The Effect of Large Corporate Donors on Nonprofit Performance

• In Event: Current Topics in Not-For-Profit Accounting

Abstract

Using a dataset of corporate philanthropic gifts of $1 million or more, we examine the influence of large corporate donors on the performance of recipient nonprofit organizations (NPOs). We find that large corporate donors positively influence NPO performance, specifically in form of higher revenues per employee, program ratios, and fundraising efficiency. We also find little evidence that large foundation or individual donors similarly enhance organizational performance. Additionally, our results are concentrated in NPOs where the corporate philanthropist appears to be more familiar with the organization it donates to. Overall, these findings suggest that corporate donors provide the monitoring and expertise needed to enhance organizational performance beyond simply providing funding to NPOs. While prior research has examined the effect of corporate philanthropy on the donor’s organization performance, we contribute to the literature by examining whether corporate philanthropy also improves recipient organization.

Authors

• Andrew Finley, Claremont McKenna College

• Curtis Hall, Drexel University

• Erica Harris, Villanova University

• Stephen John Lusch, Texas Christian University