Nonprofit fundraising with virtual reality

An increasingly competitive fundraising environment and the new media ecosystem have prompted nonprofit organizations to strengthen their digital marketing capabilities. Recently, a few nonprofits have used virtual reality (VR) technology in fundraising, which raises questions about its effectiveness. Does VR work, and if so, through what psychological mechanisms? Through a lab experiment, the usefulness of VR as a digital fundraising tool was investigated. Specifically, we compared the media effects of experiencing the same fundraising video on two different devices: (a) a head‐mounted VR and (b) a tablet. The results revealed that donation intention, perceived vividness, perceived interactivity, and social presence were all significantly greater with the VR medium than with the tablet medium. Next, we tested and successfully verified the mediation effect of social presence on donation intention. Finally, we verified that a viewer's sensation‐seeking tendency served as a moderator when the device type influenced donation intention. Specifically, the media effects of VR were stronger for high sensation seekers than for low sensation seekers. This study contributes to theory and research by verifying the VR fundraising effect and identifying the key role of social presence, and it also provides important managerial guidelines for media design in VR fundraising campaigns.     

What Affects the Strategic Priority of Fundraising? A Longitudinal Study of Art,Culture and Humanity Organizations’ Fundraising Expenses in the USA

Fundraising is a crucial activity for many nonprofit organizations. However, scant research has examined how the strategic priority of fundraising activities may vary across organizations and over time. This study addresses this gap in knowledge by examining how economic and organization-specific financial conditions predict the priority of fundraising in a nonprofit organization. In particular, this study examines the changes in the ratio of art, culture and humanities organizations’ fundraising expenses to their total expenditure during the period of 2005–2012, which includes the great recession of 2007–2009. The findings reveal that, when facing an economic crisis, the ratio of fundraising expense to total expenditure increases, suggesting that fundraising becomes a higher priority under a hostile economic condition. The analysis also reveals differences in nonprofits’ reaction to recession depending on their revenue mix, with donative nonprofits reacting more sensitively than commercial nonprofits.     

Predictive models for annual fundraising and major gift fundraising

For most nonprofit organizations, the selection process for determining the best individual prospects for capital campaigns or annual fund drives are ad hoc and intuitive. Our research provides two statistical models developed from the alumni database at Northwestern University for both major gifts and annual fund prospects. One model predicts which individuals will give $100,000 or more over three years, the other, $1,000 or more. Our work provides a means of more efficiently selecting fundraising prospects. In our analysis, we combine geo-demographic data with the internal data typically found in alumni databases. A metric is presented to test the viability of the models when compared to single-criterion models. We show that past giving is the strongest single factor in predicting future giving. However, full models provide superior overall results.     

How Pervasive Are Abuses in Fundraising Among Nonprofits?

This article explores selected fundraising information for charitable nonprofits, asking whether widespread abuses might exist in this sector. After examining the pervasiveness of fundraising and its relation to mission, we show that a few nonprofits raise a majority of sector charitable revenues, and we present the ratio of funds raised to funds spent on fundraising by mission categories. We find that 72 percent of charitable nonprofits do not report direct fundraising expenditures, 5 percent of the active fundraising nonprofits obtain 90 percent of total funds raised, mission is related to a nonprofit's ability to raise funds, the median nonprofit spends about 9.6 percent of total raised funds for fundraising, and only one in five nonprofits hires a professional fundraiser. At least in terms of the measures used in this report, widespread abuses are not obvious.     

Does meeting standards affect charitable giving? An empirical study of New York metropolitan area charities

Charitable donations constitute a significant revenue source for many nonprofit organizations. To help donors decide which nonprofits to support, watchdog organizations such as the Better Business Bureau (BBB) Wise Giving Alliance have developed standards to promote wise giving. The effectiveness of these guides in channeling limited resources to the best‐managed nonprofits is not widely studied. This research attempts to empirically investigate the effects of standards on public giving, controlling for factors that have documented effects on donations. Specifically, it regresses public support on the extent to which local nonprofits meet the standards of the Better Business Bureau Serving Metropolitan New York, Mid‐Hudson and Long Island Regions, controlling for organization size, board size, service category, government funding, fundraising expense, and giving price. The study found that BBB standards have a positive effect on giving behavior. Meeting BBB standards is associated with higher levels of public support. Participating in assessment programs and striving to meet the standards are recommended for nonprofits seeking to improve funding through charitable contributions. Further study that extends the search for the mechanism that links meeting standards to improved donations is recommended.     

Relationship Fundraising: How to Keep Donors Loyal

This article explores how relationship marketing and its variant relationship fundraising may be used to assist nonprofits in reducing the lapse rate of donors to their organization. Employing a postal survey of ten thousand donors to causes in a variety of categories, the author concludes that although approximately one in five donors might lapse because of a change in financial circumstances, a similar number simply elect to switch their support to other organizations. The role of the quality of service offered to the donor in enhancing retention is also highlighted, as are donor perceptions of the feedback they receive and the impact they believe their gift might have on the cause.     

