use of donor-specified donation splitting: a technique to understand the impact of financial...

International Journal of Nonprofit and Voluntary Sector MarketingInt. J. Nonprofit Volunt. Sect. Mark. 19: 165–175 (2014)Published online 1 April 2014 in Wiley Online Library(wileyonlinelibrary.com) DOI: 10.1002/nvsm.1493

Use of donor-specified donation splitting: atechnique to understand the impact offinancial management on donor trustChris Burt* and Skye WilliamsPsychology, University of Canterbury, New Zealand

• Two experiments investigated donors’ willingness to split their donation into a proportion that the

charity could use for administration costs and a portion that could be used to deliver the charity’s

services. Experiment 1 found that participants in the condition given the opportunity to split their

donation into an amount for administration costs and an amount for service delivery gave a signif-

icantly smaller proportion of their overall donation to administration costs, when compared with

participants in another condition who were simply asked what proportion of their donation they

would be happy for the organization to use for administration costs. Experiment 2 manipulated

the amount of information participants (donors) received about the breakdown of a charity’s ad-

ministration costs but found no significant change in the amount donated to administration. Both

experiments show that donors were willing to donate approximately 15% of their donation directly

to charity administration costs. Results are discussed in terms of understanding how a charity’s

financial management might be influencing donor’s trust in the charity and providing charities

with a degree of certainty in the proportion of donations they can spend on administration costs.

Copyright © 2014 John Wiley & Sons, Ltd.

Introduction

Charities are now routinely using the internet as anonline fund-raising mechanism, and research intothis approach to fund-raising is increasing (e.g. Burt& Dunham, 2009; Burt & Gibbons, 2011; Fox &Carr, 2000; Goatman & Lewis, 2007; Gueguen &

*Correspondence to: Chris Burt, Psychology, University ofCanterbury, Christchurch 8140, New Zealand.E-mail: [email protected]


Jacob, 2001; McWah & Carr, 2009; Powell, 2005;Richard, 2008; Sargeant, 2001; Sargeant & Jay,2003; Sargeant et al., 2007; Water, 2007; Wenhamet al., 2003). Research on online donating has gener-ally focused on how to improve fund-raising. In thisstudy, the focus is on how online donating can beused to provide charities with information to assessthe impact of their financial management on donortrust. Funds raised for a charity are generally usedto provide financial support for running the organi-zation and fund-raising expenses, what we will term

Int. J. Nonprofit Volunt. Sect. Mark., August 2014

DOI: 10.1002/nvsm

166 Chris Burt and Skye Williams

administration costs, with the remaining fundsused to deliver the services provided by the charity.An issue that appears to have received little researchattention and that is addressed in this study iswhether donors are willing to split their donationinto these two broad cost components. That is, willdonors donate directly towards the administrationcosts of a charity? Online donating makes donor-controlled donation splitting functionally possi-ble, and the process could potentially provide acharity with information that allows an under-standing of donor trust in the charity and thus futurefund-raising potential.Clearly, there is an implicit assumption by donors

that a proportion of every dollar donated will beused to fund the running of the charity (administra-tion costs), with the remainder going towards theservices that the charity provides. This splitting ofdonations is no trivial matter. Research has shownthat the proportion of a donation that a charity usesfor administration costs is associated with donor’strust (confidence) in the charity organization (e.g.,Burt & Dunham, 2009). Donors who are moretrusting of (have more confidence in) a charity tendto think that less of donations is being spent on ad-ministration costs (Sargeant et al., 2006). Thus, iftoo much of a donation is used for administrationcosts, donors are likely to lose trust in the charity.Many scholars have commented on the impor-

tance of donor trust to the fund-raising process(e.g. Bekkers, 2003; Bruce, 1994: Drucker, 1990;Kotler & Andreasen, 1991; Mullin, 1995; Sargeant& Lee, 2004; Sumption, 1995). Thus, any declinein donor trust is likely to adversely affect futurefund-raising potential. In line with this reasoning, anumber of authors have argued that charities needto be efficient, with the goal of keeping administra-tion costs to a minimum and thus ensuring ongoingtrust and support from donors (e.g. Burt, 2012;Ebrahim & Rangan, 2010; Ebrahim & Weisband,2007; Gibelman & Gelman, 2001; Kearns, 1996;Van Iwaarden et al., 2009; Young et al., 1996). Thekey importance of the issue of proportioning do-nated funds to administration and service delivery


has prompted a number of scholars to attempt to de-termine what an acceptable proportional split mightbe. In this case acceptable is defined as a donationsplit that is acceptable to donors and is not likelyto undermine donor trust in the charity.Two different approaches can be identified in the

