Poster #26 - Not All Ratings Are Equal: Decomposing Rating Effects on Nonprofit Resource Mobilization

• In Event: Friday Poster Reception

Abstract

The nonprofit sector depends on private giving and volunteer labor to deliver public-interest services, yet donors and volunteers face severe information asymmetry in evaluating organizational quality. Third-party rating systems such as Charity Navigator and GuideStar have emerged as central informational infrastructure to mitigate this asymmetry, and substantial evidence shows that donors do respond to ratings even when the signal is noisy or self-reported (Haque, 2026; Gordon et al., 2009; Sloan, 2009; Barber et al., 2022).

However, prior literature still lacks a complete picture of how stakeholdersa respond to nonprofits’ performance ratings. First, ratings are typically treated as a single composite indicator, masking that distinct dimensions -  financial performance, transparency and accountability - may operate through different mechanisms; few studies separating these dimensions rely on survey experiments rather than revealed behavior (Banding & Mayangsari 2017; Wu & Dai, 2025). Second, research has focused exclusively on monetary donations, leaving open whether ratings also mobilize volunteer participation (Haque, 2026). Also, there is a lack of evidence regarding how environmental turbulence and uncertainty moderate these relationships.

This paper asks whether the two dimensions of nonprofit ratings differentially mobilize external resources, and whether their relative effects diverge across donations and volunteers. Drawing on signaling theory (Spence, 1973), we argue that the financial score satisfies the asymmetric-cost condition and operates as a credible efficiency signal. Drawing on legitimacy theory (Suchman, 1995), we argue that the T&A score signals conformity with institutional norms of accountability and is salient for volunteers. Furthermore, grounded in contingency theory (Lawrence & Lorsch, 1967), we posit that the COVID-19 pandemic served as a critical environmental moderator, amplifying the influence of financial ratings on donors while heightening the salience of T&A scores for volunteers.

We build an organization-year panel (2020–2023) merging GuideStar Korea ratings — disaggregated into Financial and T&A scores — with annual National Tax Service disclosures by Korean public-interest corporations. We estimate organization-level fixed-effects regressions with organizational controls. Donations and volunteer counts are modeled as separate dependent variables; Financial and T&A scores enter as separate independent variables rather than being collapsed into a composite total. We also employ the COVID-19 period as a moderating variable to examine the impact of temporal conditions on the relationships between ratings and donations, as well as volunteer counts. As a robustness check, we also conduct first-difference models and inverse probability-weighted two-way fixed-effects models to address potential endogeneity concerns.

Guided by the dual-theoretical framework, we expect that financial scores will exert a stronger positive effect on donations than T&A scores, while T&A scores will exert a relatively larger effect on volunteer mobilization. We further posit that these divergent patterns are amplified during periods of environmental turbulence. These patterns would demonstrate that treating ratings as unidimensional understates heterogeneous effects across resource types. These findings would suggest that “the rating effect” is not unitary — financial efficiency and accountability dimensions activate distinct stakeholder responses. The study is expected to provide the revealed-behavior panel evidence but distinct pathways shaping nonprofit resource mobilization.

Author

• Il Hwan Chung, Sungkyunkwan University
  Presenting Author