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Past Issue • Oct-Dec 2015

Ex-post Funding: Innovating Non-profit Organisations

The authors study an emerging/innovative model in the Non-profit Organisations (NPO) marketplace, wherein the NPO raises donations/funds for a development project post its implementation, thus allowing it to reduce the information asymmetry prevalent in such marketplaces and potentially raise larger donations.

Non-profit Organisations (NPO), differ from forprofit businesses in two important ways. First, the NPO status does not permit distribution of surplus cash flows as dividends or pay-outs to the shareholders (or units) that establish control and finance the NPO. Second, most NPOs raise funds for operations through donations from various entities and use these funds to achieve social goals, where the social goals typically involve the provision of a public good that simultaneously benefits many individuals. In spite of these differences, the non-profit sector contributes significantly to the global economic activity. A recent study based on financial data available from 40 countries, estimates the operating expenditure of the non-profi t sector to be approximately $2.2 trillion and the sector employs almost six percent of the economically active populations in these countries [Salamon, 2010].

ABOUT THE AUTHORS

  • Milind-G-Sohoni

    Milind G. Sohoni

    Associate Professor of Operations Management and Senior Associate Dean, Faculty Alignment and Registrar Office at the Indian School of Business (ISB).
  • sripad

    Sripad Devalkar

    Assistant Professor of Operations Management at the Indian School of Business (ISB).
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