BUSI 409 Week 6 Discussion Board Forum 3 Replies Example

Discussion Board Forum 3 Replies: Obtaining and Managing Resources

BUSI 409 Nonprofit Management and Governance, Discussion Board Forum 3 Replies

Thread by [Student Name]

The two classmates and their threads are composites; the textbook, research and Scripture cited are real, and textbook locations are given by chapter because page numbers differ between printings.

Reply to Shannon

Shannon, your essay worried that the after-school program would lose private donors if it accepted a large city grant, because donors would assume the government was taking care of the need. Worth (2017), in Chapter 15, acknowledges that government funding brings both opportunity and dependence, so the concern is fair.

Research suggests, however, that the bigger risk may lie with the organization rather than the donors. Andreoni and Payne (2011) studied a large panel of charities and found that government grants did reduce private donations, but that much of the reduction came from charities cutting back their own fundraising after receiving the grant. Donors gave less partly because they were asked less. The effect was not simply donors deciding the need had been met; the organizations themselves had shifted attention from donors to grant management.

That finding points to a practical answer: accept the grant, but keep fundraising at full strength and tell donors what their gifts do that the grant cannot, such as supporting programs the city does not fund. Paul reminded the Corinthians that whoever sows sparingly will also reap sparingly (English Standard Version Bible, 2001/2016, 2 Corinthians 9:6). An organization that stops sowing among its donors because a grant arrived may reap less support when the grant ends. Diversified funding also protects the program if the city's budget changes, which happens more often than grant recipients expect.

Would your program's board be willing to set a minimum fundraising goal that stays in place even in years when government funding is strong?

Reply to Darius

Darius, your essay argued that donors should choose charities with the lowest overhead, since every dollar not spent on programs is wasted. Many donors share that view, and transparency about spending is important, so your instinct to scrutinize where money goes is a good one. Worth (2017), in Chapter 12, explains, though, that administrative and fundraising costs pay for accounting systems, qualified staff, evaluation and the very fundraising that brings in program dollars. An organization that starves these functions often delivers weaker programs.

Donors' aversion to overhead is real but can be addressed. Gneezy et al. (2014) ran a field experiment in which potential donors who were told that a separate major donor had already covered the organization's overhead gave more, and more often, than donors told their gifts would help pay overhead. The money was the same; the framing changed behavior. Rating sites that rank charities mainly by overhead ratios can therefore push organizations to underinvest in the systems that make programs effective. Donors do not hate overhead; they hate the feeling that their own dollar disappears into it.

Jesus said that workers are worthy of their pay (English Standard Version Bible, 2001/2016, Luke 10:7). Nonprofit staff who manage finances and raise funds are laborers too. A better question than how low a charity's overhead is would be whether its spending produces results, which the outcome measures discussed in earlier chapters can help answer. Could your organization ask one major donor to underwrite overhead, so that other donors can see their gifts going directly to programs?

References

Andreoni, J., & Payne, A. A. (2011). Is crowding out due entirely to fundraising? Evidence from a panel of charities. Journal of Public Economics, 95(5-6), 334-343. https://doi.org/10.1016/j.jpubeco.2010.11.011

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Gneezy, U., Keenan, E. A., & Gneezy, A. (2014). Avoiding overhead aversion in charity. Science, 346(6209), 632-635. https://doi.org/10.1126/science.1253932

Worth, M. J. (2017). Nonprofit management: Principles and practice (4th ed.). SAGE Publications.