Performance measurement of Non-Profit Organizations (NPOs) is of increasing importance for aid agencies, policy-makers and donors. A widely used benchmark for measuring the efficiency of NPOs is the overhead cost ratio, consisting of the total money spent on administration and fundraising relative to the budget. Donors generally favor a lower overhead cost ratio as it ensures that more money directly reaches beneficiaries. Unlike fundraising expenses, administrative costs do not contribute to advertising the actions of an NPO even though they account for a significant proportion of overhead cost. Reducing administrative expenses is a logical consequence from a financial viewpoint, but might negatively affect NPOs through the resulting administrative capacities. This phenomenon is known as “Nonprofit Starvation Cycle”. This work provides an analytical framework for analyzing NPO decision making concerning administrative costs. The paper provides answers to important research questions on the optimal level of administrative spending, the influencing factors and the effects of available information on NPOs. The research shows that focusing on financial performance measurements can result in reduced utility created for NPOs. Less transparency often leads to increased utility for NPOs, but more transparency can increase NPOs’ utility if the information available exceeds a certain threshold. Fluctuating donations are challenging for NPOs’ planning and may impact administrative capacities negatively.

This article sheds light on the role of information systems in product recovery management. We first develop analytical models and then provide a numerical example to determine under what conditions investments in Information-intensive Product Recovery Systems (IPRS) are economically justifiable for manufacturers and when policy-makers need to consider facilitating their implementation. The results of the analytical models indicate that the recovery network (collection) structure and product characteristics determine if precision improvements or increased sorting speed associated with IS investments will lead to higher profit gains. Manufacturers should carefully assess conflicting impacts of current manufacturing and recycling technology trends on the value of IPRS. Implementing IPRS might end up reducing manufacturers' profits under a highly time efficient decentralised collection structure. We show that negotiations with competitors about IPRS implementation may lead to a win–win situation and allow consumers to enjoy the lowest product price if the binding force of the agreement is strong. Otherwise, some manufacturers follow free-rider strategies. This article has immediate application to manufacturers' IS strategy and to government policy-makers considering investing in and/or structuring product recovery closed-loop supply chain processes within their jurisdictions. It also opens a potential stream of research concerning the role of IPRS to automate, informate and transform closed-loop supply chains for eco-efficiency.