The impact of fundraising inefficiency on donations to nonprofit organizations

Only one study, Greenlee and Brown (1999), tests the effect that the fundraising inefficiency ratio (fundraising expenses / total expenses) has on donations to nonprofit organizations (NPOs). However, the model in their study omits factors known to affect donations, such as fundraising, and organizational age and wealth, thereby substantially misspecifying the model. We improve on their model by testing a better-specified autoregressive model that includes important factors known to affect donations. We find a significant negative relation between donations and fundraising inefficiency, while Greenlee and Brown (1999) find a perverse significant positive relation. Our results should be of interest to NPO managers, "watchdog agencies", and regulators of NPOs.Godkänd; 2007; 20071203 (keni