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Do Donors Penalize Nonprofit Organizations with Accumulated Wealth?

Authors


Thad D. Calabrese is an assistant professor in the School of Public Affairs at Baruch College, City University of New York. He teaches courses on government budgeting, nonprofit finance, and accounting. His research interests focus on financial management issues facing the nonprofit and government sectors. Before completing his dissertation in 2009 and entering academia, he worked in both nonprofits and local government in the fields of budgeting and finance.
E-mail:thad.calabrese@baruch.cuny.edu

Abstract

Does current accumulated wealth by nonprofit organizations influence contributions from individuals? Existing research demonstrates that financial reserves aid program continuity during economic downturns. Yet donors, charity watchdogs, and policy makers voice concern about accumulated wealth in nonprofits. This empirical analysis examines whether the expected negative relationship occurs when donors perceive accumulated wealth as excessive. The results support the conclusion that future contributions are negatively affected when wealth levels are deemed excessive. Nonprofit managers concerned that accumulated wealth will diminish donations should consider financial strategies that will allow their organizations to build modest—but not excessive—reserves.

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