Do Donors Penalize Nonprofit Organizations with Accumulated Wealth?

Abstract

Does current accumulated wealth by nonprofi t organizations infl uence contributions from individuals?Existing research demonstrates that fi nancial reserves aid program continuity during economic downturns. Yet donors, charity watchdogs, and policy makers voice concern about accumulated wealth in nonprofi ts. Th is empirical analysis examines whether the expected negative relationship occurs when donors perceive accumulated wealth as excessive. Th e results support the conclusion that future contributions are negatively aff ected when wealth levels are deemed excessive. Nonprofi t managers concerned that accumulated wealth will diminish donations should consider fi nancial strategies that will allow their organizations to build modest-but not excessive-reserves.

As You Sow, So Shall You Reap?

“…The capacity grant information includes 528 applications from 260 of the 415 nonprofits covering twelve years (2003–2014). The financial data span fifteen (2000–2014) years and were compiled from all 415 nonprofits’ 990 IRS tax forms as available through the National Center for Charitable Statistics Core Data Files, which were cleaned following Calabrese () to exclude annual observations that included erroneous financial data. The final panel included 5,052 observations of organizations’ yearly data with an average of twelve years of data per organization.…”

Do ‘Good Governance’ Codes Enhance Financial Accountability? Evidence from Managerial Pay in Dutch Charities

“…In this setting, agency problems arise if the quality or quantity of that product diverges from donor expectations. In particular, the absence of intense monitoring by a residual‐claimant and the presence of multiple principals with different objectives provide managers in nonprofit organisations a greater opportunity to expropriate the firm's assets and engage in opportunistic behaviour (Calabrese, ; Jegers, and ; and Szper and Prakash, ). This, in turn, tests the ability of the principal‐agent framework to resolve questions of accountability, although the assumptions behind agency theory may not apply in a nonprofit context (Caers et al., ; and Van Puyvelde et al., ).…”

Necessary but Not Sufficient

“…1 Just as advertising expenses drive future sales in for profit organizations, nonprofits' fundraising expenses have a positive impact on future donations (Calabrese, 2011;Gordon et al, 2009). Trussel and Parsons (2003) indicate that advertising expenses represent the quantity of information nonprofits provide to potential donors about their organization and its operations.…”