Donor Reliance on Accounting and its Consequences for the Charitable Distribution Channel

Arya, Anil; Mittendorf, Brian

doi:10.1111/poms.12550

Cited by 17 publications

(11 citation statements)

References 17 publications

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“…Accordingly, donation income is the critical resource for nonprofits, and it influences the viability, sustainability, efficiency, and scalability of nonprofit operations (Berenguer & Shen, 2020;Lewis, 2004). Funding concerns contribute to nonprofits' challenges in recruiting quality staff (Wolf, 1999), coordination (Eftekhar et al, 2017), investments in information technology, data collection, and demand forecasting (Berenguer & Shen, 2020), and force them to make myopic decisions (Arya & Mittendorf, 2016;Keshvari Fard et al, 2019). Budget allocation (i.e., the level of spending on programs, fundraising, and administration) is a critical challenge for nonprofits because the reaction of donors to these expenditures is largely unknown.…”

Section: An Operations Management Perspectivementioning

confidence: 99%

Does governance ease the overhead squeeze experienced by nonprofits?

Parsa

Eftekhar

Corbett

2022

Production and Operations Management

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Nonprofits' performance is often evaluated based, in part, on their program spending ratio (PSR). Yet, ranking nonprofits based on PSR has been criticized because it is an imprecise index of a nonprofit's actual social impact. Further, too much emphasis on PSR creates an incentive for nonprofits to increase their program spending at the expense of investing in overhead, regardless of the social value it generates. In extreme cases, excessive focus on PSR can create incentives to manipulate or even misreport financial statements. Communicating information regarding governance can potentially counterbalance the pressures created by this focus on PSR. In 2008, the U.S. Internal Revenue Service implemented significant changes in the type of information that nonprofits are required to disclose, which helps them to better display their governance quality. Studying the tax forms of 38,226 nonprofits active in social services and relief operations during 2010–2017, we find that governance quality is now an important factor in driving public donations to nonprofits, although PSR still remains a key driver. Moreover, our findings show that better governance is associated with a lower likelihood of misreporting, consistent with the argument that better governance reduces the pressure to report a high PSR. Overall, our results suggest that nonprofits should consider improving their governance quality in their strategies for securing donation income, even though that may lead to lower PSR levels.

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Section: An Operations Management Perspectivementioning

confidence: 99%

Does governance ease the overhead squeeze experienced by nonprofits?

Parsa

Eftekhar

Corbett

2022

Production and Operations Management

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“…Alpha and Omega partnered to launch a C-RM campaign centered on one cause product. Alpha's sales and operations planners indicated that they chose the cause product on the basis of the firm's ability to donate excess inventory in exchange for tax incentives, which is common practice (Arya & Mittendorf, 2016;Stecklow, 2005). For each item of the cause product that consumers purchased in-store, Alpha pledged to donate the equivalent (in pounds) to Omega.…”

Section: Empirical Setting the C-rm Campaignmentioning

confidence: 99%

Good cause, not so good business? Sales and operations performance of cause‐related marketing

Sodero

2022

J of Business Logistics

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Building on prior literature on sales and operations planning, corporate social responsibility, and marketing campaigns, we investigate cause-related marketing (C-RM) effects on sales and operations performance across the retail supply chain. C-RM is a corporate social responsibility marketing campaign, in which a for-profit firm donates proceeds from consumer purchases of a promoted product to a designated nonprofit cause. Using a unique, rich, and proprietary dataset from an actual CR-M campaign, we conduct a quasi-experiment analysis. Our findings suggest positive C-RM effects on retail store sales during the campaign, coupled with enduring negative effects on forecast bias and service levels upstream in the retail supply chain.Although academic studies and the specialized media have thoroughly documented the benefits of C-RM to corporate branding, our findings point to trade-offs in sales and operations performance across the retail supply chain. These findings call for firms to carry out holistic assessments of the strategic value of C-RM involving all of its stakeholders, including sales and operations planners and the nonprofit cause, as well as investments in the development and improvement of their forecasting management competence.

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“…Scott () and Hofmann and Reyes () describe the challenges faced by small entrepreneurs in obtaining humanitarian funding through UN agencies. Arya and Mittendorf () investigate the relationships among donors, charities, and beneficiaries. Aflaki and Pedraza‐Martinez () point out that while nonearmarked (unconstrained) funds are most effective in humanitarian operations, they are harder to raise and imply a larger administrative cost per dollar.…”

Section: The Research Nichementioning

confidence: 99%

Humanitarian response to hurricane disasters: Coordinating flood‐risk mitigation with fundraising and relief operations

Chakravarty

2018

Naval Research Logistics

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To alleviate flooding, caused by hurricanes, governments build structural barriers called levees. In addition, relief providers such as the nongovernmental organizations and charities raise funds, and procure and deliver supplies (food, water, and medicines) for humanitarian relief. The strategy for managing disasters must, therefore, weigh the costs and benefits of building levees as well as procuring and delivering supplies. We use a three‐stage decision making framework to study how the investment in levee capacity can be integrated with supply procurements, fundraising, and rapid response. One of our major findings is that a large fundraising cost discourages postdisaster funding, implying relatively large investments in levee and prepositioned supplies. That notwithstanding, a large social value (of saving life) can tilt the balance in favor of postdisaster funding. If the levee capacity increases, funding for predisaster procurement is reduced without affecting postdisaster funding. For a sufficiently large increase in capacity, however, postdisaster response becomes superfluous. We also find that hurricane uncertainty motivates levees with large capacity. In contrast, levee‐failures motivate levees with small capacity.

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Donor Reliance on Accounting and its Consequences for the Charitable Distribution Channel

Cited by 17 publications

References 17 publications

Does governance ease the overhead squeeze experienced by nonprofits?

Does governance ease the overhead squeeze experienced by nonprofits?

Good cause, not so good business? Sales and operations performance of cause‐related marketing

Humanitarian response to hurricane disasters: Coordinating flood‐risk mitigation with fundraising and relief operations

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