An Experimental Examination of US Individual Donors’ Information Needs and Use

McDowell, Evelyn A.; We, Li; Smith, Pamela

doi:10.1111/faam.12017

Cited by 26 publications

(33 citation statements)

References 30 publications

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“…Disclosure of mission goals, outputs, and outcomes and the possibility of evaluating their congruence with specific measurable targets related to the organization's mission are important for stakeholders providing funds (Hyndman & McConville, 2018). Donors consider information about a nonprofit's mission, goals, programs, and outcomes more than they consider traditional financial information when making donation decisions (Connolly & Hyndman, 2013; McDowell, Li, & Smith, 2013). Despite this, nonprofits' disclosures on mission‐centered performance are limited, perhaps because they experience difficulties in setting targets and measuring achievements against them (Candler, 2001; Hyndman & McConville, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

The more you know, the more you give: Influence of online disclosure on European community foundations' donations

Rossi

Leardini

Landi

2020

Nonprofit Mgmnt & Ldrshp

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Competition is high in the charitable contributions market, and donors demand to know how nonprofit organizations use the money they receive. In scrutinizing the variables that affect the capacity of nonprofits to attract donations, previous research has highlighted the positive influence of the amount of financial and performance information that nonprofits disclose through their websites. This study explored whether the depth of the organizations' online disclosures also affects these donations. In line with existing studies on regression‐based economic models of giving, this study considered community foundations—focusing on the United Kingdom and Italy—and its results indicated that managing the depth of the information provided through financial reports can influence donors' sensitivity and willingness to donate.

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Section: Literature Reviewmentioning

confidence: 99%

The more you know, the more you give: Influence of online disclosure on European community foundations' donations

Rossi

Leardini

Landi

2020

Nonprofit Mgmnt & Ldrshp

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“…They found that 89 percent of donors who chose to view financial accounting information donated to the organization with the highest program ratio—but only 30 percent of participants chose to view any financial information before making their donation. McDowell, Li, and Smith (), using an Internet‐based experiment with thirty‐six undergraduate students, found that participants did not seem to integrate the program ratio into their donation decisions. Van der Heijden () conducted an online experiment in which 226 individuals allocated a theoretical donation among three similar charities, then were allowed to adjust their donations after viewing the program ratios of the charities.…”

Section: Incentives For Managing the Program Ratiomentioning

confidence: 99%

Playing the Numbers Game

Garven

Hofmann

McSwain

2016

Nonprofit Mgmnt & Ldrshp

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Nonprofit organizations are often evaluated using the program ratio: the proportion of mission-related program expenses to total expenses. Nonprofit managers have incentives to manipulate the reporting of financial information to enhance the program ratio. This article reviews the scholarly literature on program ratio management in nonprofit organizations. Prior research has identified several motivations for and methods of program ratio management and provided limited evidence that it occurs. Researchers have explored the consequences of program ratio management and provided a list of factors mitigating such behaviors. The emerging consensus is that the program ratio is of limited usefulness in evaluating nonprofit performance. Keywords: program ratio; program ratio management; nonprofit organizations; earnings management; nonprofit performance measures EXTANT LITERATURE PROVIDES CONSIDERABLE EVIDENCE of many publicly traded, profi t-seeking corporations manipulating reported numbers to infl uence the perceptions and decisions of fi nancial statement users (Dechow and Skinner 2000;Graham, Harvey, and Rajgopal 2005;Habib and Hansen 2008;Healy and Wahlen 1999;Schipper 1989). However, for-profi t corporations are not alone in the practice of intervening in the fi nancial reporting process to present more favorable results. Nonprofi t managers also face pressures to manipulate fi nancial results. Although their success is not measured by profi t margins or rates of return, nonprofi t organizations are evaluated using fi nancial reports.Recently, the nonprofi t sector has grown substantially and has begun to attract more attention. Advances in technology, coupled with broader disclosure requirements by regulators, have increased access to nonprofit financial information. Internal Revenue Service (IRS) Form 990 annual reports are now publicly available through various websites. Th is increased access has resulted in heightened scrutiny of how nonprofi ts spend their money, especially in light of several high-profi le scandals in recent decades (Dimsdale 2009;Shepard and Miller 1994;Simross 1992). Th e role of charity "watchdog" agencies has grown, and donors have become more discriminating when disbursing their scarce resources. Competing with thousands of other nonprofi ts for resources and knowing they are commonly judged on their Nonprofi t Management & Leadership DOI: 10.1002/nml 402 GARVEN, HOFMANN, MCSWAINfi nancial results, some nonprofi t managers may resort to playing a numbers game to make the organization look as favorable as possible. Figure 1 describes the elements of this game.Although management of fi nancial results by profi t-seeking corporations tends to focus on net income, management of fi nancial results by nonprofi ts is more likely to focus on the program ratio (Khumawala, Parsons, and Gordon 2005)-the proportion of total expenses dedicated to providing programs that fulfi ll an organization's mission. Th e program ratio is typically computed as program expenses divided by total expenses. An alt...

