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Do Charity Ratings Matter?

Author

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  • Vidhi Chhaochharia

    (Department of Finance, School of Business, University of Miami)

  • Suman Ghosh

    (Department of Economics, College of Business, Florida Atlantic University)

Abstract

This paper investigates whether donor contributions to charities responds to the information incorporated in charity ratings. Using charity ratings data from 1999-2004, we find that ratings do have a significant effect on contributions received. We find that charities that have the lowest rating have 16 % less contributions as compared to charities with the highest rating. In addition we find that charities in turn react to lower ratings by increasing their fundraising expenditures. Our results suggest that ratings do have an effect in reducing the asymmetry of information that exists amongst donors and the charities.

Suggested Citation

  • Vidhi Chhaochharia & Suman Ghosh, 2008. "Do Charity Ratings Matter?," Working Papers 08001, Department of Economics, College of Business, Florida Atlantic University.
    • Handle: RePEc:fal:wpaper:08001
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    File URL: http://home.fau.edu/sghosh/web/CharityFeb19.pdf
    File Function: First version, 2008
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    Cited by:

    1. Gallier, Carlo & Goeschl, Timo & Kesternich, Martin & Lohse, Johannes & Reif, Christiane & Römer, Daniel, 2023. "Inter-charity competition under spatial differentiation: Sorting, crowding, and spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 457-468.
    2. Jade Wong & Andreas Ortman, 2013. "Do Donors Care About the Price of Giving? A Review of the Evidence, with Some Theory to Organize It," Discussion Papers 2013-22, School of Economics, The University of New South Wales.
    3. Brown, Alexander L. & Meer, Jonathan & Williams, J. Forrest, 2017. "Social distance and quality ratings in charity choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 9-15.
    4. Figlio, David N. & Kenny, Lawrence W., 2009. "Public sector performance measurement and stakeholder support," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1069-1077, October.

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