literature, which provide insight into what is anappropriate proportion of donated funds to usefor administration costs. In the first approach, do-nors are simply asked what proportion of a donationis acceptable to use for administration costs.Warwick (1994) reported that individuals appearto consider a ratio between administration costsand service expenditure of 20 : 80 to be acceptable(20% of every dollar can be used for administrationcosts). Van Iwaarden et al. (2009) obtained a similarfinding, with the majority of participants indicatingthat administration costs should be less than 20%.Harvey and McCrohan (1988) reported a ratio of40 : 60 and also reported that non-profit organiza-tions that spent at least 60% of funds on servicesachieved significantly higher levels of donation. Itseems probable that individuals asked about the pro-portion of donations that could be used for adminis-tration costs, because of the social desirability ofresponding positively to questions about povertyand need, might well give a slightly larger value thanthey really would be happy with. Thus, the valuesreported earlier may have limited utility for acharity, and achieving these values may not ensurethe maintenance of donor trust.Although social desirability bias can be found

across a wide spectrum of cross-sectional surveydata, it is also clear that such biasing applies to dataon charitable giving and related issues. Several stud-ies have demonstrated this empirically (e.g. Bekkers& Wiepking, 2011; Burt & Popple, 1998; Wilhelm,2007) and Lee and Woodliffe (2010) provide a usefulreview. Further recognition of the problem isreflected in Lee and Sargeant’s (2011) developmentand validation of a multi-dimensional social desirabil-ity scale specifically for use in giving surveys. Over-all, there seems to be ample evidence to support theprediction that donors’ reports of what proportion


DOI: 10.1002/nvsm

167Donation splitting

of their donation can be used for administration willbe an overestimation of what proportion they aretruly likely to find acceptable.The second way that the donation split has been

examined is in research on the concept of price,which analyses actual charity expenditure. The termprice is used to define the amount of money neededfrom donors to obtain $1 for services. As such, priceis related to the proportion of total donations usedfor administration (Tinkelman, 1998; Weisbrod &Dominguez, 1986), and in line with the researchon trust development, research has found that lowerprice is correlated with higher donations (e.g.Callen, 1994; Greenlee & Brown, 1999; Tinkelman,1998, 1999; Weisbrod & Dominguez, 1986).Sargeant et al. (2009), in their analysis of 115 UKnon-profit organizations, found that the mean priceper £1 of donation was £1.21 (stated in a differentway, the organizations sampled were spending onaverage 21% of each pound raised on administrationcosts). As might be expected, significant variationsin this price figure were found between organiza-tions serving different categories of need. Interest-ingly, the average price figure reported by Sargeantet al. (2009), although in a different currency, issimilar to the $1.28 reported by Chen (2009) froman examination of 730 American-based non-profitorganizations. Although the research on priceshows what monies charities (on average) seem toneed for administration costs, it does not addressthe issue of whether donors find this acceptable.The third way a charity could understand how

their division of donated funds may influence theirdonor’s trust is to use donor-specified donation split-ting, the technique that is investigated in this paper.If online donating can be successfully used to allowdonors to donate specifically for administrationcosts, a charity would clearly know that they canspend that proportion of donations on administra-tion without undermining the trust of their donors.Furthermore, the separation between the charity’strue price value (how they are currently proportion-ing their donated funds) and the proportion thatdonors donate directly to support administration


costs could provide a clear insight into how thecharity’s administration spending could be influenc-ing donor trust. When the gap between true priceand the proportion donated directly to administra-tion costs is small, donor trust is probably not beingcompromised. However, when the gap is large, thecharity may need to address its administration costsin order to maintain donor trust and ensure the suc-cess of future fund-raising.Two experiments were conducted to examine the

feasibility of using the donor-specified donationsplitting technique. Both experiments used betweengroup designs and an online donating format. In onecondition of experiment 1, participants were giventhe opportunity to split their donation into twocomponents: a donation towards administrationcosts and a donation towards services. In the othercondition, participants were simply asked to makea donation and at the end of the experiment wereasked what proportion of their donation they wouldbe happy for the charity to use for administration(labelled the retrospective condition). Thus, experi-ment 1 tested hypothesis 1: that participants in the

retrospective condition would indicate that a

larger donation proportion can be used for admin-

istration costs, based on the social desirability of

responding positively to such questions, when

compared to the proportion donated directly to

administration in the donation split condition.Charity trust was also measured, along with a num-ber of other variables to ensure that the participantsin the experimental conditions were equivalent.

