What will we get? – Donation management in
charitable organisations
Master’s Thesis Supply Chain Management, MSc
University of Groningen
Faculty of Economics and Business
Katharina Bieschke
K.Bieschke@student.rug.nl
Student number: s2332027
Supervisor, University of Groningen: Dr. Kirstin Scholten
Co-Assessor, University of Groningen: Dr. Carolien de Blok
What will we get? – Donation management in
charitable organisations
_____________________________________________________________________
ABSTRACT
_____________________________________________________________________ Purpose – The purpose of this paper is to investigate how highly uncertain in-kind donations complement existing goods and service offers of charitable organisations’ supply chains to fulfil demand from beneficiaries.
Design / Methodology / Approach – An exploratory multiple case study approach was utilised. Data consisted of 7 semi-structured interviews, field observations as well as evaluated data records within the analysed organisations’ supply chains. The data were analysed by means of coding, within-case analysis and cross-case analysis. Findings – Six different mechanisms were identified to manage supply uncertainty of in-kind donations and achieve a better supply-demand match. It was found that charitable organisations should be transparent about all operations and needs, build buffers to balance out supply uncertainty, accept partial demand fulfilment, redirect supplies, collaborate with other organisations, and build supply-based offers to overcome the potentially disruptive effects of supply uncertainty induced by in-kind donations.
Originality / Value – This paper is one of the first to investigate the flow of in-kind donations to charitable organisations, and the way of achieving complementarities with organisations’ existing goods and service offers. This research focuses in particular on how to ensure that despite the supply uncertainty in-kind donations complement charitable organisations’ charitable efforts.
Keywords – In-kind donations, Non-profit organisations, Charitable organisations, Supply uncertainty, Complementarities, Humanitarian aid
Paper type – Case study
Table of contents
ABSTRACT ... 2
1. INTRODUCTION ... 4
2. THEORETICAL FRAMEWORK ... 7
2.1. Matching Supply and Demand ... 8
2.2. Supply Uncertainty of In-kind Donations ... 11
2.2.1. Solicited In-kind Donations ... 12
2.1.2. Unsolicited In-kind Donations ... 13
2.3. Model ... 13
3. METHODOLOGY ... 15
3.1. General Research Design ... 15
3.2. Research Context ... 15
3.3. Case Selection ... 17
3.3. Data Collection ... 19
3.4. Data Reduction and Analysis ... 20
4. FINDINGS ... 24
4.1. Existing Goods and Service Offers ... 24
4.2. Solicited In-kind Donations ... 26
4.3. Unsolicited In-kind Donations ... 28
4.4. Bought Supplies... 30
5. DISCUSSION ... 31
5.1. Managing Supply Uncertainty ... 31
5.2. Complementarities ... 36
6. CONCLUSION ... 37
6.1. Managerial Implications ... 37
6.2. Limitations and Future Research Implications ... 39
7. REFERENCES ... 41 8. APPENDIX A ... Fout! Bladwijzer niet gedefinieerd.
8.1. Informed Consent ... Fout! Bladwijzer niet gedefinieerd.
9. APPENDIX B ... Fout! Bladwijzer niet gedefinieerd.
9.1. Interview Guide ... Fout! Bladwijzer niet gedefinieerd.
10. APPENDIX C ... Fout! Bladwijzer niet gedefinieerd.
10.1. Case Study Protocol ... Fout! Bladwijzer niet gedefinieerd.
11. APPENDIX C ... Fout! Bladwijzer niet gedefinieerd.
1. INTRODUCTION
Political upheaval in the Middle East and Africa has been challenging the European Union due to massive inflows of refugees since 2011 (e.g. BBC, 2016; Ross, 2015): refugees have diverse basic needs, such as health assistance, food items, clothing, and/or school supplies (World Vision Inc., 2016). Many European governments struggle to react in a timely manner to provide refugees with the necessary resources (Amnesty International, 2015; BBC, 2015). Instead, a great amount of humanitarian aid to refugees is provided by independent parties, i.e. charitable non-profit organisations collecting in-kind donations (non-monetary goods and service donations) from public authorities, corporations and/or individuals (Brammal, 2015). Charitable organisations often solicit in-kind donations to support themselves in their objective of satisfying demand from their specified target group (Polonsky & Grau, 2008). These received in-kind donations, however, entail high degrees of upstream uncertainty and may vary in terms of type, quality, quantity, time and place, which can cause supply-demand mismatches (Hammond, Fisher, Obermeyer & Raman, 1994). Despite charities’ solicitations that outline desired specifications of donations (Wiepking, 2010), they still receive undesired in-kind donations, and charitable organisations are increasingly aware of the need to manage donations more efficiently (Flieb & Kleinalktenkamp, 2004; Sargeant, 2001). Therefore, it is crucial to understand how in-kind donations can be managed to be of most value and complement charitable organisations’ aid efforts, creating a better supply-demand match.
Even though the European refugee crisis has shown that in-kind donations are urgently needed and supportive for charitable organisations (Heath, 2016), they were also found to be frequently inappropriate and disruptive rather than aiding (Nianias, 2016). Furthermore, research on donation exchanges between charities and donors has shown contrasting results: While some research (Milsten, 2016; OCHA, 2013) found that in-kind donations entail challenges and often cause more problems than they solve, other researchers state in-kind donations can be highly valuable when managed correctly (Hellenius & Rudbeck, 2003), and even when unsolicited, provide a potentially rich source of value added to existing charitable goods and service offers (Islam, 2013). While both literature and practice recognise “adverse effects” of uncertain kind donations to existing charitable activities, complementarities of in-kind donations with established offers are largely neglected in research. Nevertheless, achieving better complementarities of in-kind donations with charitable organisations’ existing goods and service offers can unlock tremendous potential value for beneficiaries’ welfare and developmental efforts (Islam, 2013). To the best of the author’s knowledge, however, there exists no study that examines how charitable organisations deal with the high upstream uncertainty of in-kind donations and eventually provide a service that is a complement of existing goods/service offers and in-kind donations.
