Collective Reputations Affect Donations to Nonprofits


Article first published online: July 20, 2015

Matthew Potoski, Professor, Bren School of Environmental Science and Management, University of California, Santa Barbara

What was the genesis of the idea for your research/paper?

While teaching nonprofit management a few years ago, students in my class who worked for nonprofits wanted to learn more about how to effectively manage their organization's reputation. My students were finding that their organizations' supporters were making decisions about where to give based on information from a lot of different sources, many of them unrelated to how well the nonprofits were actually performing. I found that nonprofit management research and teaching materials were pretty thin on this topic. A few years later, Laura Grant decided that Charity Navigator ratings would be promising place to explore ideas that would of value to scholars and practitioners alike. Laura had done some great research on how Charity Navigator ratings influenced donor giving.

What is the main conclusion that becomes evident from your research? (Or, what is your main takeaway?)

Even when a nonprofit's own performance stays the same, donors give more to the nonprofit when they learn that its peer nonprofits are performing better and give it less when they learn that its peers are performing worse. Since 2001, Charity Navigator had been rating thousands of nonprofits and grouping them into peer groups. Our analysis combined this Charity Navigator information with data from the IRS on how much each charity received in yearly donations.

What are some of the more interesting or surprising findings/conclusions did you find in the process of bringing this together?

Laura and I found that donors reacted in ways my students had found to be such a challenge: a least part of a nonprofit's reputation is based on factors outside its control. Obviously, this makes public managers' job even more difficult.  Our paper suggests some directions where research help nonprofits manage this challenge more effectively.

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Authors' Bio

Matthew Potoski is Professor at the Bren School of Environmental Science and Management, University of California, Santa Barbara. He has taught courses on business and the environment, persuasion and public policy and management.

He is co-author of The Voluntary Environmentalists (Cambridge, 2006) and Complex Contracting (Cambridge 2014) and has written on a variety of topics including businesses environmental strategies, environmental policy, and nonprofit management.

He is Co-Editor of The Journal of Policy Analysis and Management and the International Public Management Journal. He received his Ph.D. from Indiana University.

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