Nonprofit Behavior Research Articles

Nonprofit behavior altered by monetary donations: evidence from the U.S. hospice industry.

This study investigates whether reliance on monetary donations alters nonprofit firms' behaviors. Specifically, in the hospice industry, a shorter patients' length of stay (LOS) speeds up overall patient turnover, allowing a hospice to serve more patients and expand its donation network. We measure hospices' donation reliance using the donation-revenue ratio, which indicates the importance of donations for revenue structure. By exploiting the supply shifter of donation, we adopt the number of donors as an instrument to control for the potential endogeneity issue. Our result suggests that a one-percentage-point increase in the donation-revenue ratio decreases patient LOS by 8%. Hospices that are more reliant on donations serve patients diagnosed with diseases that have shorter life expectancies to achieve a lower average LOS of all patients' stay. Overall, we find that monetary donations alter the behavior of nonprofit organizations.

Nonprofit Behavior Altered by Monetary Donations: Evidence from the U.S. Hospice Industry

Nonprofit Behavior Altered by Monetary Donations: Evidence from the U.S. Hospice Industry

Compassionate Bureaucracy: Assuming the Administrative Burden of Policy Implementation

The lens of administration burden is used to examine the behavior of nonprofit organizations when managing regulations attached to public funding and public policy implementation. Interviews with leaders of nonprofit domestic violence advocacy organizations dependent on public funding streams were qualitatively content analyzed to answer three questions. How do nonprofit managers respond to burdensome bureaucratic reporting measures when they are at odds? How do they determine when to comply and when compliance is not possible? What is the outcome for service recipients? The authors find that these nonprofit organizations simultaneously implement multiple public policies while absorbing the accountability costs. They do this to shield their clients from the laborious task of obtaining a spectrum of services across public systems.

Societal trust and the economic behavior of nonprofit organizations

This study explores the impact of societal trust on the economic behavior of nonprofit organizations. Although prior studies reveal that trust has a positive impact on the economic behavior of for-profit firms, the institutional differences between the two organization types make it unclear whether trust plays a similar role in nonprofits. Our results show that nonprofits operating in higher trust areas are more likely to overspend on administrative expenses. This positive relationship between trust and overspending is primarily driven by service organizations, as opposed to public charities. Moreover, within service organizations, we find that the positive trust-administrative overspending association is most prevalent in situations of weaker monitoring or governance. Additional tests show trust has a similar impact on excess compensation and abnormal accruals in service organizations. Overall, our findings suggest that trust may provide opportunities for nonprofit managers, particularly in service-oriented organizations, to engage in opportunistic behavior that may be exacerbated by weaker forms of oversight.

Societal Trust and the Economic Behavior of Non-Profit Organizations

Societal Trust and the Economic Behavior of Non-Profit Organizations

Nonprofits and Political Activity: A Joint Consideration of the Political Activities, Programs, and Organizational Characteristics of Social Service Nonprofits

ABSTRACTNonprofit social service agencies are essential to the safety net assisting Americans with low incomes. These agencies also fulfill important civic functions through political activities such as policy advocacy and public education. To learn more about nonprofit political behavior, we analyze unique survey data drawn from 1,205 faith-based and secular nonprofit social service agencies across the United States. We distinguish between six different types of political activity while also considering program service areas. Our findings indicate that there is substantial variation in the type of political activity undertaken by social service nonprofits, and organizational characteristics can help explain this variation.

Interactions between Non-Profit Finance, Governance and Investments

The essays on Interactions between Non-profit finance, governance and investments study the economic and investment behavior of foundations, as well as the general environment of non-profit governance and of equity investments by non-profit foundations. The essays are structured as follows. The Introduction presents the rationale for non-profits, some basic characteristics of non-profits and especially of foundations, and compares the economic motivation of non-profit foundations with that of for-profit companies. Essay 1 examines the root causes of governance choices in foundations, and the consequences of such governance choices. Essay 2 empirically investigates the equity portfolios of foundation investors and confirms typical characteristics of foundations as investors.The governance in foundations, a wealth-endowed subset of non-profits, differs fundamentally from the governance principles of for-profit corporates on three dimensions: (1) foundations do not have legal owners who could exert external control over the foundation; (2) without universal measures, such as profitability or stock market valuation, the efficient economic behavior of foundations is difficult to assess; and (3) most foundations are established to exist in perpetuity and are not subjected to any market for control.Thus, Essay 1 focuses on the following questions. Firstly, (1) which foundation-specific characteristics explain the accumulation of power at the board level in the governance of foundations? A sample of 891 foundations in Finland is empirically investigated using data on the foundations’ detailed rules, financials, and other characteristics. A new index measure for the concentration of control in foundations is constructed. Secondly, (2), the first Essay examines whether governance choices may have any consequences on foundations’ grant-making or other charitable spending.One of the possible drivers for governance choices include a foundation’s financiers. In absence of owners, the regular financiers such as donors, customers or the public sector may exert power over how the foundation is administered. In order to investigate the effect of financing, Essay 1 classifies sample foundations into four categories, based on their main source of finance. The empirical results suggest that a foundation’s source of finance is associated with the concentration of decision powers. Foundations that have to regularly approach outside sources of finance ― donors, public sector or customers ― show less concentration of power on the board level than foundations that can finance their missions with capital income from an endowment. We also find that foundations with a less concentrated governance model spend more on charitable operations than foundations with concentrated governance. However, in grantmaking foundations this association does not emerge: governance is not related to the level of grantmaking. In our second Essay, we argue for the need to understand the investment behaviour of various investor types, and present empirical evidence of non-profits’ equity investment style, based on data on portfolios of listed equity owned by 530 foundations during the years 2000-2013. Overall, foundations are active risk-takers: they can carry concentrated equity risk by not diversifying their portfolios towards the industry breakdown of the general market index. Foundations are shown to be infrequent traders, with relatively low equity portfolio turnover. If they decide to own a stock for longer than one year, they remain owner for 3.6 years on average (in the 13-year sample period). In addition, the majority of their single shareholdings stay intact from year to year. Foundations do not adjust their positions frequently.Foundation age and size are related to the equity allocation of foundations’ portfolios: older and larger foundations diversify more along the lines of the market index breakdown. We also find that older foundations trade less frequently than younger ones.The essays present new insights into non-profit economic behavior. Concerning governance, Essay 1 suggests a measure (Foundation Governance Index) and a determinant (the source of finance of a foundation) for governance in non-profits. Concerning investments, Essay 2 confirms empirically that non-profits have a distinct equity investment style.

