Research & Insights
One Tip to Increase Donations
Research finds a reason for all that pesky paperwork.
For nonprofits and charities, the process of preparing annual reports, performance evaluations and financial statements may seem like an arduous task, but new research suggests that making these documents available online can boost donations.
Groups that provide performance information receive more donations than tight-lipped groups, according to a study conducted by communications scholar Gregory D. Saxton his colleagues.
Published in the March-April 2014 issue of the Journal of Accounting and Public Policy, the findings were based on a statistical analysis of the disclosure patterns and fundraising statements of 400 nonprofits of various sizes.
The researchers focused on financial disclosure such as resources and allocations, as well as performance disclosure including information on organizational effectiveness in relation to their mission, vision, values and strategic plan. They also included client stories and testimonials.
Additionally, the researchers recorded the age and purpose of the organizations, how much of their revenue comes from fundraising and the amount of money spent on things like programs, fundraising and administration.
Overall, disclosure had a positive effect on charitable contributions.
“Organizations that make greater use of online disclosure tools will thus fare better in the market for charitable contributions,” report the researchers.
However, the researchers found that financial disclosures were less important than performance disclosures and annual reports.
They suspect that this is because financial disclosures for nonprofits can be found easily on websites such as Charity Navigator, as compared to performance and effectiveness information that is more difficult for a rating agency to obtain.
‘The more dependent an organization is on contributions, the smaller the apparent return from its levels of total disclosure and performance disclosure,” say the researchers. “Our study suggests that, in the market for charitable contributions, Web disclosure plays an additional informational role beyond that of fundraising.”
Gregory D. Saxton, SUNY at Buffalo
Daniel G. Neely, University of Wisconsin-Milwaukee
Chao Guo, University of Pennsylvania