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Publicity vs. impact in nonprofit disclosures and donor preferences: a sequential game with one nonprofit organization and N donors

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Abstract

Charitable giving is one of the essential tasks of a properly functioning civil society. This task is greatly complicated by the lack of organizational transparency and by the information asymmetries that often exist between organizations and donors in the market for charitable donations. The disclosure of financial, performance, donor-relations, and fundraising-related data is thus an important tool for nonprofit organizations attempting to attract greater donations while boosting accountability and public trust. There are, however, varying payoffs associated with such disclosure depending on the nature of donor preferences and the relative openness and effectiveness of competing organizations. To help understand the interplay between nonprofit organizational disclosures and individual donations, we present a novel game-theoretic model of disclosure–donation interactions that incorporates the predominant forms of both donor preferences and “value-relevant” information.

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Correspondence to Jun Zhuang.

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This research was partially supported by the United States Department of Homeland Security through the National Center for Risk and Economic Analysis of Terrorism Events (CREATE) under award number 2010-ST-061-RE0001. However, any opinions, findings, and conclusions or recommendations in this document are those of the authors and do not necessarily reflect views of the United States Department of Homeland Security, or CREATE.

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Zhuang, J., Saxton, G.D. & Wu, H. Publicity vs. impact in nonprofit disclosures and donor preferences: a sequential game with one nonprofit organization and N donors. Ann Oper Res 221, 469–491 (2014). https://doi.org/10.1007/s10479-011-0967-3

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