Cause-related marketing,fundraising, and environmental nonprofit organizations

This article provides policy guidance to environmental nonprofit organizations, and, secondarily, to other nonprofits, that are considering entering into a cause-related marketing (CRM) alliance. Toward that end, insights into establishing CRM committees, sponsorship development, and regulatory awareness are offered to environmental nonprofit managers. The author argues that strong consumer support for local environmental concerns translates into strategic fundraising opportunities for regional, state, and local environmental organizations that have underutilized CRM in the past.     

The economic value of volunteers to nonprofit organizations

This article applies microeconomic theory to the problem of calculating the economic value of volunteers to nonprofit organizations. It finds weaknesses in two popular valuation metrics: replacement cost and demand price. It argues for a method that measures the economic value of volunteer time by the impact it has on an organization's revenue, through either fundraising or producing goods and services. An Australian case study illustrates the method, and a survey of U.S. nonprofits tests the generality of the assumptions. The concluding section offers suggestions for management practice and further research.     

Environmental Nonprofit Campaigns and State Competition: Influences on Climate Policy in California

Over the past 20 years, the US Federal Government has been considered to be intransigent in its response to climate change by many commentators and not-for-profit environmental advocacy organizations (nonprofits). An enduring source of pressure on the US Government has been nonprofit campaigns operating at both a state and federal level. Six US environmental nonprofits representing a diversity of resources and prominence were selected for an in-depth examination of their climate-focused campaigns. Given the resistance at the federal level, these nonprofits have undertaken state-focused campaigns to achieve adequate climate policy development. This research examined some climate campaigns in California by the selected nonprofits that have supported, enhanced, and influenced the Californian Government’s efforts to address climate change. The campaigns have gained leverage from existing state competition for economic advancement and political leadership on issues of public concern. In addition, they appear to have benefited from a high level of environmental awareness in the community, a history of progressive environmental legislation, Governor Schwarzenegger’s use of climate change to differentiate his political leadership, and strong public trust of nonprofits. Recent climate-related political pledges and legislative changes at a federal level are convergent with the nonprofit-influenced, state-level developments.     

The Effects of the Facial Expression of Beneficiaries in Charity Appeals and Psychological Involvement on Donation Intentions

To increase the effectiveness of fundraising campaigns, many human‐need charities include pictures of beneficiaries in their ads. However, it is unclear when and why the facial expression of these beneficiaries (sad versus happy) may influence the effectiveness of charity ads. To answer these questions, an experiment was conducted to investigate the effect of the facial expression on donation intentions, while considering the moderating role of psychological involvement with charities. It found that psychological involvement with charities moderated the impact of the facial expression on donation intentions in that seeing a picture of a sad versus happy person increased intentions to give among participants with lower levels of psychological involvement, whereas the reverse was true for highly involved participants. The moderating effect of psychological involvement was fully explained by the perceived efficacy of one's donation. The findings not only contribute to our understanding of the effect of the facial expression of people pictured in charity appeals on donation behavior, but also suggest that nonprofits should tailor their ads to target potential donors with various levels of psychological involvement with charities.     

How does a board of directors influence within‐ and cross‐sector nonprofit collaboration?

Board members play a significant, yet largely unexamined, role in nonprofit collaboration. Processes, such as finding prospective partners, creating common ground with a partner, and establishing appropriate collaborative governance implicate nonprofit board members. In contrast to the scholarship of the role of interlocking directorates as potential networks for nonprofit collaboration, this paper examines the role of board members' social and human capital on nonprofit collaboration with other nonprofits, businesses, and government agencies. Drawing on online survey data from 636 nonprofit organizations, this paper finds that board social capital—but not board human capital—is positively related to the presence and number of within‐sector and cross‐sector nonprofit collaboration. However, board human capital enhances nonprofit‐government collaboration, when board social capital is also high. The results provide a novel perspective in nonprofit collaboration and board management research.     

The Investment Returns of Nonprofit Organizations,Part II

We continue our examination of the investment performance of nonprofit charities and foundations. This analysis tests hypotheses about what types of organizations do better. Our motivating intuition is that nonprofits with greater focus on investment performance will secure higher returns. Our hypotheses are tested by regressing the rate of return for each organization on various characteristics. As expected, nonprofits whose primary business is predominantly financial, such as insurance providers and pension or retirement funds, consistently earn higher returns. The data also support our hypotheses that larger nonprofits, older nonprofits, and private foundations will tend to outperform. The evidence is mixed as to whether nonprofits that pay higher executive salaries or spend more on management earn higher returns.     

