Panel Paper: Does Transparency Promote Donations? Evidence from Chinese Foundations

Saturday, November 10, 2018
Jackson - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Zhongsheng Wu and Angela L. Bies, University of Maryland

Previous empirical research found that nonprofit voluntary disclosure has the potential to influence donor behavior through improving donors’ perceptions on the effectiveness of nonprofit organizations (Buchheit & Parsons, 2006). However, most previous studies focused on the impact of financial disclosure on aggregated total donations (Parsons, 2003, 2007; Tussel & Parsons, 2007; Gandia, 2011). Very few studies paid attentions to other types of nonprofit transparency or disclosure, such as disclosure on project information and donor information. In addition, little is known on whether the impacts of voluntary disclosure on different types of donations (e.g., domestic vs. foreign donations) are different. Based on a large sample (N=1824) of foundations in China, this study intends to probe the impacts that the total score of Foundation Transparency Index in 2012, as well as the scores of its sub-dimensions (general information, financial information, project information, and donor information) have on domestic and foreign donations that foundations received in the subsequent year. Two-part models are used to estimate the impact of transparency on donations. Preliminary analyses find that the total transparency score has positive impact on domestic donations but no significant impact on foreign donations. Surprisingly, disclosure of financial information and project information are found to have no significant impacts on either domestic or foreign donations. General information and donor information are found to be positively associated with both types of donations.