When Nonprofits Help Corporate Disaster Giving, and When They Don’t

When disasters strike, the United Nations and other global institutions have urged corporations to channel their donations through established nonprofits like the Red Cross. The argument has been that this is the most effective way to close the widening gap between disaster needs and available funding. This study tested that assumption by analyzing every reported corporate donation across 4,396 major natural disasters worldwide between 2003 and 2015. 

The findings complicate the conventional wisdom. Nonprofits do add significant value — but only under specific conditions. Companies would have donated substantially more through nonprofits when responding to disasters in countries with weak institutional systems where they had no local operations. Conversely, companies would have given more by acting directly when responding to disasters in well-governed countries where they had established local presence. Most striking: companies systematically chose the opposite channel from the one that would have maximized their giving. 

This mismatch suggests a breakdown in communication, incentive alignment, or decision-making between the business and nonprofit sectors — one that, if addressed, could meaningfully expand the resources flowing to disaster victims.
 

The relative value of firm and nonprofit experience: Tackling large‐scale social issues across institutional contexts
Authors: Luis Ballesteros and Aline Gatignon
Published: 2019, Strategic Management Journal