Work

Relationships between financial transparency, trust, and performance: an examination of donors’ perceptions

Year: 2025

Type: article

Abstract: To better understand donors’ decisions within the nonprofit context, it is important to empirically attend to their perceptions of nonprofits. Drawing upon extant literature, a parsimonious conceptual model of donor perceptions is developed. Hypotheses derived from the model are empirically tested by means of structural equation modelling using 2017 survey data from 400 usable responses. The study finds positive associations between (1) perceptions of financial transparency and perceived performance, (2) perceived financial transparency and donor trust, and (3) donor trust and perceived performance. Different explanatory mechanisms are suggested to account for these findings. (1) could be explained by an ‘informational’ mechanism, whereas (2) and (3) could be explained by a ‘performative’ mechanism. The focus on donor perceptions has important implications for regulators when considering the assessment of nonprofit disclosure practices. The findings would also be valuable to nonprofits in developing strategies aimed at legitimising their operations by improving perceptions of their performance and trust in their ‘organisational brand’. By examining subjective perceptions of transparency and performance, this paper extends the nonprofit literature on donors’ perceptions, and adds a fresh perspective to the growing body of work on nonprofit transparency.

Source: Humanities and Social Sciences Communications

DOI: 10.1057/s41599-025-04640-2

Authors: Ushi Ghoorah, Edward Mariyani-Squire, Sabreena Zoha Amin

Institution: Western Sydney University

Language: English

Topic: Nonprofit Sector and Volunteering

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: gold

Estimated APC paid: $1,890