An Analytic Approach to Selecting a Nonprofit

31 Pages Posted: 15 Oct 2009  

Andres Ramirez

Bryant University

Hakan Saraoglu

Bryant University - Department of Finance

Date Written: January 14, 2009

Abstract

Charity giving continues to be an important aspect of the economic and social fabric of the United States. The number and total assets of nonprofits registered with the Internal Revenue Service (IRS) under the section 501(c)(3) of the tax code have grown significantly over the past decade. Given the significant share of donations in supporting the activities of nonprofits, it is important for donors to have a better understanding of their operations and governance. As the number of nonprofits with similar objectives increases, it becomes overly complicated for donors to make a choice that is consistent with their own purpose for giving. The goal of this paper is to develop an analytic framework for selecting a nonprofit from among competing alternatives. Specifically, we propose a process in which consultants or financial advisors help donors evaluate nonprofits using a set of financial and governance criteria to generate a ranked short list of alternatives for further evaluation. Donors differ in their criteria for evaluating the performance of nonprofits. The methodology we use allows donors to incorporate their preferences for specific criteria to the selection of a nonprofit in a consistent manner.

Keywords: Financial Performance, Philanthropy

JEL Classification: L3, G2, G3

Suggested Citation

Ramirez, Andres and Saraoglu, Hakan, An Analytic Approach to Selecting a Nonprofit (January 14, 2009). William Davidson Institute Working Paper No. 951. Available at SSRN: https://ssrn.com/abstract=1488870 or http://dx.doi.org/10.2139/ssrn.1488870

Andres Ramirez (Contact Author)

Bryant University ( email )

1150 Douglas Pike
Smithfield, RI 02917-1284
United States

Hakan Saraoglu

Bryant University - Department of Finance ( email )

1150 Douglas Pike
Smithfield, RI 02917
United States

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