Steve Buchheit
Texas Tech University
Linda M. Parsons
George Mason University
Abstract: Not-for-profit organizations are required to provide donors with certain financial accounting information upon request. Although financial measures are ideal for communicating the efficiency with which the organization operates, they are ill-suited for measuring how well a charitable organization is meeting the needs of its beneficiaries. Qualitative, nonfinancial information, such as that contained in optional service efforts and accomplishments (SEA) disclosures, is more appropriate for assessing effectiveness.
Previous accounting research studies have shown that greater financial efficiency is associated with higher subsequent donations. However, there has been little examination of whether and how voluntary SEA disclosures benefit individual donors. This study uses a laboratory experiment to investigate whether voluntary disclosures of nonfinancial information are useful to individual donors when making a charitable giving decision. The study provides evidence that SEA disclosures are informative to potential donors and provide incremental information beyond required financial disclosures.
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