Do Charity Ratings Matter?

Vidhi Chhaochharia () and Suman Ghosh ()
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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

No 8001, Working Papers from 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.

Pages: 24 pages
Date: 2008-02
New Economics Papers: this item is included in nep-cbe
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Citations: View citations in EconPapers (5)

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