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Developing Donor Relationships: The Role of the Breadth of Giving

Farnoosh Khodakarami¹; J. Andrew Petersen²; Rajkumar Venkatesan³

¹ Farnoosh Khodakarami is a doctoral student, Kenan-Flagler Business School, University of North Carolina at Chapel Hill · ² J. Andrew Petersen is Associate Professor of Marketing, Smeal College of Business Administration, Pennsylvania State University · ³ Rajkumar Venkatesan is Bank of America Research Professor of Business Administration, Darden School of Business, University of Virginia

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.

DOI

10.1509/jm.14.0351

Volume

79 (4)

Pages

77-93

Language

en

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Sources

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