Nonprofit Operations; Incomplete Products; Product Variety; Fairness;
Problem definition: faced with the challenge of serving beneficiaries with heterogeneous needs and under budget constraints, some nonprofit organizations (NPOs) have adopted an innovative solution: providing partially complete products or services to beneficiaries.The authors seek to understand what drives an NPO’s choice of partial completion as a design strategy and how it interacts with the level of variety offered in the NPO’s product or service portfolio.Academic/practical relevance: although partial product or service provision has been observed in the nonprofit operations, there is limited understanding of when it is an appropriate strategy - a void that the authors seek to fill in this paper.Methodology: the authors synthesize the practices of two NPOs operating in different contexts to develop a stylized analytical model to study an NPO’s product/service completion and variety choices.Results: the authors identify when and to what extent partial completion is optimal for an NPO. The authors also characterize a budget allocation structure for an NPO between product/service variety and completion. Their analysis sheds light on how beneficiary characteristics (e.g., heterogeneity of their needs, capability to self-complete) and NPO objectives (e.g., total-benefit maximization versus fairness) affect the optimal levels of variety and completion.Managerial implications: the authors provide three key observations. (1) Partial completion is not a compromise solution to budget limitations but can be an optimal strategy for NPOs under a wide range of circumstances, even in the presence of ample resources. (2) Partial provision is particularly valuable when beneficiary needs are highly heterogeneous, or beneficiaries have high self-completion capabilities. A higher self-completion capability generally implies a lower optimal completion level; however, it may lead to either a higher or a lower optimal variety level. (3) Although providing incomplete products may appear to burden beneficiaries, a lower completion level can be optimal when fairness is factored into an NPO’s objective or when beneficiary capabilities are more heterogeneous.