Journal Articles

Matching Donors and Nonprofits: The Importance of Signaling in Funding Awards

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The topic of nonprofit reform has sparked a debate on the battle between efficiency and effectiveness. Why do ineffective nonprofits survive? Prospective donors favor applicants likely to fulfill donor priorities. Donors with limited time and energy look for signals that reveal recipients' true capabilities. Knowing this, recipients attempt to send the right signals to prospective donors. If the process of sending and reading signals is efficient, funding decisions will tend toward an optimal outcome in which only effective agencies survive. What signals do donors consider the most helpful? Are organizations that send such signals receiving the highest payoffs? What is the financial yield of each signal to recipients? This article uses a signaling game to sharpen our understanding of nonprofit fundraising and derive the conditions under which signals will be credible. Interview and survey evidence gathered in Brazil indicate that signals of accessibility, reliability, and credibility attract the highest payoffs.

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Detail Information

Series Title

Journal of Theoretical Politics

Call Number

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Publisher

Thousand Oaks, CA : Sage Publication., 2009

Collation

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Language

English

ISBN/ISSN

0951-6298

Classification

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Content Type

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Media Type

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Carrier Type

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Edition

Vol. 21, No. 3, July 2009.pp. 283-309

Subject(s)

Foreign aid
Signaling game
Fundraising
Information asymmetry
Nonprofit
Matching Donors and Nonprofits

Specific Detail Info

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Statement of Responsibility

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