Charity rating agencies often focus on overhead cost ratios in evaluating charities, and donors appear to be sensitive …-used metric and a charity’s effectiveness. There is evidence that a focus on overhead costs leads charities to underinvest in … whether donors care about overhead costs, whether they are good measures of charity effectiveness, and what effects a focus on …

this practice, we propose a principal-agent model in which the charity optimally offers a higher commission to a more … “efficient” solicitor, raising the price of giving significantly. Outsourcing is, therefore, profitable for the charity only if … the charity if: (1) donors are unaware; (2) donors have intense “warm-glow” preferences; or (3) the charity worries mostly …