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“…This indicates that less than half of the respondents who were really engaged in achieving PBO goals (46.67 percent) were interested in information on the progress and performance of the PBOs. The fact that not every PBO supporter followed relevant developments is a usual phenomenon being described in the scientific literature (Dyczkowski, 2015;McDowell et al 2013;Palmer, 2013). It could be explained by their trust in PBOs and/or their spontaneous, emotion-based actions that are not followed by any further interest in the PBOs.…”

Section: Resultsmentioning

confidence: 99%

“…Direct public and indirect governmental support given to PBOs imposes an obligation on the PBOsnot legislative but at least based on ethical principlesto inform the public about the organisation's activities and performance, thereby demonstrating its accountability for the funds received and spent. However, the government and/or organisations not always disclose such information to the public, which may lead to an increased mistrust of the organisations (McDowell et al 2013). The availability of information to external users in particular not only affects the opinions of individuals on the organisation's activities but also helps to determine the effectiveness of fund collection efforts in the future, the amount of voluntary contributions and the overall level of public support to the organisation (Dyczkowski, 2016).…”

Section: Literature Reviewmentioning

confidence: 99%

Assessment of the Financial Performance Transparency of Public Benefit Organisations

Voitkāne

Jakusonoka

2019

Economics and Culture

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Research purpose. The aim of the research is to assess the transparency of financial performance of public benefit organisations (PBOs). Methodology. To achieve the aim and to accomplish the tasks set, general-scientific methods were used: the monographic method, the method of document analysis and the graphical method. A statistical analysis method – descriptive statistics – and a sociological research method – surveying – were used as well. Findings. Since 1 October 2014 when the Public Benefit Organisation Law came into force in Latvia, the number of PBOs has been increasing every year. On 1 January 2018, the number of organisations with valid PBO status had reached 2,775. To get an insight into the opinions of Latvian PBOs on the disclosure of financial information, a questionnaire was developed. The survey was attended by 201 respondents. The questionnaires revealed that 64.68 percent of the respondent organisations had a website or a web page on a social network, although only 21.89 percent of these respondents' websites contained some sort of financial information. In parallel with the PBO survey, a society survey was conducted to get an overview of the public opinions about the need to make PBO financial information freely available. The survey was attended by 116 respondents. The results indicated that although the PBO attitude to the disclosure of financial information was considered to be reserved, the public saw the need for such information. In view of the insufficient availability of financial information in the country and the low activity of PBOs themselves in voluntarily disclosing their financial information on their websites, it is necessary to carry out activities that supplement free-access information resources and/or motivate the organisations themselves to provide free access to such information. Practical implications. Based on the experience of other European countries, the Ministry of Finance has to consider amending the PBO Law to oblige PBOs to publish their annual financial and performance reports on their websites or in an equivalent way, thereby contributing to the transparency and accountability of the PBOs towards the society.

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An Experimental Examination of US Individual Donors’ Information Needs and Use

Cited by 26 publications

References 30 publications

The more you know, the more you give: Influence of online disclosure on European community foundations' donations

The more you know, the more you give: Influence of online disclosure on European community foundations' donations

Playing the Numbers Game

Assessment of the Financial Performance Transparency of Public Benefit Organisations

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