The Influence of Financial Efficiency and Affect on Individual Donors' Donation Decisions

Evelyn A McDowell, Rider University
Wei Li, Kent State University

ABSTRACT: Prior studies provided conflicting evidence on whether individual donors prefer to donate money toward nonprofit organizations that are financially efficient. Moreover, none of the studies provide theoretical explanations for their findings. Motivated by the void, the current paper intends to extend prior research by providing a theoretical explanation for why individual donors may not prefer to donate money toward efficient organizations. Specifically, based on prior research and psychology theory on affective reactions, the current study hypothesizes that individual donors do not have a noticeable preference for the more efficient organizations because their donation decisions are influenced more by whether and how much a nonprofit organization can invoke their affective reactions than by how financially efficient the organization is. These hypotheses are supported by the examination of individual donors’ actual donation decision process through a web-based experiment.

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