Hence, the research question considered in this study is How do in-kind
donations complement existing goods and service offers of charitable organisations’ supply chains to meet demand from beneficiaries?
supply chain effectiveness can be improved, namely, reduce lead-time to beneficiaries, better provide required items and services, and concentrate resources on relevant operations only.
2. THEORETICAL FRAMEWORK
Charitable organisations, or charities, are a type of non-profit organisation focused on charitable, religious, educational or other public interest activities benefitting the common good and social well-being (Sherlock & Gravelle, 2009). Charities follow a mission that drives all activities (Brinckerhoff, 2009), and accordingly set up supply chains to fulfil a certain type of demand from specific target groups (Sheehan, 1996). They implement their charitable efforts by sourcing from official suppliers (Falasca & Zobel, 2011), and receiving monetary and in-kind donations from individuals, governments and corporate bodies (Polonsky & Grau, 2008). While some papers refer to charitable organisations’ donors as customers (e.g. Balcik, Beamon, Krejci, Muramatsu, & Ramirez, 2010), this study considers donors as suppliers of charities, as their main contribution is providing resources in form of goods and services. Charitable organisations therefore have two types of suppliers: official suppliers and donors. This study considers a charity’s supply chain as consisting of the different suppliers from which it is sourced, the charity itself for the distribution of goods and services, and the beneficiaries as recipients.
In-kind donations may be solicited (resulting from specific donation requests to aid in response to particular needs), or unsolicited (proactive offers without previous need assessment) (OCHA, 2013). To study complementarities with existing goods and service offers, this research focuses purely on in-kind donations flowing through charitable organisations rather than on direct flows from donors to beneficiaries. In-kind donations are complementary to existing offers if the interaction effect of both is greater than existing offers’ separate effect (Milgrom & Roberts, 1995). Nevertheless, they entail high supply uncertainty and impede achieving charities’ mission by complicating supply-demand matches. This potentially results in not covering demand from beneficiaries.
2.1. Matching Supply and Demand
By understanding the importance of proper supply-demand matches, valuable insights can be gained from the for-profit context, where firms increase customer satisfaction by focusing on customer need fulfilment (matching supply and demand) (Cox & Brittain, 2004). Needs are fulfilled by providing the right types of products or services of the right quality, in right quantity, at the right time and right place at the right price – commonly referred to as meeting the “six-rights” (e.g. Cox & Brittain, 2004; Mukherjee, 2006). The “six rights” constitute buyers’ key expectations from suppliers, and depend on what an organisation specifies as “right” in its particular context. Customer demand is fulfilled by carefully selecting suppliers based on their ability to live up to expectations (Tajbakhsh, Zolfaghari & Lee, 2007). When applying the theory of the “six rights” to the charitable giving of donations, however, the “right price” is not applicable as charities’ collected donations are passed on to beneficiaries without monetary compensation (Dees, 1998). The “six rights” are therefore marked down to the “five rights”. Table 2.1 lists descriptions for each factor, and distinguishes, where necessary, between the for-profit and non-profit context.
TABLE 2.1
When sourcing from official suppliers, similar to commercial businesses, charities can influence the “five rights” of goods/services bought. In contrast, charitable organisations’ heavy reliance on donors restricts the extent to which they can select “non-official” suppliers (that is, donors) and their characteristics (Islam, 2013). Instead, donors’ motivation to offer in-kind donations is driven by different factors often intrinsic to the individual and out of the organisation’s influence (Balcik et al., 2010; Islam, 2013; Wisner, Stringefellow, Youngdahl & Parker, 2005). The resulting high donor flexibility often results in charities receiving in-kind donations that do not conform to the required type, quality, quantity, time or location (Milsten, 2016; OCHA, 2013). In fact, supplied goods/services may fully or only partly complement existing goods/service offers, or be neither conforming to requirements nor complementary at all. Table 2.2 presents possible mismatches of in-kind donations with charities’ demand concerning existing goods and service offers.
TABLE 2.2
Possible supply-demand mismatches
One potential mismatch of supply and demand is the quality of received goods/services being too low to be considered “fit for use” (Fenton et al., 2014: 217), preventing goods/services from being processed to beneficiaries. Moreover, if capacities are sufficient, an oversupply or early delivery of goods might simply be stored for future use until needed (OCHA, 2013). However, services can by their very nature not be stored for future use (Fitzsimmons, Fitzsimmons & Bordoloi, 2014), and are therefore often declined when offered in excess or at suboptimal timing (Ergun et al., 2010; Islam, 2013). In case of an undersupply of goods/services, demand cannot be fully met or (if possible) crucial logistics resources need to be moved so that an oversupply of goods or services in one location compensates for the undersupply in another (OCHA, 2013). When in-kind donations are received too late, demand might have been fulfilled otherwise already, or has changed for other reasons, so that in-kind donations are not needed anymore (Ergun et al., 2010). However, it is also possible that demand still needs to be covered, yet late response to beneficiary demand can cause harm particularly in disaster contexts (Islam, 2013). Supply-demand mismatches are mainly caused by supply uncertainty of in-kind donations, which is discussed next.
