Abstract
The notion of accountability in nonprofits suggests that these organisations should disclose financial and non-financial practices following a holistic model. In practice, the interest of both managers and researchers has focused primarily on donors and financial disclosures, for funding and methodological reasons respectively. From the perspective of impact investment, all of them, government, beneficiaries, private donors, managers and volunteers are expected to make their decisions based on non-financial information as investors expecting social returns. However, to what extent does project information that demonstrates that the non-profit organisation has achieved its social mission actually matter? The main objective of this paper is to analyse whether the donations received by non-governmental organisations NGOs are related to the information disclosed on the projects undertaken. We perform our analysis separately for individual, private and public donors. Our results show that public donors are more interested in financial disclosures, private donors find information about outcomes and impacts to be most useful and individual donors do not tend to use non-financial information when it comes to making decisions about whether to donate or not.
Highlights
To what extent does project information that demonstrates that a non-profit organization has achieved its social mission matter? There is a great deal of literature on the importance of financial information [1,2,3,4], due to the availability of financial data, but there few studies have addressed the usefulness of non-financial information, especially that which refers to the portfolio of non-profit projects and activities but paradoxically, these are their real raison d’être
The results show that this information is useful for public donors, especially the financial content, while private donors prefer to rely on corporate information related to the outcomes and impact of the project
This study analysed whether non-financial information disclosed by nonprofits about activities and social projects is useful to donors in their decision-making processes
Summary
To what extent does project information that demonstrates that a non-profit organization has achieved its social mission matter? There is a great deal of literature on the importance of financial information [1,2,3,4], due to the availability of financial data, but there few studies have addressed the usefulness of non-financial information, especially that which refers to the portfolio of non-profit projects and activities but paradoxically, these are their real raison d’être.Nonprofits, unlike for-profit organisations, rely primarily on their social dimension [5]. To what extent does project information that demonstrates that a non-profit organization has achieved its social mission matter? The projects undertaken by NGOs always pursue social and/or environmental goals, so these projects make a positive contribution to sustainability. Their stakeholders could be considered as investors in social/environmental impact investors [5]. “Sustainability reporting offers a number of financial and social advantages, including social impact that builds trust towards the idea of civil society and its funders” [6]. Accountability and transparency should involve all stakeholders in a balanced manner, in addition to enabling continuous learning and disclosing financial information about projects and impacts to the same extent for all stakeholders [7,8]
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