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Small is beautiful? Financial efficiency of small fundraising charities

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  • van der Heijden, Hans

Abstract

The study analyses potential scale efficiencies of 1196 Dutch fundraising charities for 2005–2009. The data set includes a unique group of small charities (reporting an income of less than €1 million). The study articulates and tests differences in financial efficiency between smaller and larger charities, specifically concerning program expenditure, administrative expenditure, and fundraising expenditure. The study finds that reported levels of program-spending efficiency and administrative efficiency are similar across small and large charities, with no economies of scale. In addition, the study finds that smaller charities report considerably better fundraising efficiency ratios, with the smallest charities reporting an average spend of €8 to raise €100 and the largest charities reporting an average spend of €15. The paper discusses why larger charities appear to experience scale inefficiencies in fundraising and provides directions for further research.

Suggested Citation

  • van der Heijden, Hans, 2013. "Small is beautiful? Financial efficiency of small fundraising charities," The British Accounting Review, Elsevier, vol. 45(1), pages 50-57.
    • Handle: RePEc:eee:bracre:v:45:y:2013:i:1:p:50-57
    DOI: 10.1016/j.bar.2012.12.004
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    References listed on IDEAS

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    1. Jurgen Kahler & Adrian Sargeant, 2002. "The size effect in the administration costs of charities," European Accounting Review, Taylor & Francis Journals, vol. 11(2), pages 215-243.
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    3. Lev, Baruch & Sunder, Shyam, 1979. "Methodological issues in the use of financial ratios," Journal of Accounting and Economics, Elsevier, vol. 1(3), pages 187-210, December.
    4. Tinkelman, Daniel, 2009. "Unintended consequences of expense ratio guidelines: The Avon breast cancer walks," Journal of Accounting and Public Policy, Elsevier, vol. 28(6), pages 485-494, November.
    5. Kreander, Niklas & Beattie, Vivien & McPhail, Ken, 2009. "Putting our money where their mouth is: Alignment of charitable aims with charity investments – Tensions in policy and practice," The British Accounting Review, Elsevier, vol. 41(3), pages 154-168.
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    Cited by:

    1. Yang, Cherrie & Northcott, Deryl, 2018. "Unveiling the role of identity accountability in shaping charity outcome measurement practices," The British Accounting Review, Elsevier, vol. 50(2), pages 214-226.
    2. Henderson, Elisa & Lambert, Vicky, 2018. "Negotiating for survival: Balancing mission and money," The British Accounting Review, Elsevier, vol. 50(2), pages 185-198.

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