Browsing by Subject "overhead"

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    Is “overhead” a tainted word? A survey experiment exploring framing effects of nonprofit overhead on donor decision
    (SAGE, 2021) Qu, Heng; Levine Daniel, Jamie; School of Public and Environmental Affairs
    Nonprofit overhead ratios (i.e. proportion of funds spent on fundraising and/or management) have long been used as a proxy for nonprofit efficiency. Prior studies find that donors negatively respond to charities with higher overhead. Using a survey experiment, we explore whether providing different types of information about overhead alleviates this donor aversion. When asked to choose between two organizations as donation recipients, donors preferred the organization with lower overhead. However, when presented with information that described the purpose of higher overhead as building long-term organizational capacity, an increased proportion of donors chose to give to the organization with higher overhead. Omitting the word “overhead” further increased the proportion of donors choosing the organization with higher overhead. This study adds to our understanding of overhead aversion and has practical implications for nonprofits that rely on voluntary private contributions to achieve their missions.
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    Tangible Information and Charitable Giving: When (Does) Nonprofit Overhead Matter?
    (2021) Qu, Heng; Levine Daniel, Jamie
    Nonprofit organizations in the U.S. have been under pressure to demonstrate their “worthiness” by minimizing overhead costs. Prior experiment studies find that donors respond negatively to high overhead costs when overhead information is highlighted. In reality, donors receive all sorts of information about nonprofit organizations from various channels. While high overhead has been found to reduce donors’ perceived impact and charitable giving, providing other types of tangible information can increase giving by enhancing donors’ perceived impact. When other types of information are available, to what degree overhead aversion still exists? We use two online survey experiments to examine how information on overhead costs and donation use affect giving intentions to a hypothetical charity in a single-organization and two-organization evaluation setting. Only a small proportion of people demonstrated overhead aversion when presented with a single organization. There was stronger evidence of overhead aversion when participants were asked to compare and choose between two organizations. Providing tangible information about what donations can buy mitigated overhead aversion among male donors. This study contributes to the growing experimental research on the relationship between overhead ratios and charitable giving, and provides practical insights for nonprofits hoping to ameliorate overhead aversion and increase donations.