The Curious Impact of Donor Knowledge on Support to the Cause When NGO Disclosure is Opaque about Myopic Behavior

We investigate donors' reactions when an NGO is financed by a party whose business exacerbates the problem the NGO is fighting against.

A team serving food and drink to vulnerable people.

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Project description

NGO myopia occurs where an NGO focuses on short-term success at the expense of its long-term mission, such as receiving CSR funds from a corporate firm that is magnifying the problem it is fighting against. Through an experiment, we investigate how an NGO’s myopia, and the level of donor knowledge about the NGO’s mission, impact donor support when the NGO’s disclosures are opaque about its myopia. Our results indicate that, in the absence of any NGO disclosure about it, knowledgeable donors assume that NGOs do not engage in any myopic behaviour. Importantly, we find that when an NGO’s myopic behaviour is exposed, donors not only reduce support to that NGO but also to other NGOs serving the same cause. Our results have specific implications for donor education and NGO regulations.

Ozlem Arikan leads the project. Collaborators include Ivo De Loo from Nyenrode University (Netherlands) and Carolyn Cardory from University of Wellington (New Zealand).