Price professor wins philanthropy grant

Since Fall 2015, USC Price School of Public Policy assistant professor Alexandra Graddy-Reed has taught classes about nonprofits, philanthropy and social innovation. When she is not in the classroom, Graddy-Reed conducts research about the effectiveness of nonprofit organizations, and was recently awarded a $10,000 grant.

Last November, Graddy-Reed was named as the inaugural recipient of the Dugan Research Award for Philanthropic Impact. Her research examines the ways in which nonprofits’ overhead ratios — which include the share of expenditures that go to administrative, operating and fundraising costs — affect the number of donations received.

According to Graddy-Reed, the public pressures nonprofit organizations into keeping their overhead rates to less than 20 percent. The lower the percentage, the more inclined people are to donate.

With her research, Graddy-Reed addresses two questions: How are nonprofits reporting overhead ratios? Do the overhead ratios actually impact the donations these organizations receive?

“There’s a lot of focus in the public on these overhead ratios, and I think there’s too much focus with not enough data to say whether or not these things matter,” Graddy-Reed said. 

According to Graddy-Reed, it is important to investigate whether or not this pressure leads nonprofits to report their expenditures in alternative categories in order to minimize the overhead cost ratio.

Graddy-Reed started her research last fall and received seed funding from the USC Center on Philanthropy and Public Policy. According to USC Price Dean Jack H. Knott, Graddy-Reed’s being named the inaugural recipient of the Dugan Research Award is a “tremendous honor, and a very well-deserved one.”

“Professor Graddy-Reed is utilizing innovative data analysis approaches to examine important issues involving charity ratings, nonprofit revenues and donor behavior,” Knott said in an email to the Daily Trojan. “Her work will help further our understanding of philanthropic impact — and how to measure it more effectively.”

The award, presented by the Association for Research on Nonprofit Organizations and Voluntary Action and Charity Navigator, comes with the opportunity to present the study at the ARNOVA annual conference. Additionally, Graddy-Reed has been granted access to Charity Navigator’s information database, which offers exclusive information about various nonprofits.

Before receiving access, she used public data from the Internal Revenue Service for her research.

“[Charity Navigator’s data] is key,” Graddy-Reed said. “I have access to all of Charity Navigator’s reports and ratings of all nonprofits that they rate … It’s a big time saver.”

Graddy-Reed said she is encouraged by how people have expressed interest in addressing this issue and that nonprofits are open to her conducting this research.

“It’s very exciting,” Graddy-Reed said. “It’s an amazing opportunity … [This research] can lead to many other research projects in the future.”