Experiment 1

Method

Participants

Sixty-two New Zealand university students volun-teered to participate in experiment 1. Participantswere randomly assigned to one of two experimentalconditions. Eight men (mean age 21.2 years) and21 women (mean age 21.8 years) participated in


DOI: 10.1002/nvsm


the direct donation split condition. Eleven men(mean age 20.5 years) and 22 women (mean age22.2 years) participated in the retrospective dona-

tion split condition. The experiment was conductedin 2011.

Procedure and materials

Participants completed the experiment one at atime in a small office. They were seated at a com-puter and given an instruction sheet, whichcontained an informed consent statement and thefollowing information: The study will take approxi-

mately five minutes to complete. Upon completing

this study you will be reimbursed $5 for your

participation. This study will require you to inter-

act with a non-profit organizations website. The

homepage of the website is inactive with the excep-

tion of the ‘Please donate now’ and ‘No thank you’

buttons, which are active. During the study you

will be given an opportunity to make a donation

using your $5 to … , a New Zealand based non-

profit organization. One hundred percent of your

donation will be given to ….

Participants that consented then viewed thecharity’s homepage and decided whether theywanted to make a donation by clicking either theDonate now or the No thank you button. Partici-pants that made a donation completed the donationpage before going to the measures section, whereasparticipants that declined to donate went directly tothe measures section presented using QUALTRICS

survey software. The length of time each participantspent on the charity’s homepage, from when thehomepage was loaded until when they clickedeither the Donate now or the No thank you button,was measured.The study website consisted of a homepage and

two different donation pages. The homepage wascopied directly from a charity’s website and modi-fied only by the addition of a No thank you buttonplaced under the Donate now button. The charityagreed to participate in the research and was


referred to by name in all instructions. However, topreserve the charities confidentially the name hasbeen removed and replaced with … in the descrip-tions presented here.The donation page differed across the two exper-

imental conditions. In the direct donation splitcondition, participants were able to decide howto allocate their money between the servicesprovided by the charity and the administrationfunction of the charity. The page showed threeboxes, with the top two boxes labelled servicesand administration respectively. The bottom boxwas labelled total donation and automaticallyshowed the sum of the other two boxes. Thefollowing instructions were given: Thank you for

indicating that you would like to donate to ….

Donated funds are used to deliver …. services

and products, and also to support the administra-

tion of the organization. Please indicate how you

would like your donation to be used by … by

entering your donation amount into the boxes

below. Then press the next button.

In the retrospective split condition, the donationpage showed only one box, and participants weregiven the following instructions: Thank you for in-

dicating that you would like to donate to ….

Please indicate how much you would like to do-

nate to … by entering your donation amount into

the box below. Then press the next button. Aftercompleting all the other measures (described inthe succeeding text), participants in the retrospec-tive split condition were asked to respond to the fol-lowing question: Please indicate what percentage

of your donation you would be happy for … to

use for administration costs.Research suggests that donation intentions are

strongly predictive of actual donation behaviour(Cheung & Chan, 2000; Fox & Carr, 2000). How-ever, in both experiments, we asked for actualdonations. In order to facilitate this, each partici-pant was reimbursed $5 (paid in five $1 coins)for participating in the study. This money wasthus available for the participant to make a dona-tion from. Note that all donations made in this


DOI: 10.1002/nvsm


experiment, and in experiment 2, were passed onto the charity.The first page of the measures section asked par-

ticipants for demographic information: age, gender,how many times they had donated to charities inthe last 12months and to rate how familiar theywere with the services offered by the charity usinga 5-point scale (1 =not familiar at all to 5 = ex-

tremely familiar). The order of the next three pageswas counterbalanced across participants andcontained scale measuring dispositional trust, altru-ism and trust in the charity. Dispositional trust andaltruism, charity trust and familiarity, and frequencyof donating in the last 12months were measured toensure that the participants in the two experimentalconditions were equivalent on these factors.Dispositional trust was measured using nine items

selected from the International Personality ItemPool (2009). Participants responded to each itemusing a 5-point scale (1 = strongly disagree to5 = strongly agree). A sentence stem of You tend

to see yourself as someone who… proceeded eachitem. Example items are…believes that others have

good intentions, …believes that people are basi-

cally moral, …believes in human goodness. Fouritems were reversed scored, and ratings for theitems were summed and divided by the number ofscale items to form a dispositional trust score. Thealpha coefficient for this scale was 0.84.