2.2. Supply Uncertainty of In-kind Donations
Charitable organisations rely on in-kind donations as their major resource (Dawson, 2012) and means to meet their objectives (Sheehan, 1996). In-kind donations come in the form of goods (e.g. clothing, hygiene items) or services (e.g. supporting administrative activities or providing translation services) (Wisner et al., 2005), and can originate from different donors. This is displayed in Table 2.3. Charitable organisations not only wait passively for donors to contribute to the organisation’s mission and intended purpose (Meer & Rosen, 2011; Wiepking, 2010), but also are usually active in solicitation efforts to increase donations via appeals on different channels such as direct mail, TV (Wiepking, 2010) or social media and online platforms (Gao, Barbier, Goolsby & Zeng, 2011). Many charitable organisations source goods and services from official suppliers, building the foundation of their eventual charitable offer (Polonsky & Grau, 2008). Those existing offers have specific requirements regarding the “five rights”, depending on the charity’s context and objective. To complement those goods and service offers, in-kind donations need to match solicited requirements (Sherlock & Gravelle, 2009). Having effective solicitation appeals should be one of charities’ primary goals to reach the public (Ein-Gar & Levontin, 2013) and ensure that donations match the charity’s demand specifications (Meer & Rosen, 2011). Asking for specific contributions is done in an attempt to reduce this upstream uncertainty (Andreoni, 2006).
TABLE 2.3
Donor motivations for in-kind donations (adapted from Islam et al., 2013)
Sourcing from official suppliers and receiving a combination of solicited and unsolicited in-kind donations, different types and degrees of supply uncertainty can be recognised. While purchases can be clearly specified on all “five rights” beforehand, solicited in-kind donations can still vary on different specifications of the “five rights”, and might deviate from (a combination of) the needed type, quantity, quality or location, or be donated at suboptimal timing (Milsten, 2016). Unsolicited goods, on the other hand, are entirely uncertain on all characteristics of its supply. Inherent uncertainties in organisations’ supply chains can significantly influence overall performance (Tofighi, Torabi & Mansouri, 2016), and should therefore be given special attention. In the next two sections (the supply of) solicited and unsolicited in-kind donations is thus discussed separately.
2.2.1. Solicited In-kind Donations
Even though solicitation appeals might explicitly state all donation requirements with regard to the “five rights”, there remains an information asymmetry between donor and charity. Donors have little knowledge to determine if quality and quantity of their donation are according to requirements. Even if donated well intended, donations might not match charities’ requirements and hence not cover demand (Weisbrod & Domingues, 1986). Thus, there still remain uncertainties of which type of product or service is ultimately going to be received and whether those conform to specifications. If donations take the form of, for example, volunteer time, their skills determine the quality of the donation: Volunteers having the required skills to complete a relevant task have high value to the organisation, whereas volunteers lacking required skills or time availabilities could become obstacles rather than facilitators (Philips, Ring & Hacket, 2011).
Moreover, the effectiveness of solicitation activities is uncertain. Even though solicitations attract more donors, it is unknown how many people/organisations asked to contribute will actually donate (Meer & Rosen, 2011). Donors’ willingness to donate likely varies depending on demography, and might therefore result in a suboptimal division of in-kind donations across locations/branches of the organisation (e.g. Bennet, 2002; Wisner et al., 2005).
2.1.2. Unsolicited In-kind Donations
Charitable organisations also receive unsolicited in-kind donations, that is to say items that the charity has not asked for and thus most likely does not need (Milsten, 2016). As solicitations are disregarded, the type, quality, quantity, time and location of the donation are entirely subject to donors’ flexibility thereof (Ergun, et al., 2010). Charities are faced with full uncertainty: it cannot be determined beforehand whether unsolicited in-kind donations will arrive at all, what exactly will be donated, in what quantities, at what location, what quality the supplies will have, and at what point in time an unsolicited donation might be received (Islam, 2013). The perhaps biggest challenge of unsolicited donations is its unannounced arrival/reception, often overwhelming the system’s capacities, potentially without meeting actual demand (OCHA, 2013). Islam (2013: 80) considers unsolicited in-kind donations to be “inappropriate at best and useless at worst”. It is uncertain whether those donations are just low-priority items, or unwanted and thus inappropriate if not disruptive for the response at all. Not at all having any indication concerning the donations’ “five rights” makes it hard if not impossible for the charity to prepare for, and thus prevents unsolicited in-kind donations from contributing to an effective response (Holguín-Veras et al., 2007). They are thus commonly acknowledged in literature to disrupt existing operations of charitable organisations (e.g. Chomilier et al., 2003; Ergun et al., 2010; Milsten, 2016; OCHA, 2013).
However, Islam, (2013) suggests that charities might also simply lack awareness of valuable supplies, so that unsolicited in-kind donations prove valuable and enhance beneficiaries’ welfare.
Similar to solicited in-kind donations, research lacks knowledge on if and how unsolicited in-kind donations complement existing goods and service offers of charities to meet beneficiaries’ demand.
2.3. Model
(Sherlock & Gravelle, 2009), depending on the organisation’s mission statement and needs of their specified target group. The goods and services necessary to implement their intended offering need to meet certain requirements concerning their type, quality, quantity, time and location. The foundation of those offers is laid by purchased goods/services from official suppliers (Polonsky & Grau, 2008). Donors’ in-kind donations complement those offers. In-kind donations are characterised by their uncertain type, quality, quantity, time and location, and can originate from solicitation requests or be the proactive offer of donors (OCHA, 2013). As charities’ existing goods and service offers have varying but explicit requirements concerning donors’ contributions (Ergun et al., 2010), in-kind donations should complement existing offers (Islam, 2013). However, it remains unclear how exactly uncertain in-kind donations ultimately complement charities’ existing offers and objectives to eventually satisfy demand from beneficiaries.
The flow of in-kind donations to charities and their creation of complementarities with existing goods and service offers is therefore the focus of this research.
