Operations of cost-effective charities: A qualitative study

Abstract

People donate to charities with the aim of improving society. Yet, many charities fail to use donations efficiently or have ineffective interventions. We explore the strategic operational priorities and processes that enable charities to efficiently implement their interventions and have a positive impact on society. We first review the literature on charities to gain a deeper understanding of the current state of knowledge on charity operations. We then employ the lens of paradox theory and perform a qualitative investigation of six case studies to explore various aspects of the operations of charities that are known for being cost-effective. We reveal how the strategic operational decisions of charities, as well as the processes they implement, help them resolve the tensions arising from the cost-effectiveness paradox. We show that cost-effective charities make strategic operational decisions that help maintain two diverging priorities: prioritizing the status quo and prioritizing change in how they deliver value. Another set of strategic decisions helps balance these two diverging priorities. We then show how these charities create and then maintain cost-effective operations. We address recent calls for research on non-profit organizations in the field of operations management. To our knowledge, it is the first in-depth study of exemplary charity operations. The results can be used by charity executives as a benchmarking tool when they develop and implement their charitable interventions and by government agencies and potential donors when they select charities for their donations. Finally, the results should have implications for other organizations trying to have a positive societal impact.