Efficiency, stability and the decision to give to nonprofit arts and cultural organizations in the United States

Abstract

Using data from the Cultural Data Project, this study extends the literature by examining the impact of financial disclosure information on donations to arts and culture-related nonprofit organizations in the United States. Results for organization financial stability are for the most part counterintuitive: financially unstable arts and culture-related nonprofits receive more donations. The current analysis supports prior research and finds evidence of a "crowding in" effect for fundraising expenses, suggesting that nonprofits that spend more on fundraising and marketing raise more funds than those that spend less. Additional analysis indicates efficiency matters to donors when it comes to fundraising efforts. As the "cost to raise a dollar" increases donations decrease. Nonprofit managers in arts and culture-related organizations concerned about increasing donations should consider strategies that will increase the efficiency of their fundraising and marketing efforts.