FIGURE 2.1
Official suppliers
Charitable organisationBeneficiaries
In-kind donations · Uncertain type · Uncertain quality · Uncertain quantity · Uncertain time · Uncertain location Goods/Service flow Information flow
Sourcing
Distribution
Recipients
Donors
Goods and services · Certain type · Certain quality · Certain quantity · Certain time · Certain location
Goods & service offers requiring · Certain type
· Certain quality · Certain quantity · Certain time · Certain location
3. METHODOLOGY
3.1. General Research DesignIn order to empirically investigate complementarities of in-kind donations and existing charitable goods and service offers, a multiple case study design was chosen. It was considered as the most appropriate methodological approach for a number of reasons (Eisenhardt, 1989; Eisenhardt & Graebner, 2007). First, the lack of literature results in the topic being of exploratory nature (Voss, 2009). Thus, the aim is to gain a deeper understanding of the phenomenon of achieving complementarities of uncertain supply with existing charitable operations, and ultimately being able to develop theory (Eisenhardt, 1989; Eisenhardt & Graebner, 2007). Second, the phenomenon to be examined in-depth should be studied in its natural setting; it is complex, unique and exploratory (Yin, 2009). The flexibility and rich data collection of a case study best fit those characteristics (Voss, 2009; Yin, 2009). In order to achieve generalizability of the findings, multiple cases were chosen. This avoids the risk of misjudging the representativeness of a single case, but consistently replicates phenomena across several cases (Eisenhardt, 1989; Voss, 2009). Multiple cases augment external validity and guard against observer bias (Voss, 2009), while ensuring that the findings are more grounded, accurate and theoretically transferable (Eisenhardt, 1989). Moreover, multiple methods and data sources were used in order to come to the result of a thorough comprehension of the investigated phenomenon (Yin, 2009).
3.2. Research Context
GRAPH 3.1
Increase of people in need (2012-2015) (OCHA, 2016)
A great amount of those affected by the political upheaval and war in the Middle East and Africa have claimed asylum in European Union member states. As Table 3.1 depicts, Germany is the one European country that has received by far most asylum applications for four consecutive years from 2012 to 2015. More than twice the amount of asylum claims have been recorded compared to the second most popular country of asylum in 2015, which makes the case of the refugee crisis in Germany particularly interesting.
TABLE 3.1
3.3. Case Selection
The unit of analysis is supply chain; the investigated cases were hence charitable organisations’ supply chains. In light of the underlying theoretical and conceptual framework, cases were selected based on the three involved variables of in-kind donations, bought supplies and existing offers. The main case inclusion criterion was for all cases to satisfy the condition of organising in-kind donation exchanges with and for refugees in Germany, either in the form of goods or services, or a combination of both.
For the purpose of theoretical generalization of the results, replication logic guided the case selection (Voss, 2009). According to literal replication, cases that are similar in character concerning the involved variables are expected to generate similar results (Sousa & Voss, 2001; Voss, 2009). Therefore, we chose cases that were offering charitable services and goods to refugees composed of in-kind donations as well as bought supplies, and were thus similar on the three variables. Moreover, it was important to choose supply chains that represented an interesting, representative or unique case (Voss, 2009). This criterion was satisfied as supply chains were chosen that were either operative on a large scale in Germany and thus a representative case for donation exchanges, or made an interesting case as they evolved in response to the refugee crisis.
3.3. Data Collection
The main source of valuable information in this study was 7 semi-structured interviews, as they are excellent means to collect rich data that capture exploratory phenomena, as well as study and relate emerging concepts (Voss, 2009). Moreover, for each case organisational documents and their online platforms were reviewed and included in the analysis.
At least one individual face-to-face interview with an employee in a leading position was organised for each case. Selection of interviewees was based on their knowledge on and involvement in donation exchanges between charity and donors. Interviewees were approached and asked to participate following a standard procedure (see Appendix C for more details). An overview of interview details and related analysed documents is presented in Table 3.3. Interviews took place in May 2016.
Based on literature an interview guide was developed, which permitted the comparison of answers and thereby improved the study’s reliability (Yin, 2009). The interview guide was organised under the different variables, i.e. solicited in-kind donations, bought supplies, and existing offers, and focused on complementarities between existing offers and in-kind donations. Interviews followed a standard sequence, exemplary questions for each variable can be found in Appendix B. The variables are operationalized in Appendix C. Interview questions were reviewed by two experts in the field, and pilot-tested prior to data collection on one individual holding a managerial position in a charitable organisation. Refinements were then made and feedback concerning the questions was implemented.
Questions were open-ended and gave the interviewer the possibility to probe, leaving room for additional questions and discussions to emerge. The aim of the interviews was to gain insights into how charitable organisations dealt with the supply uncertainty of in-kind donations, and how complementarities with existing offers were ultimately achieved. Questions therefore mainly addressed problem-oriented approaches taken to tackle supply uncertainty and integrate unpredictable supply into existing structures. Practical examples were used to infer insights into well-functioning techniques that could later serve as the base for theory-building.
interviewee then provided additional data, which was considered during the data analysis. Data on each case was supplemented with additional information obtained from organisational documents and material handed out on site, as well as impressions and field observations gained during the conversations. Those field notes were taken directly after the visits, which focused on observations concerning volunteer labour on site, as well as the reception procedure of donations.
Applying multiple methods and making use of various information sources led to data triangulation and increased validity (Voss, 2009). A detailed case study protocol was developed and can be found in Appendix C, which increases the study’s reliability.
TABLE 3.3
Interview and document details
3.4. Data Reduction and Analysis
first-order codes were converted into descriptive second-first-order categories, such as “Detailed descriptions of solicited goods“, “Clear instructions for volunteers“, or “List of useless/inappropriate donations“. This step permitted initial insights into coping mechanisms in relation to supply uncertainty of in-kind donations and resulting integrations into existing structures. Third-order themes in relation to managing supply uncertainty could then be deducted by grouping similar/related descriptive codes under overarching themes. An excerpt of coding is presented in Table 3.4, showing the progression from data reduction (first-order codes) over descriptive codes (second-order categories) to third-order themes. The data was then analysed again from a slightly different perspective, checking for how the third-order codes relate to the “five rights” of required goods. Each of the “five rights” that could be identified under each mechanism was listed accordingly, as Table 3.4 shows on the outer right column. During this step we not only checked for how to ensure that the “five rights” match, but also what steps were taken if they deviated from the optimum.
