This article describes a model that can be used to predict which nonprofit organizations are vulnerable to financial problems. The model is based on financial indicators developed by Tuckman and Chang (1991)P OTENTIAL donors, managers and board members, creditors, and others are faced with multiple challenges when trying to evaluate the financial condition of tax-exempt organizations. First, research using financial measures in the for-profit sector is not necessarily applicable to nonprofit organizations whose purpose is to maximize service rather than profit. Second, relatively little research exists in the nonprofit sector that uses financial measures in evaluating financial condition across organizations. In the for-profit sector, many methods have been developed that use financial information to determine which organizations are vulnerable to financial problems. This article describes a model, based on the pioneering work of Tuckman and Chang (1991), that predicts which nonprofit organizations (specifically, charitable organizations) are vulnerable to financial problems. This model can be used by managers and board members during the strategic planning process, by donors and potential donors when deciding how to allocate their charitable contributions, by suppliers and other potential creditors in determining credit terms, and others.

Whether or not a nonprofit organization is vulnerable to financial problems is a concern of all stakeholders of the organization. Recently, Greenlee and Trussel (2000) and Trussel and Greenlee (2001) expanded Tuckman and Chang' s work (1991) F INANCIAL vulnerability is an organization's susceptibility to financial problems. Whether or not a nonprofit organization is susceptible to financial problems is a concern of all stakeholders of the organization, because financial problems might not allow an organization to continue to meet its objectives and provide services. Over ten years ago, Tuckman and Chang (1991) wrote their seminal article on the financial vulnerability of nonprofit organizations, and they described financial ratios that might indicate a susceptibility to financial problems. Recently, Greenlee and Trussel (2000) and Trussel and Greenlee (2001) expanded Tuckman and Chang' s work to predict which organizations are vulnerable to financial problems. These models are based on comparing an organization's financial profile to those organizations that are considered financially vulnerable. This article extends the work of these authors and develops an alternative model to predict which organizations are financially vulnerable. The model is based on a sample of over ninetyfour thousand organizations, includes four financial indicators, and controls for the broad sectors to which the organizations belong.An understanding of the relationship between financial indicators and financial vulnerability should be of interest to a variety of groups. These groups include government agencies setting policies and monitoring grants and contracts, auditors conducting analytical reviews and determining the scope of audits, managers and board members working on strategic planning, suppliers and other potential creditors setting credit terms, and potential donors allocating resources (Trussel and Greenlee, 2001).

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Accounting manipulation is defined as when the managers of an organization intention-