Table 1. Means and standard deviations for experiment 1 conditio

Direct donation spl

Time spent viewing homepage (s) 20.2 (18.6)Familiarity with charity 2.97 (1.0)Number of donations in the last 12months 3.3 (5.5)Altruism 3.8 (0.44)Trust 3.4 (0.70)Charity trust 4.3 (0.57)Amount donated $4.73 (1.09)Percentage of donors giving or consentingto administration cost use of donation

29.4

Percentage of donation for administrationcost use

11.1 (19.6)

ns, not significant.


Altruism was measured using 10 items selectedfrom the International Personality Item Pool (2009).Participants responded to each item using a 5-pointscale (1= strongly disagree to 5 = strongly agree). Asentence stem of You tend to see yourself as some-

one who… proceeded each item. Example itemsare …anticipates the needs of others, …has a

good word for everyone, …is concerned about

others. Five items were reversed scored, andratings for the 10 items were summed and thendivided by the number of scale items to form analtruism score. The alpha coefficient for this scalewas 0.85.Charity trust was measured using a five-item

scale developed by Sargeant and Lee (2004). Anexample item is I would trust the non-profit to

always act in the best interests of the cause.Participants responded using a 5-point scale(1 = strongly disagree to 5 = strongly agree).The item ratings were summed and dividedby the number of items to generate a charitytrust score. The alpha coefficient for this scalewas 0.92.

Results

Table 1 shows means and standard deviationsfor each experimental condition. Despite random

ns

it Retrospective donation split ANOVA comparison

18.9 (17.8) F(1, 60) = 0.085, ns2.67 (1.1) F(1, 60) = 1.177, ns1.3 (1.6) F(1, 60) = 3.685, ns4.0 (0.55) F(1, 60) = 2.197, ns3.4 (0.55) F(1, 60) = 0.082, ns4.3 (0.64) F(1, 60) = 0.000, ns

$5.00 (0.00) F(1, 35) = 1.182, ns95.0 z=4.143, p< 0.01.

41.0 (39.1) F(1, 35) = 8.114, p< 0.01


DOI: 10.1002/nvsm


assignment to the experimental conditions, it wasimportant to compare the conditions on the twopersonality variables (trust and altruism), trust inthe charity, time spent viewing the homepage, famil-iarity with the charity and number of donationsmade in the last 12months to ensure that partici-pants in the conditions were equivalent. Analysisof variance results are shown in Table 1 and indi-cate no significant differences between the condi-tions on these variables.Seventeen participants (58.6%) in the donation

split condition and 20 participants (60.6%) inthe retrospective condition made a donation. Abinomial test of proportional difference indicatedthat these proportions were not significantly dif-ferent z = 0.64. Table 1 shows the mean amountdonated by participants in each condition, and acomparison of these means indicated no signifi-cant between condition difference. In contrast, abinomial test of proportional difference indicatedthat the percentage of donors that donated toadministration costs in the donation split condi-tion was significantly smaller than the percentageof donors from the retrospective condition whoindicate they were happy for a percentage oftheir donation to be used for administrationcosts. Finally, the amount that participants inthe donation split condition donated to adminis-tration was converted to a percentage of theiroverall donation and was compared with thepercentage values (the percentage of their dona-tion they were happy to be used for administra-tion costs) given by the retrospective conditionparticipants. Table 1 shows the condition meansand standard deviations for the percentagevalues, and the between condition comparisonindicated that the donation split condition hada significantly smaller mean percentage. Both ofthe significant between condition differencesreported above support hypothesis 1: that re-ported support for administration costs in theretrospective condition would larger than theproportion donated to administration in the dona-tion split condition.


Experiment 2

Experiment 1 confirmed that obtaining donations tosupport administration costs directly from donors ispossible. This suggests that the donation splittingtechnique is feasible. Experiment 1 also confirmedthe prediction that donating directly to administra-tion would identify that a smaller proportion of fundsshould be used to support administration costs, com-pared with the proportion that participants say theyare happy for the charity to use for this function.Thus, arguably, the donation splitting technique canprovide a charity with a more accurate representa-tion of how donors would like their donations used.Experiment 2 attempted to replicate the finding

that donors would donate directly to administrationcosts (the feasibility of the donation splittingtechnique) and also attempted to determine if theproportion donated towards administration costswould be influenced by varying the amount of infor-mation about how administration money was beingused. A charity can select the amount of informationthey provide donors about their financial manage-ment of donations. Providing a detailed breakdownof how administration money is spent could be seenas providing a degree of justification for the spend-ing, in contrast to providing just a single percentagefigure (i.e. 15% of donations are used to coveradministration costs). Thus, experiment 2 testedhypothesis 2: that providing a breakdown of ad-

ministration spending, and thus a degree of justifi-

cation for the spending, would result in the

proportion being donated to support administra-

tion being closer to the actually used or required

spending on administration.

