This research proposes a mechanism to develop long-term donor relationships, a major challenge in the nonprofit industry. The authors propose a metric, donation variety, which captures a donor's breadth of donations with a given nonprofit organization, controlling for the distribution of donations to different initiatives. Using donation data spanning 20 years from a major U.S. public university, the authors find that improvements in donation variety increase the likelihood that the donor will make a subsequent donation, increase the donation amount, and reduce the sensitivity of donations to negative macroeconomic shocks. In the acquisition phase, most donors give to a single initiative, and these decisions are more influenced by a donor's intrinsic motivations. In contrast, as the donor-nonprofit organization relationship develops over time, nonprofit marketing efforts have a more significant influence on a donor's decision to give to multiple initiatives. Finally, the authors conduct a field study that validates the econometric analysis and provides causal evidence that marketing efforts by nonprofit organizations can encourage donors to spread donations across multiple initiatives.
All Science Journal Classification (ASJC) codes
- Business and International Management