TABLE 3.4
The approach of within-case analysis was first applied. This permitted a detailed understanding of each analysed organisation’s supply chain separately, becoming intimate with each case and its distinct circumstances (Eisenhardt, 1989). Initial conclusions drawn from the interviews and company documents as well as online platforms were summarised per case and included in separate case narratives. After that, a cross-case analysis was done in order to compare the different cases and discover patterns or differences concerning how supply uncertainty was managed, specifically in relation to the “five rights”. During the cross-case analysis we compared descriptive codes across cases, as well as each case’s identified third-order themes for (un)solicited in-kind donations, bought supplies and existing offers. Table 3.5 shows this.
Of particular interest were the “five rights”, so we were seeking for patterns that could explain how each of the identified overarching themes related to ensuring a supply-demand match concerning the “five rights”, or how a deviation from the “five rights” was corrected. The related analysis is shown in Table 3.6.
TABLE 3.5
TABLE 3.6
4. FINDINGS
The data analysis processes revealed insights into how uncertain in-kind donations complement existing goods and service offers in charitable organisations’ supply chains. Complementarities can be achieved and supply uncertainty can be balanced out via transparency, building buffers, inter-organisational collaboration, partial demand fulfilment, a redirection of supplies and a supply-based offer. Before outlining the identified mechanisms for each variable, however, further insights on the different cases’ existing goods and service offers are required. This permits a better understanding of how in-kind donations ultimately complement existing goods and service offers of charities, and how they are in line with their objective.
4.1. Existing Goods and Service Offers
All four analysed cases’ goods and service offers were based on donors’ supply, resulting in charities acting in accordance with contributions from donors and volunteers. Interviews, field visits as well as document analyses made clear that charities’ main intention is building a contact platform to mediate between donors and beneficiaries (refugees). Consequently, their main offer is built on donors’ supply. Supply in turn is heavily dependent on solicitation appeals that are in line with demand from beneficiaries. Those supply-based offers are directed at refugees’ daily demand:
“For us it was primarily about providing people with a warm soup, new clothing, or food and drinks, give them information, tell them where to sleep. Those were main concerns we had to cover, and our volunteers and donors were really helpful. Without them it would not have been possible. Of course, that needs structure and guidance from our site.” (Case B3)
Thus, meeting the “five rights” complements charitable efforts and permits an effective response. Moreover, inter-organisational collaboration in the form of resource sharing, information sharing and joint donation collections was found across all cases, and enables implementing desired aid and relief efforts:
“Collaborating with other initiatives lets us satisfy demand from refugees quite well because collectively we have access to many more resources.” (Case C4)
Furthermore, partnering with corporations such as drug stores permits setting up additional collection channels, ensuring solicited and appropriate donations that complement the charity’s efforts and objectives:
“We have a cooperation with a local drugstore chain. We always specifically state our needs to ensure that donations match our demand. People do their shopping and can donate items from our list.” (Case C4)
On the other hand, in case in-kind donations do not fulfil demand, charities’ employees can act as “emergency buffers” in the form of backup capacity. For two cases it was claimed that the sudden increase in demand from arriving refugees could have been managed to a large extent by internal labour working overtime, mostly on voluntary basis. If volunteers lack required skills or time availabilities to complement charitable efforts, skilled employees can ensure an effective response. Potential shortcomings in uncertain volunteer supply are thereby prevented and balance out “non-complementing” in-kind donations. Thus, charities register demand and forward that to donors to react. Whatever useful comes in, either in the form of volunteer labour or donated goods, is offered to refugees. Supplying goods in line with demand specifications in consequence complements charitable objectives. However, only partially fulfilling demand, has to be accepted at times:
4.2. Solicited In-kind Donations
Overall, it was found that transparency, a redirection of supplies as well as inter-organisational collaboration all together ensure that in-kind donations are appropriate and match the charity’s (and thus beneficiaries’) demand.
The findings highlight the importance of transparency throughout the supply chain. Detailed descriptions of required goods to ensure that in-kind donations match the organisation’s requirements were found across all cases, clearly specifying characteristics on the “five rights”. Only Case A did not specify the location (as it only operates a single branch), and Case B did not specifically state the quantity but regularly updated needs to changes in demand and supply. To achieve a (near) perfect supply-demand match and ensure that in-kind donations complement charities’ offers, clearly outlining certain specifications related to the “five rights” of required goods and services is crucial, as Case B3 and Case C show:
“We not only solicit clothing, we do not just say we need pants. We explicitly state that we need jeans in size 38-40.” (Case B3)
“Breaking news: We need your support on [date] at [location] from 10am on. […] No matter if you want to load pallets, trucks or be in charge of documentation and paperwork – we will find a task for anyone.” (Case C social media analysis)
“We have a huge pool of volunteers being regularly present and familiar with our structures […]. We could put some volunteers in charge, so we said to familiar faces ‘Hey, great to see you back again, go show some of the newbies how to sort shoes and clothing’” (Case B3)
Information sharing in the supply chain is another important component of
transparency. Passing on updated information concerning the flow of donations or current demand via social media or newsletters not only increases trust in the charity but also keeps donors and volunteers willing to help informed about appropriate contributions. Thus, transparency is important so that downstream demand from beneficiaries is communicated upstream to donors as specific as possible, describing all of the “five rights”. In that way, in-kind donations (more likely) match demand and complement charities’ existing offers and charitable efforts.