Method

Participants

Sixty New Zealand university students volunteered toparticipate in experiment 2 (none had participated inexperiment 1). Participants were randomly assignedto one of two experimental conditions. Seven men


DOI: 10.1002/nvsm


(mean age 24.7 years) and 25 women (mean age23.1 years) participated in the low-information

condition. Nine men (mean age 22.1 years) and 19women (mean age 24.0 years) participated in thehigh-information condition. The experiment wasconducted in 2011.

Materials and procedure

All aspects of experiment 2 were exactly the sameas those in the direct donation split condition ofexperiment 1, including the procedure and allthe measured variables, with the exception ofthe information provided to participants on thedonation page. The breakdown of administrationcosts and the overall percentage used for adminis-tration costs and services were obtained from thecharity that had participated in experiment 1 andwere used to develop two donation pages: ahigh-information condition and a low-informa-

tion condition.The donation page in the high-information condi-

tion contained the following information: A propor-

tion of every dollar donated to … is used to

support the administration function of the organi-

zation. …’s administration expenses include

personnel, supplies, vehicles and marketing activi-

ties. Please refer to the table below to see how …

uses monies for administration expenses.

Administration expenses

Copyright © 2014 John Wiley & Sons,

Percentage cost (%)

Personnel
22.9 Operating 0.7 Vehicles 0.2 Office 0.4 Computer/communications 0.7 Marketing/fund-raising 31.1 External fees 14.9 Depreciation 0.02 Levies 4.8 Apportioned costs 24.2 Percentage of each dollarused for administration
15.6

Percentage of each dollar used forprogrammes and services

84.4

Ltd.

Please indicate how you would like your

donation to be used by … by entering your

donation amount into the boxes below. Then

press the next button.

The donation page in the low-information condi-tion contained the following information: A propor-

tion of every dollar donated to … is used to

support the administration function of the organi-

zation. …’s administration expenses include

personnel, supplies, vehicles and marketing activi-

ties. Of the monies donated to …, 15.6 cents of

every dollar is used to cover their administration

expenses. Please indicate how you would like your

donation to be used by … by entering your dona-

tion amount into the boxes below. Then press the

next button.

Results

Table 2 shows means and standard deviations foreach experimental condition. Despite randomassignment to the experimental conditions, itwas important to compare the participants inthe conditions on the two personality variables(trust and altruism), trust in the charity, timespent viewing the homepage, familiarity withthe charity and number of donations made inthe last 12months. Analysis of variance resultsare shown in Table 2 and indicate no significantdifferences between the conditions on the con-trol variables.Nineteen participants (59.3%) in the low-information

condition and 19 participants (67.8%) in the high-information condition made a donation. A bino-mial test of proportional difference indicatedthat these proportions were not significantlydifferent z=0.680. Table 2 shows that the compari-son of the total amount donated by the partici-pants in each condition indicated no significantdifference. To examine the question of whetherthe amount of information about how administrationmoney was uses would significantly change the pro-portion donated to administration; the percentage


DOI: 10.1002/nvsm

Table 2. Means and standard deviations for Experiment 2 conditions

Low-information condition(N=32)

High-information condition(N=28) ANOVA comparison

Time spent viewing homepage (s) 34.23 (36.3) 23.2 (23.2) F(1, 59) = 1.593Familiarity with charity 2.5 (1.0) 2.9 (0.80) F(1, 59) = 1.883Number of donations in thelast 12months

2.8 (4.0) 3.5 (8.8) F(1, 59) = 0.156

Altruism 4.0 (0.44) 3.9 (0.42) F(1, 59) = 0.731Trust 3.4 (0.62) 3.5 (0.46) F(1, 59) = 0.398Charity trust 4.2 (0.65) 4.3 (0.47) F(1, 59) = 0.520Amount donated $5.00 (0.00) (n= 19) $5.00 (0.00) (n= 19) F(1, 37) = 0.000Percentage of donors donatingfor administration costs

47.4 21.0 z= 1.876, p> 0.05

Percentage donated toadministration costs

15.7 (21.16) 10.5 (23.44) F(1, 37) = 0.528


donated to administration was compared acrossthe two experimental conditions. As shown inTable 2, the percentage values were found to benot significantly different across the experimentalconditions.The results for both experimental conditions

clearly indicate that participants were willing todonate directly towards supporting the adminis-tration costs of the organization. To explore thisfurther, the proportion of participants in eachexperimental condition that indicated donationsupport for administration costs was examined.Twenty-one per cent of the high-informationcondition participants that donated assigned aproportion of their donation to administrationcosts. In contrast, 47.4% of the low-informationcondition participants that donated assigned aproportion of their donation to administrationcosts. As shown in Table 2, a binomial test ofproportional difference indicated that theseproportions were significantly different. Theseresults, although significant, are in the oppositedirection to that predicted by hypothesis 2and suggest that providing more informationabout administration spending may decrease theproportion of participants willing to donate toadministration costs.