The Impact of Societal-Level Institutional Logics on Hybridity: Evidence from Nonprofit Organizations in England and France

We examine how societal-level institutional logics impact the way in which hybridity develops in nonprofit organizations using international, comparative and qualitative case studies of community regeneration organizations in England and France. The research applies theoretically based conjectures about types of hybridity to empirical data generated from 20 interviews, document analysis and observation in five nonprofits in the city of Lyon and five in Sheffield. We find that the French nonprofits are ‘blended’ hybrids that integrate state and community institutional logics, while ‘assimilated’ hybrids combining state, community and market logics are found in the English cases. Undertaking contextually situated analysis of institutional logics generates new knowledge on the influences on nonprofits’ rules, practices and narratives, so improving the level of knowledge about, and capacity to manage, this sector.     

Using Donor Lifetime Value to Inform Fundraising Strategy

The successful quantification in monetary terms of the value of a donor to a voluntary organization can be a valuable aid to the subsequent development of fundraising strategy. Despite the significance of the concept of lifetime value (LTV), however, many nonprofits remain uncertain as to exactly how it might be calculated. This article reviews the contribution that LTV can make to fundraising and provides a conceptual framework within which it might be calculated.     

Latino Faces,Corporate Ties: Latino Advocacy Organizations and Their Board Membership

Although they have increased exponentially since the 1960s, social scientists know little about ethnic advocacy organizations. These nonprofits are important bridges between underresourced communities and mainstream funding organizations and their directors are established ethnic leaders. Sociologists study interlocking directorates—or shared board membership—to understand how organizations fit together within broader social networks. Network concepts, particularly the theory of institutional isomorphism, suggest that organizations are likely to be similar to the extent they are connected and operate within a common organizational field. We apply this logic to Latino advocacy organizations to examine the underlying source of cohesion across this ethnic field. We ask whether the organizations are tied by interlocking directorates of ethnic elites who sit on their boards of directors or if board members' common affiliation with other elite institutions creates the structural conditions that facilitate potential ideological or behavioral similarity. A social network analysis of five prominent Latino advocacy organizations reveals support for both hypotheses: Latino board members are both embedded in ethnic‐based networks and entrenched within elite organizational webs. This suggests that ethnic elites who sit on the boards of Latino advocacy organizations are also corporate elites, selected for the social capital they bring to these nonprofits.     

Playing to the Test: Organizational Responses to Third Party Ratings

External ratings of organizations have proliferated in the last few decades, impacting not only the behavior of consumers but also of the organizations being rated. This phenomenon has been widely studied in regards to the U.S. News and World Reports ratings of universities and law schools. This article strives to understand how third party ratings impact the behavior of nonprofits using the financial data the nonprofits provide in their IRS Forms 990. The results show that such ratings are, in fact, having an effect on how nonprofits report financial information on the IRS Form 990.     

Does Fundraising Professionalization Pay?

Although fundraising organizations in the third sector have gone through a progressive professionalization process, it remains unclear whether this development has led to any financial benefits. This article focuses on the question of whether or not it pays off for fundraising organizations to invest in professionalization. The data for this study come from 165 organizations representing 45 percent of the Swiss fundraising market. We first propose the term “organizational fundraising capability” as a new construct for measuring the degree of professionalization and rationalization in fundraising management. We then analyze its relationship to overall net revenue from donations as well as the growth of net revenue from donations. Our analysis indicates that, in addition to organizational size measured by total revenue, revenue share from donations, and expansion strategy, fundraising capability makes an important contribution to explaining both an institution's net revenue from fundraising and the level of increase in net donations. The consequences for the development of professionalization and rationalization in fundraising are discussed.     

FUNDRAISING INTERMEDIARIES INHIBIT QUALITY‐DRIVEN CHARITABLE DONATIONS

Charitable donations are frequently raised by an intermediary, which accepts donations and subsequently sends the proceeds to the chairty—for example, a workplace campaign for United Way, a 5‐km walk for Susan G. Komen, or buying cookies from a local troop for the Girl Scouts. These fundraisers can greatly increase donations received by a given charity, but how do they affect what types of charities we support? This article shows intermediary fundraisers can make donors insensitive to differences in charity quality: Unattractive charities can receive the same financial support as an attractive charity. In a series of across‐subject experiments, when donations are framed as going directly to the charity, unattractive charities receive fewer and smaller contributions relative to attractive charities; however, when donations for the same charities are collected by (meaningless) intermediary fundraising campaigns, donations become indistinguishable across charities. The fundraising campaign does not affect donor recall of charity identity or evaluation of charity quality; it simply precludes donors from using these data in the donation decision. Follow‐up experiments suggest the results are driven by information overload. (JEL A13, C91, C93, D61, D64, H41)     

The effect of recommended contributions in the voluntary provision of public goods

Recommended contributions are often observed in fundraising campaigns for charitable and other public goods. We present an experiment investigating the impact of recommended contributions in a voluntary threshold public goods process. We find that when valuations for the public good are heterogeneous, recommended contributions significantly increase the likelihood of efficient provision, although when valuations are homogeneous, the effect of recommendations is less compelling. This article represents a first step in understanding recommended contributions and other nonbinding, cheap-talk announcements in public goods provision and charitable contributions.