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Thus, we may have underestimated the degree to which misreporting occurs.Despite our conservative test design, we find that over 74 percent of the organizations in our sample fail to properly report telemarketing expenses.
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Additionally, a number of studies provide evidence that donors direct their charitable gifts to nonprofits that report higher program ratios and lower fundraising ratios.
Prior research has supported a concern by regulators and donors that nonprofits have incentives to understate fundraising costs and may inappropriately allocate these costs to other activities.