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Misreporting Fundraising: How Do Nonprofit Organizations Account for Telemarketing Campaigns?
Elizabeth K Keating, Harvard University
Linda M Parsons, University Of Alabama
Andrea A Roberts, Boston College
ABSTRACT. The purpose of this study is to examine the frequency, determinants and implications of misreporting fundraising activities. We compare state telemarketing campaign reports with the associated information from nonprofits’ annual Form 990 filings to directly test nonprofits’ revenue and expense recognition policies. Our study indicates that smaller nonprofits, and those with less accounting sophistication, are more likely to inappropriately report telemarketing costs as a component of net revenues rather than as expenses. In addition, less monitored firms are more likely to report telemarketing campaign revenues net of expenses. Additionally, among those firms that do report telemarketing costs as expenses, we find that smaller firms, and those with relatively less officer compensation, are more likely to allocate telemarketing expenses to non-fundraising expense categories.
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