The sustainability of charitable organisations

Abstract

Many charitable organisations do not produce commercially viable outputs and, consequently, rely heavily on private donations. As they operate in an increasingly competitive environment for donations and grants, organisational sustainability is increasingly a critical issue. Empirical results explaining levels of private donations to individual charities are presented and are consistent with a Cournot oligopolistic structure in the competition for private donations. Thus, the level of donations increases with an organisation’s level of fundraising expenditure, but the effect of inter-charity competition for grants reduces individual levels. Other influences on donations are volunteer numbers, government grants and organisational size and administrative expenditure.