Misreporting Fundraising: How do Nonprofit Organizations Account for Telemarketing Campaigns?

Posted: 25 Oct 2007

See all articles by Elizabeth K. Keating

Elizabeth K. Keating

Harvard University - John F. Kennedy School of Government

Linda M. Parsons

University of Alabama - Culverhouse School of Accountancy

Andrea Alston Roberts

University of Virginia - McIntire School of Commerce

Abstract

The purpose of this study is to examine the frequency, determinants and implications of misreported fundraising activities. We compare state telemarketing campaign reports with the associated information from nonprofits' annual Form 990 filings to directly test nonprofits' revenue and expense recognition policies. Using a conservative approach that understates the extent to which nonprofit organizations violate the reporting rules, our study indicates that 74 percent of the regulatory filings from nonprofit organizations fail to properly report telemarketing expenses. Smaller nonprofits, less monitored firms and those with less accounting sophistication are more likely to inappropriately report telemarketing costs as a component of net revenues rather than as expenses. Nonprofits that use external accounting services are more likely to properly classify the cost of their telemarketing campaigns as professional fundraising fees.

Keywords: efficiency, nonprofit, fundraising, telemarketing

JEL Classification: M41, M48, M45, G38

Suggested Citation

Keating, Elizabeth K. and Parsons, Linda M. and Alston Roberts, Andrea, Misreporting Fundraising: How do Nonprofit Organizations Account for Telemarketing Campaigns?. Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1024562

Elizabeth K. Keating

Harvard University - John F. Kennedy School of Government ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-9856 (Phone)
617-495-8963 (Fax)

Linda M. Parsons (Contact Author)

University of Alabama - Culverhouse School of Accountancy ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

Andrea Alston Roberts

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

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