This study uses modern portfolio theory (MPT) to estimate the risk of nonprofit revenue portfolios and examines to what degree the revenue concentration measure based on Herfindahl–Hirschman Index is associated with the portfolio risk measure based on MPT. The findings suggest that nonprofits with greater revenue concentration have lower revenue portfolio risk in the whole sample analysis. However, it is plausible that this result is dominated by organizations reliant on commercial income, which comprise over half of the sample. In fact, when examined separately, the relationship varies by an organization's primary funding structure. While higher revenue concentration is positively associated with portfolio risk for organizations relying on donations or those without a consistent primary funding source, it appears to associate with a lower portfolio risk for commercial organizations and those relying on government grants. This study reflects on the concept of diversification derived from portfolio theory and calls attention to a more nuanced approach to nonprofit revenue strategy.
Nonprofit overhead ratios (i.e., proportion of funds spent on fundraising and/or management) have long been used as a proxy for nonprofit efficiency. Prior studies find that donors negatively respond to charities with higher overhead. Using a survey experiment, we explore whether providing different types of information about overhead alleviates this donor aversion. When asked to choose between two organizations as donation recipients, donors preferred the organization with lower overhead. However, when presented with information that described the purpose of higher overhead as building long-term organizational capacity, an increased proportion of donors chose to give to the organization with higher overhead. Omitting the word “overhead” further increased the proportion of donors choosing the organization with higher overhead. This study adds to our understanding of overhead aversion and has practical implications for nonprofits that rely on voluntary private contributions to achieve their missions.
There is a vast literature on the health benefits associated with volunteering for volunteers. Such health advantages are likely to vary across groups of volunteers with different characteristics. The current paper aims to examine the health advantages of volunteering for European volunteers and explore heterogeneity in the association between volunteering and health. We carry out a mega-analysis on microdata from six panel surveys, covering 952,026 observations from 267,212 respondents in 22 European countries. We provide open access to the code we developed for data harmonization. We use ordinary least squares, fixed effects, first difference, and fixed effect quantile regressions to estimate how volunteering activities and changes therein are related to self-rated health for different groups. Our results indicate a small but consistently positive association between changes in volunteering and changes in health within individuals. This association is stronger for older adults. For respondents 60 years and older, within-person changes in volunteering are significantly related to changes in self-rated health. Additionally, the health advantage of volunteering is larger for respondents in worse health. The advantage is largest at the lowest decile and gradually declines along the health distribution. The magnitude of the association at the first decile is about twice the magnitude of the association at the ninth decile. These results suggest that volunteering may be more beneficial for the health of specific groups in society. With small health advantages from year to year, volunteering may protect older and less healthy adults from health decline in the long run.
This article focuses on endowed operating public charities that receive income not only from sources such as donations, grants, and service fees but also from endowment portfolios. Using the Form 990 data between 2009 and 2016, this study examines if the risk from nonendowment income sources, namely background risk, is relevant to endowment portfolio volatility, and if there are any differences across four types of nonprofits where endowment assets are the most concentrated, including museums, universities and colleges, K‐12 schools, and hospitals. The results show that the association between background risk and endowment portfolio volatility is significant and negative for universities; however, it is either nonsignificant or significantly positive for other types of organizations. This study extends research on university endowments to other types of endowed nonprofits. The findings imply different endowment objectives and reflect different asset allocation strategies across types of organizations.
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