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Are Customers the Better Donators? Financing Dilemmas of Non-Profit-Organizations
The paper focuses on the effects such an expansion of stakeholders has on NPOs. Drawing on statistical data concerning the German NPO sector as well as on the analysis of the case of World Wildlife Fund (WWF), it will be argued for three main outcomes: First a tendency towards professionalization within NPOs, second a tendency towards organizational narcissism, and third a financing dilemma. In sum, NPOs that attract a large number of donators (resp. a huge amount of donations) signal relevance and legitimacy to business firms, which makes them a favorable partner. On the other hand collaborations with business firms make NPOs suspicious in the eye of donators. Consequently, their success (large donation amount) becomes a precondition (in terms of establishing business models) as well as a threat (in terms of potentially decreasing the donation amount and, thus, relevance and legitimacy) to even more success.
By illustrating the (effects of the) inter-relationships between different stakeholders (i.e. donators and customers) and NPOs, this paper also directs attention to illegitimate forms of NPO financing, which - in conceptual respects - might make Neo-Institutionalism open to an analysis of the dark side of success.