Professionalization and Cost Efficiency of Fundraising in Charitable Organizations: The Case of Charitable Foundations in China

This study examines the effects of professionalization on the cost efficiency of fundraising organizations in a unique research context, Chinese charitable foundations. Two important professionalization measures, professionalized human resource management and accounting practices, are adopted. Using data from audited annual reports from 2005 to 2009, we find that professionalization in general enables foundations to increase their fundraising cost efficiencies. However, further analysis indicates that this positive effect only occurs in private but not in public foundations. Furthermore, the positive effect of professionalization is more significant when raising unrestricted funds than when raising restricted funds from donors.