August 2024

Mohammad Anas Wahaj | 31 aug 2024

One of the most critical challenge that nonprofits face is effective and efficient allocation of their limited funds towards their various activities. According to the research study, 'Allocation of Nonprofit Funds Among Program, Fundraising, and Administration' (Authors: Telesilla O. Kotsi of The Ohio State University; Arian Aflaki of University of Pittsburgh; Goker Aydin of Johns Hopkins University; Alfonso J. Pedraza-Martinez of University of Notre Dame), published in Manufacturing & Service Operations Management (2023), 'U.S. nonprofits declare three types of expenses in their IRS 990 forms: program spending to meet beneficiaries' needs; fundraising spending to raise donations; and administration spending to build and maintain capacity. Charity watchdogs, however, expect nonprofits to prioritize program spending over other categories. We study when such expectations may lead to the 'starvation cycle' or underspending on administration and fundraising.' Researchers have developed a mathematical model that can guide nonprofits to prioritize and optimize spending for present and future success. Capacity, that consists of organization's resources such as infrastructure, equipment, staff etc, is crucial and is related to the administrative costs. Researchers found that striking a right balance on allocating funds for program costs depends on the nonprofit's existing capacity. Early stage nonprofits need to spend more on adminstrative costs to build solid foundation and long-term resilience. When some capacity is build then emphasis should shift to fundraising. Researchers explain, 'That approach allows them to gather the funding necessary to maximize their existing capabilities. Importantly, the share of spending for administration or fundraising should align with the organization's anticipated future needs.' Big established donors are now classifying percentage of their grants to adminstrative costs and recognize the need for better managed organization for long-term success. Nonprofit rating organizations are also broadening their criteria to look at an organization's overall well-being and impact, and not just on their minimizing spending on administration and fundraising. Read on...

The Conversation: Nonprofits can become more resilient by spending more on fundraising and admin - new research
Authors: Telesilla Kotsi, Alfonso J. Pedraza Martinez

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Mohammad Anas Wahaj | 20 aug 2024

The research study, 'How Companies Restrain Means-Ends Decoupling: A Comparative Case Study of CSR Implementation' (Authors: Andromachi Athanasopoulou of Queen Mary University of London; Emilio Marti of Erasmus University.; David Risi of Bern University of Applied Sciences; Eva Schlindwein of Bern University of Applied Sciences), published in Journal of Management Studies, utlizes the concept of means-ends decoupling to examine why companies continue to be major contributors to environmental and social problems despite committing increasingly to corporate social responsibility (CSR). Means-ends decoupling occurs when there is a gap between implementation and achievement ['From Smoke and Mirrors to Walking the Talk: Decoupling in the Contemporary World' by Patricia Bromley of University of Utah and Walter W. Powell of Stanford University; 'Means versus Ends in Opaque Institutional Fields: Trading Off Compliance and Achievement in Sustainability Standard Adoption' by Frank Wijen of Erasmus University]. The research study shows that experimentation is critical for impactful CSR, which has implications for both companies that implement CSR and companies that externally monitor these CSR activities, such as sustainable investors and ESG rating agencies. Authors analyzed CSR activities of four companies and found that two realized their intended CSR goals as a result of experimentation approach while the other two did not. Authors explain, 'In a CSR context, experimentation means that companies produced knowledge about the local effects of their CSR practices and used this knowledge to adapt their CSR practices on an ongoing basis. By establishing a close link between the production of CSR knowledge and the adaptation of CSR practices, these companies were able to achieve their intended CSR goals...By contrast, in the companies that failed to realize the intended CSR goals, consistency - not experimentation - was central to their CSR implementation. In these companies, the emphasis was on standardizing CSR initiatives based on perceived best-practices among senior managers. There was no feedback loop.' How Companies Can Foster Experimentation in Their CSR Implementation - (1) Companies should mobilize broadly for CSR. (2) Companies should instill confidence in the business case for CSR among their employees. How Sustainable Investors and ESG Rating Agencies Can Monitor Experimentation - (1) They should monitor who is involved in the production of CSR knowledge. (2) They should monitor and examine who is involved in the adaptation of CSR practices. Even though experimentation brings in more challenges but authors suggest that this approach strongly outweigh its potential drawbacks. Read on...

Harvard Business Review: Creating a Corporate Social Responsibility Program with Real Impact
Authors: Andromachi Athanasopoulou, Emilio Marti, David Risi, Eva Schlindwein

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