Fame and Transparency: Exploring the Influence of Board Chair Celebrity on Charities' Performance

• In Event: Accountability

Abstract

Transparency is of paramount importance for charities seeking to establish legitimacy, especially in the eyes of donors. The philanthropic sector in mainland China underwent a substantial trust crisis following the 2011 Red Cross scandal, prompting the industry to actively rebuild trust through transparency initiatives. However, not all charities are equally willing to disclose their financial and organizational information, even when mandated by law. While previous research has explored factors influencing voluntary disclosure behaviors, such as organizational attributes and board characteristics (Saxton & Guo 2011; Saxton et al. 2012; Nie et al. 2016; Striebing 2017; Xue & Niu 2019; Zhou et al. 2021), relatively little attention has been paid to the influence of personal traits of charity leaders on information disclosure.

This study seeks to address this research gap by investigating the impact of leader celebrity status on the transparency and overall performance of charitable organizations. In particular, it focuses on the celebrity status of board chairs, who play a central role in charities, holding both the board and executive team accountable for the organization's mission and vision.

Drawing from data collected from 234 charity foundations registered in mainland China that are eligible to raise funds from the public, encompassing 702 observations from 2019 to 2021, this research reveals that the celebrity status of board chairs is positively linked to a charity's transparency, fundraising revenue, and mission-driven expenditure. Furthermore, the study finds that transparency also acts as a mediator in the relationship between board chairs’ celebrity status and fundraising revenue and mission-driven expenditure.

Notably, this research identifies a moderating effect, demonstrating that a charity's brand awareness strengthens the positive relationship between board chair’s celebrity status and transparency. This highlights the crucial role of brand recognition in amplifying the influence of celebrity leaders within the philanthropic sector.

These findings provide fresh insights into the role of charity leaders and their ability to impact an organization's transparency and performance. By emphasizing the significance of leadership and transparency, this study contributes to the ongoing discourse in nonprofit research, offering practical implications for charities looking to enhance their transparency practices and leverage the influence of prominent leaders in an evolving philanthropic landscape especially after a trust crisis.

References

Nie, L., Liu, H. K., & Cheng, W. (2016). Exploring factors that influence voluntary disclosure by
Chinese foundations. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 27, 2374-2400.
Saxton, G. D., & Guo, C. (2011). Accountability online: Understanding the web-based
accountability practices of nonprofit organizations. Nonprofit and voluntary sector quarterly, 40(2), 270-295.
Saxton, G. D., Kuo, J. S., & Ho, Y. C. (2012). The determinants of voluntary financial disclosure
by nonprofit organizations. Nonprofit and voluntary sector quarterly, 41(6), 1051-1071.
Striebing, C. (2017). Professionalization and voluntary transparency practices in nonprofit
organizations. Nonprofit Management and Leadership, 28(1), 65-83.
Xue, Q., & Niu, Y. (2019). Governance and transparency of the Chinese charity
foundations. Asian Review of Accounting, 27(2), 307-327.
Zhou, S., Zhu, J., & Zheng, G. (2021). Whom you connect with matters for transparency:
Board networks, political embeddedness, and information disclosure by Chinese foundations. Nonprofit Management and Leadership, 32(1), 9-28.

Authors

• Qianjin Zhang, Macau University of Science and Technology

• PEILING ZHANG