Open AccessBreaking the nonprofit starvation cycle? An experimental test
Author(s) -
Tian Yi,
ChiaKo Hung,
Peter Frumkin
Publication year - 2020
Publication title -
journal of behavioral public administration
Language(s) - English
Resource type - Journals
ISSN - 2576-6465
DOI - 10.30636/jbpa.31.93
Subject(s) - overhead (engineering) , test (biology) , perspective (graphical) , transparency (behavior) , agency (philosophy) , starvation , economics , political science , computer science , biology , sociology , law , paleontology , social science , artificial intelligence , endocrinology , operating system
Donors' overhead aversion leads to a starvation cycle that hampers the ability of nonprofits to fulfill their missions. This study provides new evidence and suggests possible solutions to break the starvation cycle. Drawing on agency theory, this study adopts a between-subject experimental design to test two strategies for nonprofits with high overhead that seek to overcome donors' overhead aversion. The results suggest that donors are indeed troubled by high overhead ratios. However, charitable contributions to high-overhead nonprofits could be significantly increased if the nonprofits provide information regarding their organization’s performance and transparency. The study contributes to the literature in two ways: It analyzes the starvation cycle from the donors' perspective rather than nonprofits' perspective, and it tests proactive strategies in response to overhead aversion. This study concludes that breaking the nonprofit starvation cycle could begin with nonprofits taking a more open and direct stance when confronting the issue of overhead aversion.