Economic Applications – Cash Gifts and Cost Minimization





Economic Applications – Cash Gifts and Cost Minimization


Managerial economics is a discipline that concerns the application of economic principles to the process of formulating effective decisions within management. As such, the discipline is applicable within a wide array of fields and sectors that deal with the controlling and organization of large groups as well as the handling of money. Ideally, the application of managerial economics can help make any organization more efficient in the way that it carries out its functions. Charity groups are a good example of organizations that can increase their competence by applying principles of managerial economics. By increasing the efficiency of their operations, charities can help more people and in doing so attract even larger donations. Cancer Fund of America is a good example of a charity that could improve with the implementation of better principles systems of operation.

Background of the Charity

Cancer Fund of America, Inc (CFA) is a charity organization that was started in 1987 by James Reynolds and two other well-wishers in the state of Delaware. Reynolds and the volunteers started the organization by merging the new corporation with the Cancer Association of Tennessee, which Reynolds had started in 1984. The organization is a non-profit entity that helps people suffering from cancer and hospices dealing with the disease by sending them free products of different kinds. The CFA’s current mission is to assist cancer victims, hospitals and other organizations battling the disease by providing them with necessities without any cost (Cancer Fund of America).

            Interestingly, CFA differs from most other cancer related charities in the fact that it does not involve itself in activities related to the funding of research or paying for the actual treatment that patients are receiving. Instead, the organization focuses on the provision of various donated goods that include shampoo, DVDs and other household items that the organization feels are out of reach for families that have spent various amounts of money paying for research (Cancer Fund of America).

Current State of Operations

CFA’s primary objective is to provide essentials for families and individuals that are spending a lot of money paying for cancer treatment. The essentials that the company provides vary depending on the recipient’s needs and donations that the group receives. This system means that in some cases, the needy may receive toiletries, while in other cases the donation the charity makes may be a DVD. Critics of this system claim that the people running the CFA take home millions of dollars every year, while the donations made are small in comparison. Financial data from the company reveals that the solicitors working for the company take home the bulk of the money that they raise in fundraising drives (America’s Worst Charities). This is made worse by the fact that the company’s donations are normally household items, while the people receiving this aid could profit much more by being given direct cash aid.

Increasing the CFA’s Efficiency

There are two main ways that the CFA can increase the efficacy of its daily charity operations. The first improvement that the company should make is replace the system of donating goods with one of giving needy people and their families direct funds. This change would increase the effectiveness of the company’s operations by making it easier for the families and individuals affected by cancer to manage their finances. The fact that cancer treatment, and medical care in general, is quite expensive in the United States makes this change even more effective. By giving the needy cash donations, the company could be helping them sustain their treatment. This would mean that the company would be having a direct impact on the wellbeing of the people that it is trying to assist.

            The CFA can also improve the quality of its operations by decreasing the amount of money that it spends paying employees and solicitors. The fact that the company spends more than eighty percent of its budget on salaries and remunerations means that a change in the firm’s spending habits could have a very large impact on its charity operations (America’s Worst Charities). Reducing the expenditure on salaries would allow the CFA to spend more money on the recipients of its aid and increase the size of its operations.


The Cancer Fund of America is a reputable organization that offers support for cancer patients and their families. Through its operations, the company helps to make a positive change in the lives of the recipients and increases the chances of people suffering from the disease to survive. However, the nature of its operations limits the company’s effectiveness. This is because the company gives victims goods instead of money, increasing the possibility that the recipient will receive an item that they do not need. Additionally, the company spends too much money on remunerations for solicitors. By changing the nature of its operations in favor of cash gifts the company would be able to increase the effectiveness of its work and possibly help more people in better ways. Such donations would allow the recipients to purchase what they feel they really need. A change in operational practices would also help the company by reducing salaries in favor of having more money at the company’s exposure for donations. Through these changes, the Cancer Fund of America could easily make its operations significantly more effective.

Works Cited

“America’s Worst Charities.” Tampabay. Tampa Bay Times, 2013. Web. 01 April 2014.

Cancer Fund of America. Cancer Fund of America, 2014. Web. 01 April 2014.

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