Lowering Standards: Unintended Consequences of 990-N and Value Congruence on Cost Shifting

Document Type

Article

Publication Date

2020

Publication Title

Journal of Forensic and Investigative Accounting

Abstract

We investigate how IRS form types (990-N vs. 990-EZ) influences existing donor decisions when fraud is suspected, as well as the pathways used to find information. The influence of donor values being closely tied to the organization also is examined. We find that participants whose values are closely represented by the nonprofit view the information they receive valuable independent of the tax form they receive. Further, participants whose values are aligned with the nonprofit are more likely to be willing to incur added costs to obtain more information when presented a Form 990-N. They pay to hire others for help or lose time filing a complaint with the better business bureau. Perhaps worse, some donors who are passionate about the cause indicate they will take their donations elsewhere when presented a Form 990-N and fraudulent action is suspected, representing the ultimate form of cost to the nonprofit.

Comments

The Journal of Forensic and Investigative Accounting (JFIA) is an open access journal

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