Despite information-sharing and clear specifications on the “five rights”, received goods might deviate from the optimum. In case excessive amounts of donations are received, charities can redirect supplies by finding a better destination of supplies either internal or external to the organisation. Redirecting supplies
internally may take the form of passing on goods to another target group of
beneficiaries (for example from refugees to the homeless):
“We told donors that shirts or other clothing that is simply too large for the average refugee was passed on to the homeless.” (Case B3),
or transporting them to another branch/location of the organisation currently experiencing high demand for the respective good:
“We always have the possibility to make use of in-kind donations, we always have another branch somewhere.” (Case B3)
However, goods may be sold and thus redirected externally, in turn financing purchases of additional goods or services from sales profits.
of required in-kind donations to different initiatives. Two of the analysed cases were found to collaborate, where Case C specialised in the collection of in-kind donations and supplied to Case D as well as other initiatives. Centralising collection, sorting, registration, storage and distribution of in-kind donations ultimately permits charities to only pick required/appropriate goods, much as placing an order with an official supplier. The goods can then be selected and specified on all of the “five rights”, and thus complement existing offers as needed. The following excerpt of an interview shows this:
“We [specific transition facility in the organisation’s supply chain] used to collect in-kind donations ourselves. […] We soon stopped doing that though, because we found one initiative [organisation case C] that specialised in donation collections. So we told our donors to please drop off their donations at [organisation case C] instead, […] and if we need anything we can order from them. […] We usually get what we order, just that we do not pay for it.” (Case D7)
4.3. Unsolicited In-kind Donations
Transparency was found among all cases to be the main mechanism to avoid
the supply of unsolicited in-kind donations that do not conform to requirements and thus do not complement existing offers. In addition to specifically describing required goods in terms of the “five rights”, all analysed cases were found to also list useless
or inappropriate donations:
“We do not accept mattresses, cushions, quilts, expired or opened food, damaged or dirty clothes.” (Case B website analysis)
“Our employees have to disassemble, sort and properly dispose of goods that we cannot use. That cause[s] considerable costs of disposal. Please understand that our employees may not always be able to accept your donations.” (Case B website analysis)
Redirecting inappropriate or excess supplies at the moment of reception avoids
potential problems and disruptions that handling and disposal of unsolicited supplies may cause.
“Sometimes I had to tell them to stop, that it was not manageable from a financial point of view, they should support people on-site.” (Case B3)
However, building a buffer to balance out supply uncertainty by ensuring
high/sufficient storage capacities is particularly important when collecting and
distributing in-kind donations in great quantities such Case C does:
“Even if people donate winter clothing midsummer we would be able to store it. Our warehouse capacities are big enough for that, we need to ensure that capacities are sufficient. We of course know very well that the next winter is coming and that people will need winter clothing. So if we get winter clothing right now, we accept it. Otherwise we will be short of winter clothing when we need it and wish we had accepted it back in summer. We can definitely work anti-cyclical in that respect.” (Case C4)
4.4. Bought Supplies
Across all cases it was found that organisations build buffers to supply uncertainty by spending resources on official purchases only “as a last reserve”, so that the upstream uncertainty induced by donors is balanced out by specified purchases of official suppliers. Three of the four cases only bought supplies in order to fill gaps that in-kind donations were not able to satisfy. As solicitation appeals appeared to work really well across all analysed cases, in-kind donations were able to satisfy large parts of beneficiaries’ demand. Additional purchases were only made when in-kind donations were not sufficient, as it could be extracted from Case C4:
“In-kind donations are our main pillar. […] If we are short on certain goods, we make additional solicitation appeals. We usually always get what we need. If we are still short on required donations, we fill that gap by making directed purchases. We only purchase if we are scarce on something.” (Case C4)
5. DISCUSSION
As the heavy reliance on in-kind donations complicates charities’ operations due to their uncertain supply (Balcik et al., 2010), supply-demand mismatches are commonly observed in practice and discussed in literature (Polonsky & Sargeant, 2007). Demand from beneficiaries is consequently not optimally met, calling for more efficient and effective practices of charitable organisations. Better managing and overcoming potentially disruptive effects of supply uncertainty enhances matching supply and demand, eventually increasing beneficiaries’ well-being (Islam, 2013). This paper contributes valuable empirical insights into charitable organisations’ daily operations and coping mechanisms concerning supply uncertainty induced by donors. It shows that supply uncertainty brought about by donated goods, both solicited and unsolicited, and variable volunteer support may be managed by transparency, inter-organisational collaboration, building buffers, supply-based offers, a redirection of supplies as well as partial demand fulfilment.
Contrary to literature suggesting the entire elimination of in-kind donations from charitable organisations’ supply chains due to their oftentimes more disruptive than supportive effects (e.g. Balcik et al., 2010), our findings suggest otherwise. In fact, as proposed by Islam (2013) in-kind donations carry compelling potential to support charitable organisations in their objective of satisfying demand from beneficiaries. For exploiting the full potential of donated goods and volunteer support, however, charities should make use of the identified mechanisms, being transparency, partial demand fulfilment, building buffers, inter-organisational collaboration, supply-based offers and a redirection of supplies. Considering that the integration of uncertain supply into existing supply chain structures poses a significant challenge on charitable organisations, the next paragraph discusses the management of supply uncertainty induced by in-kind donations. The previously outlined findings are linked to related literature on the topic. The subsequent paragraph then discusses complementarities between donors and charitable organisations.
