Pandemic or no pandemic, nonprofit organizations play an important role in the society. They provide critical (and in most cases, lifesaving) products and services to underserved populations. The Covid-19 pandemic has underscored that NPOs must use their scarce resources in an efficient and effective manner, so as to create the best possible social impact. Priyank Arora, assistant professor in Isenberg’s operations and information management department, has developed an analytical framework to help nonprofits answer questions that have direct consequences on service design, hiring and training, and partner development related decisions.
Nonprofits typically feel compelled to offer a smorgasbord of services that cater to all types of clients. The research conducted by Arora and his collaborators at Georgia Tech identifies specific conditions under which nonprofits with limited budgets can create greater social impact by focusing on a few key services. Their related research paper has recently been accepted for publication at “Manufacturing & Service Operations Management,” which is a premier journal that showcases innovative research in the field of business administration and management science.
Many nonprofits serve distressed individuals who seek relief from hardships such as domestic abuse or homelessness. These individuals are often unable to articulate their needs as they are unware of the true causes of their situation, or have endured traumatic experiences resulting in symptoms of PTSD, low self-esteem, or anxiety. As a result, they regularly choose to receive a service that does not address the true causes of their distress. Such instances end up being socially undesirable as they lead to wastage of the nonprofit’s scarce resources and result in delays in clients obtaining resolution to their needs.
Using an optimization model that accounts for the societal costs stemming from delays experienced by clients, Arora’s research offers the following two rules of thumb for managers at nonprofits. First, nonprofits can create generate a higher social impact by doing less. Their investigation reveals that by focusing on a fewer services, nonprofits can help clients achieve resolution promptly and permanently. Second, when more financial resources become available, nonprofits should prioritize investing in offering deep intake and advisory sessions. This approach can reduce mismatches because by ensuring clients’ issues are discussed and clients appropriately select one of the many service plans.
Their research study also provides guidance to benefactors who offer funding for a specific type of activity only. These funds are commonly referred to as “earmarked” funds. Interestingly, Arora and his collaborators find that, while these funds are better than none at all, earmarking can suppress the value of providing advisory support to clients. With large amounts of earmarked funds, nonprofits can generate higher social impact by diversifying their portfolio of services (and channel funds away from advisory support).