General discussion

Both experiments clearly show that a proportion ofdonors are willing to split their donation into a por-tion for administration costs and portion towardsthe charity services. Summed over both experimen-tal conditions in experiment 2, a total of 34.25% ofthe donating participants gave a dollar amount toadministration costs, and over both experiments,32.7% of the participants that had an opportunityto split their donation did so. As far as we candetermine, this is the first time this has been shown.Furthermore, the proportion donated directly tosupport administration costs in experiment 1,where no specific information on actual price wasgiven, was 11.1%, and this value is close to the char-ities reported spending on administration of 15.6%of donations. Given the closeness of the twopercentage values, it might be concluded that thedonating population that our samples representwould not be inclined to dramatically diminish theirtrust in this specific charity on the basis of its levelof administration costs.Arguably, having knowledge that donors are

willing to contribute (directly) around 11% of theirdonation to administration provides the charity(the charity we used in the experiments) with


DOI: 10.1002/nvsm


valuable input to guide its financial management.The value of the information is perhaps highlightedif we consider the results from the retrospectivecondition in experiment 1. In this condition,participants indicated that they were happy for thecharity to use 41% of their donation for administra-tion costs. If the charity only had this information(e.g. they had surveyed a sample of donors), theymay conclude that they could more than doubletheir administration spending (currently 15.7%),and donors would be happy with this. But would do-nors really accept this level of administration spending?It is important to be specific about how the results

of the two experiments should be interpreted. Firstly,the main finding in experiment 1 that the self-reported acceptable administration spend propor-tion (retrospective condition) is significantly largerthan that identified by a behavioural measure (dona-tion split condition) of the proportion is likely togeneralise to other charities and other populations.In contrast, it is not appropriate to conclude thatthe donation division proportions that were identi-fied will or should generalise to other donorpopulations or to other charities (e.g. working in dif-ferent sectors). Charities do vary in how muchmoney they need to support their operations (Chen,2009; Sargeant et al., 2009, and donors are likely toappreciate this and reflect this understanding in theirdonation split. What we would argue that can begeneralised is the feasibility of obtaining directly fromdonors, via donation splitting, what they feel is anacceptable proportioning of their donations by aspecific charity, undertaking a specific type of work.The experimental manipulation of the amount of

information on the nature of administration spend-ing in experiment 2 did not have a significant influ-ence on the amount (or percentage) donated toadministration but did significantly influence theproportion of participants that gave a donationdirectly to administration costs. However the signif-icant difference was not consistent with hypothesis2. Significantly fewer participants gave to adminis-tration when the line-by-line breakdown of adminis-tration expenditure was given (the high-information


condition). It is only possible to speculate why thisoccurred, but it could be that participants in thehigh-information condition simply were not happyto see their donation go towards some, or all, ofthe listed administration costs. In other words, thebreakdown of the spending did not justify thespending. Alternatively, the breakdown of the ad-ministration costs (the list of percentages in thehigh-information condition) may have given partici-pants the illusion that more was actually being spenton administration than was actually the case, and asnoted in the Introduction, greater administrationspending is likely to adversely influence donating.Designing the donation interface of a website to

allow donation splitting has some similarities tothe charity item purchasing approach, known asthird-party gifting. The third-party gifting approachinvolves a charity offering a range of purchase op-tions, such as a goat, which a donor can purchase(see Kemp et al., 2011 for research on this methodof donating). The goat is provided to the gift benefi-ciary, and the donor gets a certificate of their dona-tion (purchase) that they can give to someone as agift. Similar to our donation splitting approach,third-party gifting does have the value of providingthe donor with a degree of certainty about howtheir donation is going to be used. Furthermore,certainty in how ones donated funds are used hasthe advantage of building and maintaining donortrust (Kemp et al., 2011). Thus, while the use ofthe donation splitting technique may help a charityunderstand more precisely how its financial man-agement is impacting on donor trust, use of thetechnique may also help build donor trust.In conclusion, the two experiments demonstrate

that several important types of information can beobtained by a charity that adopts a donor-specifieddonation splitting process. Firstly, the percentageof donations donated directly to administrationcosts can be compared with the charity’s actualspending, their price value. This comparison shouldallow a charity to determine how their administra-tion spending could be influencing their donorpopulation’s trust in the charity. Furthermore, an


DOI: 10.1002/nvsm


understanding of donor trust can inform the likelysuccess or not of future fund-raising activities.Finally, information gained on the percentage thatdonors donate directly to administration costs mightinform a charity about how informed their donorsare about what costs are involved in actuallyrunning the charity. When the percentage donateddirectly to administration is low (well below the realcost of administration), the charity may need toprovide donors with additional information relatingto the need for donated monies to be used foradministration costs.

