The Impact of Financial Information and Voluntary Disclosures on Contributions to Not-for-Profit Organizations: A Field-Based Experiment
29 Pages Posted: 20 May 2003
The relationship between the management of and donors to a not-for-profit firm is an example of a situation with information asymmetry. This study examines whether it is possible for nonprofit managers to increase donations received if they provide signals to convey the efficiency and effectiveness of their operations.
A field-based experiment uses a real 501(c)3 organization to investigate whether accounting information reduces perceived uncertainty about nonprofit operations. Potential donors were sent, via a direct mail campaign, fundraising appeals containing varying amounts of financial and nonfinancial information in order to determine whether individual donors 1) are more likely to contribute and 2) donate greater amounts when accounting information is provided.
A logistic regression provides evidence that some donors use financial accounting information when making a donation decision. Donors who had previously contributed to the organizations are more likely to give when financial efficiency measures are provided to them directly.
Keywords: voluntary disclosures, service efforts and accomplishments, not-for-profit, field experiment
JEL Classification: M41, M45, M48
Suggested Citation: Suggested Citation