Understanding and improving donation collection and allocation in nonprofit financial management

Nonprofit organizations are critical in addressing societal needs, yet many face financial challenges that hinder their ability to deliver services effectively. This dissertation examines two central components of nonprofit financial planning: donation collection and donation allocation. The first aspect, donation collection, involves efforts to grow the donor base by drawing in new contributors, boosting the total funds raised, and maintaining support from existing supporters. The second, donation allocation, refers to the strategic choices nonprofits make in distributing funds across programs, operational expenses, and financial reserves to enhance long-term impact and maintain support over time. Through three essays, this dissertation explores each of these aspects while providing valuable insights for nonprofits. Essay 1 identifies distinct donor motives that shape two key stages of the donation decision-making process: the decision of whether to donate and the decision of how much to donate. Drawing on a systematic literature review, the essay categorizes a wide range of donor motives into two main types—affective and cognitive motives—and maps them onto these two decision stages. Additionally, it identifies donor-related, recipient-related, and contextual factors that moderate the extent to which individuals are influenced by charitable appeals that target affective and cognitive motives. Essay 2 explores another important aspect of the donation collection process: recurring donations. The findings show that individuals are more willing to become recurring donors when a charity utilizes its donations in a segregated rather than an aggregated manner. Segregated donation utilization signals a stronger commitment to the cause on the part of the charity, which in turn enhances the perceived impact of the donation and subsequently increases recurring donation intentions. Essay 3 shifts focus to the donation allocation process, specifically the timing of the nonprofits' resource allocation. This research demonstrates that consumers are less likely to donate to a charity that retains and grows donations to create a larger, later impact compared to the one that uses donations now to create a smaller, sooner impact. This occurs because consumers prioritize the timing of impact over its magnitude; as a result, they perceive charities that delay impact as less effective and less moral. The effect mitigates when the charity is perceived to meet less urgent needs, and the larger, later option is framed as a more effective choice. Overall, this dissertation contributes to the literature on charitable giving by enriching our understanding of the psychological factors that motivate individuals to donate, to give larger amounts, and to commit to recurring donations. It also sheds light on how donors perceive different components of the charitable impact. The findings offer practical implications for nonprofits seeking to increase donations, reduce uncertainty in their finances, and amplify their overall effectiveness.