References

Bekkers R. 2003. Trust, Accreditation and Philanthropy inthe Netherlands. Nonprofit and Voluntary Sector

Quarterly 32: 596–615.Bekkers R, Wiepking P. 2011. Accuracy of Self-reports onDonations to Charitable Organizations. Quality &

Quantity: International Journal of Methodology 45:1369–1383.

Bruce I. 1994. Marketing Need. ICSA Publishing: HemelHempstead, UK.

Burt CDB. 2012. The importance of trust to the fundingof humanitarian work. In Humanitarian WorkPsychology, Carr S, Furnham A, MacLachlan M (eds).Palgrave-MacMillan: UK.

Burt CDB, Dunham AH. 2009. Trust Generated by AidAgency Web Page Design. International Journal ofNonprofit and Voluntary Sector Marketing 14:125–136. 10.1002/nvsm.338

Burt CDB, Gibbons S. 2011. The Effects of DonationButton Design on Aid Agency Trust. International

Journal of Nonprofit and Voluntary Sector Marketing

16: 183–194. DOI: 10.1002/nvsm.412Burt CDB, Popple, J. 1998. Memorial Distortions inDonation Data. The Journal of Social Psychology

138: 724–733.Callen, J. 1994. Money Donations, Volunteering and Orga-nizational Efficiency. Journal of Productivity Analysis

5: 215–228.


Chen G. 2009. Does Meeting Standards Affect CharitableGiving? An Empirical Study of New York MetropolitanArea Charities. Nonprofit Management & Leadership

19: 349–365.Cheung CK, Chan CM. 2000. Social-cognitive Factors ofDonating Money to Charity, with Special Attention toan International Relief Organization. Evaluation and

Program Planning 23: 241–253.Drucker PF. 1990. Managing the Nonprofit Organization:Practices and Principles. New York: Harper Collins.

Ebrahim A, Rangan VK. 2010. The Limits of Nonprofit Im-pact: A Contingency Framework for Measuring SocialPerformance. Harvard Business School: Working paper10–099.

Ebrahim A, Weisband E (Eds.). 2007. Global Accountabil-ities: Participation, Pluralism, and Public Ethics.Cambridge: Cambridge University Press.

Fox J, Carr SC. 2000. Internet Technology and Pov-erty Relief. South Pacific Journal of Psychology

12: 52–57.Gibelman M, Gelman SR. 2001. Very Public Scandals:Nongovernmental Organizations in Trouble. Nonprofitand Voluntary Sector Quarterly 12: 49–66.

Goatman AK, Lewis BR. 2007. Charity E-evolution? AnEvaluation of the Attitudes of UK Charities towardsWebsite Adoption and Use. International Journal

of Nonprofit and Voluntary Sector Marketing 12:33–46. 10.1002/nvsm.272

Greenlee JS, Brown KL. 1999. The Impact of AccountingInformation on Contributions to Charitable Organiza-tions. Research in Accounting Regulation 13: 111–125.

Gueguen N, Jacob C. 2001. Fund-raising on the Web:The Effect of an Electronic Foot-in-the-door on Dona-tion. Cyber Psychology and Behavior 4: 705–709.

Harvey J, McCrohan K. 1988. Fundraising Costs: SocietalImplications for Philanthropies and Their Supporters.Business and Society 27: 15–22.

International Personality Item Pool. A scientificcollaboratory for the development of advanced mea-sures of personality traits and other individual differ-ences. (June 2009). http://ipip.ori.org/.

Kearns KP. 1996. Managing for Accountability: Preservingthe Public Trust in Nonprofit Organizations. Jossey-Bass: San Francisco.


DOI: 10.1002/nvsm

http://ipip.ori.org/


Kemp S, Richardson J, Burt CDB. 2011. A Goat for Christ-mas: Exploring Third-party Gifts. Journal of Manage-

rial Psychology: Special issue – Organizational

Psychology and Poverty Reduction 26: 453–464. DOI10.1108/02683941111154338

Kotler P, Andreasen A. 1991. Strategic Marketing Manage-ment for Nonprofit Organizations (4th ed.) PrenticeHall: Englewood Cliffs, NJ.

