Do Donors Penalize Nonprofits With Higher Non-Program Costs? A Meta-Analysis of Donor Overhead Aversion

Disparate research on overhead aversion and nonprofit starvation can benefit from a conceptual model that explains their relationships. Following resurrection of such a model, we focus on one important piece: the relationship between overhead spending and nonprofit donations. Studies on this topic have produced inconclusive results. Our meta-analysis clarifies the relationship by synthesizing a sample of 30 original studies with 244 effect sizes. We uncover a negative association suggesting that donors penalize nonprofits with higher overhead costs. Moreover, our meta-regression models reveal that experimental designs detect higher donor aversion than studies that use other research designs and that amateur donors have more intense overhead aversion than professional donors. However, studies that measure administrative costs do not report more negative effects than studies that measure both administrative and fundraising costs. The overall contribution of the meta-analysis solidifies the conceptual link between reported capacity costs and funders’ giving decisions, a key arc in the nonprofit starvation cycle.