targeting even materialize when the charity only exploits publicly available geospatial information or applies the estimated optimal targeting rule to later fundraising campaigns conducted in similar samples. We conclude that charities not engaging in optimal targeting waste significant resources.