Lee Z, Sargeant A. 2011. Dealing with Social DesirabilityBias: An Application to Charitable Giving. EuropeanJournal of Marketing 45: 703–719.

Lee Z, Woodliffe L. 2010. Donor Misreporting: Conceptu-alizing Social Desirability Bias in Giving Surveys.VOLUNTAS: International Journal of Voluntary and

Nonprofit Organizations 21: 569–587.McWah I, Carr SC. 2009. Images of Poverty and Attribu-tions for Poverty: Does Higher Education Moderatethe Linkage? International Journal of Nonprofit andVoluntary Sector Marketing 14: 101–109.

Mullin R. 1995. Foundations for Fund-raising. ICSAPublishing: London.

Powell AJ. 2005. It all begins with strategy: Using theInternet as a strategic tool. In Non-profit InternetStrategies: Best Practices for Marketing, Communica-tions, and Fundraising Success, Hart T, Greenfield JM,Johnston M (eds). John Wiley and Sons Inc.: New Jer-sey; 17–25.

Richard W. 2008. Applying Relationship ManagementTheory to the Fundraising Process for IndividualDonors. Journal of Communication Management

12(1): 73–87. 10.1108/13632540810854244Sargeant A. 2001. Web Based Fund Raising: Is AnyoneMaking Any Real Money? Fund Raising Management

32: 20–23.Sargeant A, Jay E. 2003. The Fundraising Performance ofCharity Websites: A US/UK Comparison. Interactive

Marketing 4: 330–342.Sargeant A, Lee S. 2004. Donor Trust and RelationshipCommitment in the U.K. Charity Sector: The Impacton Behaviour. Nonprofit and Voluntary Sector Quar-

terly 33: 185–202.Sargeant A, Ford JB, West DC. 2006. Perceptual Determi-nants of Non-profit Giving Behaviour. Journal of Busi-ness Research 59: 155–165.


Sargeant A, West DC, Jay E. 2007. The Relational Determi-nants of Nonprofit Web Site Fundraising Effectiveness:An Exploratory Study. Nonprofit Management & Lead-

ership 18: 141–156.Sargeant A, Lee S, Jay E. 2009. Communicating the “Reali-ties” of Charity Costs: An Institute of Fundraising Initia-tive. Nonprofit and Voluntary Sector Quarterly 38:333–342.

Sumption H. 1995. Yesterday’s Trail-blazing. BrianstormPublishing: Hertford, UK.

Tinkelman D. 1998. Differences in Sensitivity of FinancialStatement Users to Joint Cost Allocations: The Case ofNonprofit Organizations. Journal of Accounting,

Auditing and Finance 13: 377–393.Tinkelman D. 1999. Factors Affecting the Relation Be-tween Donations to Not-for-profit Organizations andan Efficiency Ratio. Research in Government and

Nonprofit Accounting 10: 135–162.Van Iwaarden J, Van der Wiele T, Wililiams R, Moxham C.2009. Charities: How Important is Performance toDonors? International Journal of Quality & Reliabil-

ity Management 26: 5–22.Warwick M. 1994. Raising Money by Mail: Strategies forGrowth and Financial Stability. Strathmoor Press:Berkeley, CA.

Water RD. 2007. Nonprofit Organizations’ Use of the In-ternet: A Content Analysis of Communication Trendson the Internet Sites of the Philanthropy 400.Nonprofit Management & Leadership 18: 59–76.DOI:10.1002/nml.171

Weisbrod B, Dominguez N. 1986. Demand for CollectiveGoods in Private Nonprofit Markets: Can FundraisingExpenditures Help Overcome Free-rider Behaviour?Journal of Public Economics 30: 83–95.

Wenham K, Stephens D, Hardy R. 2003. The Marketing Ef-fectiveness of UK Environmental Charity Websites Com-pared to Best Practice. International Journal of

Nonprofit and Voluntary Sector Marketing 8: 213–223.Wilhelm MO. 2007. The Quality and Comparability ofSurvey Data on Charitable Giving. Nonprofit and

Voluntary Sector Quarterly 36: 65–84.Young DR, Bania N, Bailey D. 1996. Structure and Account-ability: A Study of National Nonprofit Associations. Non-profit Management and Leadership 6: 347–365.


DOI: 10.1002/nvsm

use of donor-specified donation splitting: a technique to understand the impact of financial...

Documents