Do Donors Care About Results? An Analysis of Nonprofit Arts and Cultural Organizations

ABSTRACT:

Nonprofits are facing increasing pressure to measure and demonstrate their performance outcomes. However, we know little about the relationship between a nonprofit’s performance and its ability to attract donations. Do donors value an organization’s performance information when making giving decisions? We find that organizations that are more successful (i.e., attract larger audiences to their programs and more visitors to their websites) tend to receive fewer contributions. Despite a growing culture of performance measurement, the empirical evidence does not provide strong support of its relevance among donors. A plausible theoretical reasoning is that better performance outcomes create the image of success, making organizations look less needy. These results call for more research on the link between performance outcomes and philanthropy.

KEYWORDS::

• donations
• fundraising
• nonprofit
• performance outcomes

Acknowledgments

The data used for this report were provided by the Cultural Data Project (CDP), an organization created to strengthen arts and culture by documenting and disseminating information on the arts and culture sector. Any interpretation of the data is the view of Cleopatra Charles and Mirae Kim and does not reflect the views of the Cultural Data Project. For more information on the Cultural Data Project, visit www.culturaldata.org.

Notes

In the CDP data, the natural log transformed fundraising expenses is highly correlated with the natural log transformed total assets (r = 0.74), raising the issue of multicollinearity. Therefore, unlike Marudas et al. (2012), our model includes only the amount of total assets and does not include fundraising costs. The estimated results of the model with fundraising expenses are not qualitatively different from the estimated results without fundraising expenses.

Additional information

Notes on contributors

Cleopatra Charles

Cleopatra Charles, Ph.D., is an Assistant Professor in the School of Public Affairs and Administration at Rutgers University-Newark.

Mirae Kim

Mirae Kim, Ph.D., is an Assistant Professor in the Harry S. Truman School of Public Affairs at the University of Missouri-Columbia.