5.1. Managing Supply Uncertainty
acknowledge that donations need to be managed more efficiently (e.g. Flieb & Kleinaltenkamp, 2004; Sargeant, 2001), others propose the complete refusal and removal of in-kind donations from charitable organisations’ operations (e.g. Balcik et al., 2010). Much in line with Hellenius & Rudbeck (2003), our findings suggest that a correct management of in-kind donations and related operations unlocks great value not only to beneficiaries downstream but also to charitable organisations themselves. Donors can significantly contribute to an improved situation of those in need, both by donating goods as well as time.
Research (e.g. Flieb & Kleinaltenkamp, 2004; Islam, 2013) called for intervention and solution approaches to reduce unproductive giving and the reception of unsolicited goods. Our findings not only propose that unproductive giving can be reduced but may nearly be ruled out. The main mechanism that is necessary to achieve this goal is transparency throughout the supply chain. Specifically describing required as well as useless or inappropriate goods, information-sharing with donors, giving clear instructions to volunteers and even letting knowledgeable and regularly returning volunteers instruct other volunteers are all components of transparency. While previous studies have acknowledged the need for transparent donation flows from donor to the final beneficiary (e.g. Hellenius & Rudbeck, 2003; Tomasini & Van Wassenhove, 2009), none seem to be concerned about transparently communicating specific requirements of goods and services with regard to the desired type, quality, quantity, time and location of the donation.
Our findings, however, clearly show that following those steps makes solicitation appeals significantly more effective and prevents unsolicited goods from being supplied. Meer & Rosen (2011) and Wisner et al. (2005) suggest that solicitation appeals can become too detailed, so that rather than attracting more donors and more appropriate donations, long lists of requirements and limitations will eventually discourage donors from giving at all. We found the opposite to hold true. Not only should solicitations explicitly state all requirements with regard to the “five rights”, but also does listing inappropriate goods and services ensure a better supply-demand match. In that way, transparency in the supply chain permits that in-kind donations complement the organisation’s charitable efforts.
Philips et al. (2011) who raise attention to the uncertainty of potentially unskilled volunteers becoming obstacles rather than facilitators in aid operations, this research found volunteers to be the engine of charitable organisations. We found volunteer labour to significantly increase charities’ reach and effectiveness, extending charitable efforts to dimensions much greater than could have been achieved without.
Therefore, in line with our findings, we propose that:
Proposition 1. Transparently communicating downstream demand from beneficiaries
to suppliers/donors in a charitable supply chain enhances supply- demand matches:
1. Explicitly describing specifications in terms of the “five rights” makes in-kind donations complementary to charitable efforts. 2. Listing useless or inappropriate donations prevents the supply of
unsolicited in-kind donations that disturb complementarities. 3. Information-sharing with donors concerning downstream demand
leads to more productive giving which in turn permits complementarities.
4. Giving clear instructions on required tasks and services aligns volunteer labour with demand, complementing charitable efforts.
In addition to Tomasini & Van Wassenhove (2009) proposing coordination among charitable organisations and donors, this paper emphasises the need for coordination and collaboration among different non-profits as well, not only for information-sharing purposes but also for resource sharing and joint donation channels. Partnering with business donors and broadening donation channels has been proposed by previous research to avoid the reception of unsolicited goods (e.g. Thomas & Fritz, 2006; Van Wassenhove, 2005). Our findings additionally suggest that collaboration between different non-profits aids to make better use of resources. As a result, a more effective response to beneficiaries’ demand is achieved.
collaboration among charitable organisations results in a more appropriate supply of in-kind donations, thereby promoting complementarities. We additionally argue that the increased reach and visibility resulting from horizontal collaboration are only valuable to organisations if combined with transparency concerning beneficiaries’ demand and charities’ objectives. As a result, better supply-demand matches are achieved, charitable giving is more effective and solicited, and beneficiaries’ welfare increases.
Therefore, we propose that:
Proposition 2. Inter-organisational collaboration between non-profits leads to a more
effective and directed response to beneficiaries’ needs and thus facilitates complementarities of in-kind donations and charitable efforts.
On the other hand, we also found that the “five rights” of in-kind donations cannot always be achieved, despite having a transparent supply chain in place and making detailed solicitations. Charities therefore have to accept partial demand fulfilment at times. That is, the right thing might be distributed at the wrong time, yet still covers demand once offered to beneficiaries. The findings show that while the “five rights” are highly interdependent, a deviation from the optimum state does not necessarily entail detrimental effects as Fenton et al. (2014) propose. Supply uncertainty might indeed lead to a delivery of the right thing at the wrong time, or the wrong thing at the right time, yet correcting for this deviation does not imperatively require the mobilisation of scarce resources as suggested by Fenton et al. (2014). Collaborating with other charitable organisations to share resources such as warehouse capacities or redirecting supplies to where they are currently needed most, allows charities to correct a deviation from the “five rights”. Moreover, as an emergency situation is served, fulfilling necessary requirements as good as possible is usually accepted and considered to be of great help (UN-HABITAT, 2001).
In line with our findings, we propose:
Proposition 3. A deviation from the “five rights” of solicited in-kind donations may
In addition to that, our findings suggest that the considerable demand coverage via solicited in-kind donations in turn permits purchases to be postponed. Consequently, resources are only spent in order to fill gaps that could not be covered by in-kind donations. Saving crucial resources in turn allows, if necessary, transporting goods along the supply chain to another branch, paying for the disposal of unsolicited goods, or further investing in additional professional developmental efforts. Those findings are contrasting to Polonsky & Grau (2008) who state that in-kind donations are purchased to build the foundation of goods and service offers, and to be complemented by in-kind donations.
Based on our findings across cases, we therefore propose a revision of the conceptual model (as presented in Figure 2.1) in Figure 5.1 below. It presents a charitable organisation’s supply chain. Instead of sourcing from official suppliers to build the foundation of the charitable offer, charitable organisations’ offers are much more supply-based, and complemented by purchases in case of lacking in-kind donations to satisfy beneficiaries’ demand. Even though offers are supply-based, in-kind donations need to conform to specific requirements from recipients.
