Partial Completion as a Nonprofit Strategy
53 Pages Posted: 20 Oct 2020
Date Written: September 1, 2020
Problem definition: Faced with the challenge of serving beneficiaries with heterogeneous needs and under budget constrains, a number of nonprofit organizations (NPOs) have come up with an innovative solution: providing partially complete products or services to beneficiaries. We seek to understand what drives an NPO's choice of partial completion as a design strategy and how it interacts with the level of variety offered in the NPO's product or service portfolio. Academic/practical relevance: Although partial product or service provision is frequently observed in nonprofit operations, there is limited understanding (in academia and practice) of when and why it is an appropriate strategy -- a void that we seek to fill in this paper. Methodology: We synthesize the practices of two NPOs operating in different contexts to develop a stylized analytical model to study an NPO's product/service completion and variety choices. Results: We identify when, and to what extent partial completion is optimal for an NPO. We also characterize a budget allocation structure for an NPO between product/service variety and completion. Our analysis also sheds light on how beneficiary characteristics (e.g., heterogeneity of their needs, capability to self-complete) and NPO objectives (e.g., total-benefit maximization vs. fairness) affect the optimal levels of variety and completion. Managerial implications: We provide three key observations: 1) Partial completion is not a compromise solution to budget limitations but can be an optimal strategy for NPOs under a wide range of circumstances, including in the presence of ample resources. 2) Partial provision is more valuable when beneficiary needs are more heterogeneous, beneficiaries are more capable towards self-completion, or their self-completion capabilities are more heterogeneous. 3) While providing incomplete products may appear to burden beneficiaries, when fairness is factored into an NPO's objective, providing a less complete product can be optimal.
Keywords: Nonprofit Operations; Incomplete Products; Product Variety; Fairness
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