Nonprofit Finance

and, Dennis R. Young; Soh, Jung-In

doi:10.1002/9781119176558.ch19

Cited by 15 publications

(20 citation statements)

References 15 publications

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“…Next, we used service field as another criterion to select candidate organizations for this study. Researchers have long recognized that nonprofits focusing on different service fields are not uniform in their revenue sources and expenditure patterns (Salamon ; Young ). To obtain a sample of organizations with a relatively homogeneous financial structure, we followed Grønbjerg () and Never () and included only human services and community improvement organizations.…”

Section: Sample and Datamentioning

confidence: 99%

What Helped Nonprofits Weather the Great Recession?

Lin

Wang

2015

Nonprofit Mgmnt & Ldrshp

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This study examined the effectiveness of several financial strategies for nonprofit organizations in fighting the Great Recession. Using data from human services and community improvement organizations in the state of New Jersey, we tested hypotheses about the relationships between three measures of financial sustainability and various fundraising efforts and financial indicators. We found that (1) except for strong external funding relationships, funding efforts were generally not effective in enhancing financial sustainability during the crisis; (2) higher operating margin and equity ratio improved an organization's ability to generate revenue and maintain expense levels, but higher debt ratio and administrative cost ratio were generally harmful; and (3) revenue diversification might aggravate fiscal stress and cause more expense cuts in a severe crisis. These findings improve our understanding of the mechanics of nonprofit management during times of harsh fiscal conditions and suggest useful ways for nonprofit organizations to navigate future financial crises.

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Section: Sample and Datamentioning

confidence: 99%

What Helped Nonprofits Weather the Great Recession?

Lin

Wang

2015

Nonprofit Mgmnt & Ldrshp

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“…The reality, though, is more complicated. This is due to the presence of restrictions on endowment funds, the investment of time and resources required to manage and build an endowment (Bowman, ), the danger of nonprofits becoming too dependent on endowment during rough times, and the prioritization of future needs over current needs inherent in true endowment (Young, ). Young concludes that meaningful endowment “per se is not sufficient to maintain fiscal health and organizational success” (2007, p. 12).…”

Section: Related Literature Research Questions and Hypothesesmentioning

confidence: 99%

“…Hager () provocatively asked, “should your nonprofit build an endowment?” This research is a step toward empirically answering aspects of his question. Rather than the “should” question, we examine whether most nonprofits “can” build an endowment over an extended period of time and, if so, “who has built material endowments?” The “can” and “who” questions are especially important given the prestige and desirability commonly associated with building an endowment, as well as the expected financial stability garnered from a perpetual source of income (as argued by Young, ). As noted by Bowman, Keating, and Hager (, p. 168), “[c]apital accumulation reflects a strategic choice” and this study examines how frequently nonprofits are able to accomplish this objective.…”

Section: Related Literature Research Questions and Hypothesesmentioning

confidence: 99%

Starting from scratch: Building of meaningful endowments by public charities

Ely

Katz

Calabrese

2020

Nonprofit Mgmnt & Ldrshp

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Most nonprofits lack a true endowment and endowment wealth is concentrated in a relatively small number of organizations and subsectors. This study supports an operational definition of material endowment, equal to or greater than annual expenses, and investigates how common it is for a nonprofit to establish a meaningful endowment over time. Specifically, we address whether the sector's enthusiasm over the potential of endowment building is reflected in charitable organizations' experiences. Using financial data, we find that building a meaningful permanent endowment is a rare achievement among public charities over a period of two decades. Meaningful endowment creation, achieved by less than 2% of the sample, is more common for organizations with donor attachments, the need for subsidization of mission services, those with more fundraising costs, and those with more donative revenue portfolios.

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“…Among nonprofit research, financial performance is commonly looked to as an objective measure of organizational performance. To fulfill a mission, a nonprofit needs resources, and the organization's financial health will be a reflection of the nonprofit's capacity to fulfill its mission (Malatesta and Smith ; Young ). Although financial measures are limited in addressing the nuances of mission performance, they do present strengths that equip analysis and interpretation, namely their standardized usage, availability of data over multiple time periods, and ease in large‐ N analysis (Hager and Greenlee ).…”

Section: Hypothesesmentioning

confidence: 99%