FIGURE 5.1
Official suppliers
Charitable organisation
Beneficiaries
In-kind donations · Uncertain type · Uncertain quality · Uncertain quantity · Uncertain time · Uncertain location Goods/Service flow Information flow
Sourcing
Distribution
Recipients
Donors
Goods and services
· Certain type · Certain quality · Certain quantity · Certain time · Certain location
Goods & service offers requiring · Certain type · Certain quality · Certain quantity · Certain time · Certain location
In need of goods and services of · Certain type · Certain quality · Certain quantity · Certain time · Certain location Solicited Unsolicited
+
5.2. Complementarities
With respect to the research question, however, it must be noted that while in-kind donations are significantly supporting charitable organisations in their objective of alleviating suffering and improving beneficiaries’ well-being, they do not necessarily complement existing goods and service offers in the way it was previously expected. Instead of charitable organisations setting up goods and service offers targeted at certain needs of their specified target group, those offers are mostly supply-based. That is, as soon as donors offer goods or services that may be interesting and appropriate for beneficiaries, charitable organisations usually find a use and way to employ those. According to our findings, therefore, charitable organisations build their entire offer on in-kind donations.
6. CONCLUSION
This paper has investigated how in-kind donations flow through charitable organisations and create complementarities with charities’ existing goods and service offers in order to increase beneficiaries’ well-being. The findings of this research contribute to the on-going investigations/debate of (un)solicited in-kind donations and charitable organisations’ management thereof. This research was able to unravel the mechanisms that underlie efficient donation management of charitable organisations and thereby enhance beneficiaries’ well-being. As previous research has focused on difficulties and disruptions caused by the high supply uncertainty of in-kind donations, this study adds valuable insights to the field of supply chain management and charitable organisations’ supply chain effectiveness. We found that transparency, inter-organisational collaboration, a redirection of supplies, building buffers to balance out supply uncertainty, partial demand fulfilment and a supply-based offer are mechanisms that charitable organisations can employ to achieve a more efficient and effective supply-demand match. In that way in-kind donations are more likely to conform to the organisations’ specified “five rights”, and thus complement and support charitable organisations in their objective of fulfilling demand. With respect to the research question, therefore, it may be argued that in-kind donations complement existing goods and service offers of charities if demand from beneficiaries is transparently disclosed and explicitly forwarded to donors. Inter-organisational collaboration between different non-profits permits a more effective and directed response to demand, facilitating complementarities of in-kind donations and existing offers.
Applying the suggested strategies facilitates the achievement of more efficient supply-demand matches in charitable organisations, increasing beneficiaries’ well-being. As this paper is one of the first to look into daily operations of charitable organisations and exploiting the full potential of in-kind donations, we can add valuable new insights not only on a supply chain but also on a network level.
6.1. Managerial Implications
potential they carry. However, for the potential to show and be fully exploited in the entire supply chain by both charitable organisations and beneficiaries, certain managerial implications apply. First of all, being transparent about all operations is key, and donors need to be informed about all requirements of desired goods and services in order to donate appropriate goods or services. Second, collaborating not only with the different parties within a charitable organisation’s supply chain is necessary, but collaboration may also take the form of partnering on a network level. That is, different organisations providing different core competences and know-how are able to provide an enormous amount of help and support to those in need.
Furthermore, we found that in non-disaster contexts in particular demand fulfilment is much more of a desire rather than an “urgent need”, so that not covering a certain type or portion of demand is not necessarily fatal. As a result, partial demand fulfilment appears to be something that charitable organisations need to accept at times. Nevertheless, having effective solicitation appeals in place should be charitable organisations’ main concern, as that in turn implies saving crucial resources on purchases to fill gaps in supply, and increase beneficiaries’ well-being. Relying on donors to supply appropriate goods and services does not have to be a disadvantage or challenge in itself, as educating donors upfront about the charity’s objectives is likely to result in informed donors able to supply goods and services that act as valuable offers in themselves. Thus, charitable organisations should pay particular attention to donor relationships as well as information-sharing on a network level.
mission and objective, striving to improve a specific situation or group’s welfare, they can provide considerable and meaningful humanitarian aid together.
6.2. Limitations and Future Research Implications
Even though different measures were taken in order to provide a study that is both valid and reliable, this research comes with limitations.
First of all, this research is focused on cases based in Germany, in the context of the European refugee crisis. Charitable organisations operating in Germany mainly experience daily demand from beneficiaries rather than emergency or acute demand, such as EU member states with external borders might face – for example Greece. Even though demand for humanitarian aid has significantly risen in Germany, the structure of that demand has stayed approximately the same and does not appear to differ significantly from that of other beneficiary groups within the country. Thus, it is likely that findings might differ if the selected cases had been based in member states being the first EU-country on refugees’ escape route.
Moreover, the cases were selected based on the criterion to collect in-kind donations for refugees, and the research’s underlying questions were asked in relation to the European refugee crisis. Thus, only a specific target group of beneficiaries and context was considered in this research. Even though it became apparent that internally no specific target group of beneficiaries was being discriminated against or preferred, donor behaviour might vary depending on their attitude towards the targeted beneficiaries. This, however, was disregarded in this study. Future research could therefore extend our findings by also collecting data from donors.
Additionally, we do suggest that charitable organisations should collaborate to achieve a better supply-demand match and complementarities. However, we do not propose specific strategies of how to approach this. Nevertheless, this appears to be an important step to consider. Future research in this area should therefore address how inter-organisational/horizontal collaboration among non-profits can be achieved, and if the positive effects we found in our study also hold in different contexts.
our findings are transferable to rural areas where charitable operations are less abundant.
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