Yes! It can be hung outside as well as inside, and yes, small birds like wren, chickadees, nuthatch and titmouse will go inside! Made of 100% naturally water repellent wool, so when it does get wet on the surface it dries out fairly quickly. Wool is also naturally dirt and mold resistant. Birds might pull at the wool to use in making their own nests. Hang one up and see what happens! Colors will fade in direct sun after a few months, but the body will keep its shape in even the hardest weather. Will last forever in a protected place such as a porch or inside where its highly decorative qualities are sure to bring a smile to everyone. Use it as a door greeter, a porch ornament, or even to enliven a kitchen, bath or bedroom! Made with other sustainability harvested materials including a hemp hanging cord and bamboo perch. Handmade by skilled artisans working in a fair trade production center in Kathmandu, Nepal.