Lowering standards: unintended consequences of form 990-N and value congruence on cost shifting

• In Event: Current Topics in Not-For-Profit Accounting

Abstract

In this paper we investigate how IRS form type (990-N vs. 990-EZ) influences cost shifting by donors, investigating the pathways they use to find the information. We further study effect of donors being aligned (or not) with the cause of the organization in relation to this cost-shifting behavior. We find that participants presented with 990-EZ shift costs to their accountant when they want to know more, but those presented with 990-N may be more likely to shift funding away to a different organization. Participants who are aligned with the cause represented by the nonprofit are likely to shift costs to an outside group, such as private investigators or the better business bureau. Of particular interest is that for participants whose passion is aligned with the nonprofit, the data suggests form type matters. Specifically, they are most motivated to incur costs across a variety of external organizations, as well as the IRS and the organization itself, to seek for information due to the lack of disclosure in 990-N.

Authors

• Joseph M Wall, Marquette University

• Qianhua Ling, Marquette University