Study of Arts Nonprofits Shows Donations Drop as Audience Numbers Rise

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September 7, 2016; Phys.org

Despite a growing culture of performance measurement, the empirical evidence does not provide strong support of its relevance among donors. A plausible theoretical reasoning is that better performance outcomes create the image of success, making organizations look less needy. These results call for more research on the link between performance outcomes and philanthropy.

Over the years, NPQ has repeatedly published research findings that throw plenty of doubt on the assertion that donors need to see measurable outcomes for their philanthropic investments. Maybe sometimes they just want to listen to music.

A new study of arts and cultural nonprofit organizations from the University of Missouri suggests that there is no evidence that donors are influenced by high attendance numbers; in fact, it may be just the opposite, since higher attendance is linked to higher earned revenue. The study, “Do donors care about results? An analysis of nonprofit arts and cultural organizations,” was published in Public Performance and Management Review and analyzed data from the Cultural Data Project (CDP).

“Performance measurement has emerged as a new way to ensure accountability of nonprofit organizations that rely heavily on charitable giving,” said Mirae Kim, one of the study’s authors and an assistant professor in the MU Truman School of Public Affairs. “Philanthropic culture has long emphasized greater accountability of nonprofit organizations, often creating strict measures that can impact how a nonprofit operates. However, we found that arts nonprofits that perform better according to philanthropic standards are not necessarily rewarded with more contributions from individual donors.”

“A plausible explanation for our findings is that better performance—for example, strong attendance—creates an image of success,” said Cleopatra Charles, Kim’s co-author and an associate professor in the School of Public Affairs and Administration at Rutgers University-Newark. “This can make the organization appear less needy, which may lead to donors being less inclined to support them.”

This study can be added to other research-based evidence that donors are simplistically fixated on measurable outcomes when choosing recipients of their generosity. Sometimes, in fact, need and more subjective judgments of quality should be part of the picture.—Ruth McCambridge

  • brettashley13

    Many arts nonprofits moved to increasing earned income during the recession and have maintained that path due to shifts in the fundraising ecosystem. For the arts, foundations provide significant support as do individual donors — yet both have shifted over the past 8 years. Some foundations have moved to funding other priorities (for example the James Irvine Foundation) and emerging donors of the X and Y generations are less likely to fund arts than other issues . Thus, I wonder if the trend is a correlation and not a causation?