The more you know, the more you give: Influence of online disclosure on European community foundations' donations

• Published date: 01 September 2020
• Author: Stefano Landi,Gina Rossi,Chiara Leardini
• DOI: http://doi.org/10.1002/nml.21412
• Date: 01 September 2020

RESEARCH ARTICLE

The more you know, the more you give:

Influence of online disclosure on European

community foundations' donations

Gina Rossi

1

| Chiara Leardini

2

| Stefano Landi

3

1

Department of Economics and Statistics,

University of Udine, Udine, Italy

2

Department of Business Administration,

University of Verona, Verona, Italy

3

Department of Management, University

of Ca' Foscari, Venice, Italy

Correspondence

Gina Rossi, Department of Economics

and Statistics, University of Udine, Via

Tomadini 30/A, 33100, Udine, Italy.

Email: gina.rossi@uniud.it

Abstract

Competition is high in the charitable contributions mar-

ket, and donors demand to know how nonprofit organi-

zations use the money they receive. In scrutinizing the

variables that affect the capacity of nonprofits to attract

donations, previous research has highlighted the positive

influence of the amount of financial and performance

information that nonprofits disclose through their

websites. This study explored whether the depth of the

organizations' online disclosures also affects these dona-

tions. In line with existing studies on regression-based

economic models of giving, this study considered commu-

nity foundations—focusing on the United Kingdom and

Italy—and its results indicated that managing the depth

of the information provided through financial reports can

influence donors' sensitivity and willingness to donate.

KEYWORDS

community foundations, donors, fundraising, nonprofit, web

accountability

1|INTRODUCTION

Donations are critical for the revenue that nonprofit organizations require to realize their social mis-

sion; thus, the competition in the market for charitablecontributionsishigh(Alhidari,Veludo-de-

Oliveira, Yousafzai, & Yani-de-Soriano, 2018), especially for younger organizations, which often

spend their start-up years aggressively attracting different types of funding (Lee, Pendharakar, &

Blouin, 2012; Millesen & Martin, 2014). This competition particularly characterizes community

[Correction added on April 20, 2020 after first online publication: ORCID ID added to author Stefano Landi.]

Received: 16 September 2019 Revised: 23 March 2020 Accepted: 25 March 2020

DOI: 10.1002/nml.21412

Nonprofit Management and Leadership. 2020;31:81–101. wileyonlinelibrary.com/journal/nml © 2020 Wiley Periodicals, Inc. 81

foundations (CFs). These organizations—which, in the past, were often considered the “poor cous-

ins”in the family of philanthropic organizations (Hodgson & Knight, 2010)—are currently among

the fastest-growing segments of the nonprofit sector (Harrow, Jung, & Phillips, 2016). The first com-

munity foundation, the Cleveland Trust Company (Ohio), was established in the United States in

1914. Since then, these organizations have increased to 1,874 CFs spread worldwide, with 66% cre-

ated in the past 25 years, and they account for a combined grant-making figure of US$5,028 million.

Although these organizations differ slightly, depending on the country in which they are established

(Guo & Lai, 2019), CFs are grant-making charities that serve a locality's philanthropic needs, and typ-

ically, their funds comprise donations from many donors for that locality (Carman, 2001; Commu-

nity Foundation Atlas, 2014; Graddy & Morgan, 2006; Harrow et al., 2016; Jung, Harrow, &

Leat, 2018; Ostrower, 2007). Thus, to raise funds successfully, CFs must be accountable because “peo-

ple don't feel able to give money to an institution they don't know and don't understand”

(Worldwide Initiatives for Grantmaker Support, 2018, p. 29). Donors must rely on external communi-

cation channels for information because they are usually not directly involved in the management of

the charity. In particular, they view websites in search of high-quality financial and performance

information that would help them make donation decisions (Lee & Blouin, 2017).

The diffusion of internet-based technologies offers organizations considerable potential for

disclosing timely and adequate information to a wide range of stakeholders at a limited cost

(Ingenhoff & Koelling, 2009; Kang & Norton, 2004; Saxton & Guo, 2011, 2012), given that a sin-

gle website can have multiple sections, each targeted to a different audience (Esrock &

Leichty, 2000). Several studies—that have mostly focused on the United States context and have

rarely considered the case of CFs—have highlighted the role of the web in fostering charitable

contributions. When examining the relationship between online accountability and charitable

giving, they have usually focused on the magnitude of web disclosure—that is, the amount of

disclosure items that such organizations provide to donors. However, these studies have not

considered the depth of this web disclosure—that is, the level of detail of the content targeted at

donors (Beck, Campbell, & Shrives, 2010).

Hence, the present study aimed to contribute to filling this gap in the literature by exploring the

relationship between the depth of website disclosure and the level of donations in the European con-

text, becausethe donationsto European CFs haveexperienced the highestrate of growthin numbers

over the past 25 years (Knight, 2017). In particular, given that the organization's age can influence its

ability to attract charitable contributions (Millesen & Martin, 2014; Saxton & Guo, 2011; Tinkelman &

Mankaney, 2007), this study considers 144 United Kingdom and Italian CFs, because these two coun-

trieshave a significantnumber of both old andyoung CFs. First,this study undertakesa content anal-

ysis of the CFs' websites to understand the depth of the financial and performance information these

organizations provide online (Saxton & Guo, 2011). Second, moving from the regression-based eco-

nomic model of giving, this study investigates the relationship between the depth of disclosure and

the amount ofdonations received. Theanalyses findings provide some insights about the disclosure

leversthat can be usedto increase the capacityof a CF to competein the charitabledonationsmarket.

2|LITERATURE REVIEW

2.1 |Web accountability to donors

Accountability to stakeholders, and to donors in particular, is crucial for all nonprofits—

including CFs—that aim to build legitimacy and attract charitable contributions by providing

82 ROSSI ET AL.