Produção científica brasileira sobre comportamento organizacional no terceiro setor

Este trabalho revisa a produção científica brasileira sobre comportamento organizacional no terceiro setor. Utilizou-se um levantamento pré-existente de pesquisas empíricas sobre micro comportamento organizacional, publicadas em 15 periódicos nacionais de Psicologia e Administração, no período de 1996 a 2012. Do total de 629 artigos sobre o tema, apenas 31 apresentaram estudos realizados no terceiro setor. O achado sugere que esse segmento econômico encontra--se ainda sub-representado. "Interações sociais" é o tema que tem sido mais estudado nesse setor, seguido por "afeto". No entanto, alguns assuntos relevantes para a pesquisa em comportamento organizacional foram pouco pesquisados nacionalmente no terceiro setor, como "motivação" e "significado do trabalho". É preciso compreender esse setor como promotor de contextos organizacionais peculiares que devem ser considerados para o desenvolvimento de teorias gerais sobre o fazer humano no trabalho.

How Do Nonprofit Firms Respond to Tax Policy?

We investigate the effects of variations in the value of the charitable contribution deduction on nonprofit firm behavior, including exploring for the first time the effects of the tax price of giving on fund-raising. We find that a 1 percent increase in tax subsidies is correlated with a 2.0 percent increase in fund-raising, while the elasticity of real charitable output to changes in tax price is less than one in absolute value for most firms. We derive a new equation for treasury efficiency in the presence of fund-raising and find that while our point estimates still support treasury efficiency, our confidence intervals are wide enough to allow some possibility that the deduction is not cost effective. Further, the modest elasticity of charitable output to tax price implies that tax subsidies can crowd out other revenue sources, such that the efficacy of the subsidy depends on the relative efficiency of these alternative sources.

Revenue Diversification in Housing Nonprofits

Scholars often draw on resource dependence theory and institutional theory to explain nonprofit behavior in light of resource constraints, but few studies include empirical indicators of environmental constraints. This study examines the degree to which variables in the state-level funding environment promote (or deter) revenue diversification for housing nonprofits. It uses a hierarchical linear model (HLM) to capture constraint at two levels: the funding environment at the state level and organizational-level factors. Analyzing data from 990 housing nonprofits in 26 states and public funding environment variables for each of those states from 2008 to 2010, we find that state funding has a negative impact on revenue diversification for housing nonprofits. By including empirical indicators of the level of constraint for specific funding sources, we add to the body of literature that questions normative nonprofit financial management and provide evidence nonprofit leaders can use to inform their resource development strategies.

How Do Nonprofit Firms Respond to Tax Policy?

We investigate the effects of variations in the value of the charitable contribution deduction on nonprofit firm behavior, including exploring for the first time the effects of the tax-price of giving on fundraising. We find that a one-percent increase in tax subsidies is correlated with a 2.0-percent increase in fundraising, while the elasticity of real charitable output to changes in tax price is less than one in absolute value for most firms. We derive a new equation for treasury efficiency in the presence of fundraising, and find that while our point estimates still support treasury efficiency, our confidence intervals are wide enough to allow some possibility that the deduction is not cost effective. Further, the modest elasticity of charitable output to tax price implies that tax subsidies can crowd out other revenue sources, such that the efficacy of the subsidy depends on the relative efficiency of these alternative sources.

The Training of Jobseekers by Non‐profit Organizations: An Analysis Based on Data from the Upper Normandy Region of France

AbstractThere is now an extensive academic literature on non‐profit organizations (NPOs). The hypothesis that these organizations are different from for‐profit organizations (FPOs) is one that is frequently adopted. Nevertheless, a number of recent studies have suggested that many factors may cause NPOs to lose their specificity. The aim of this paper is to assess the influence of these variables empirically with regard to the continuing training sector. Our results lead us to conclude that, while some of these variables do indeed have an impact on the behavior of NPOs, there is sufficient evidence to conclude that they do behave differently from FPOs.

The Disclosure Panacea: A Comparative Perspective on Charity Financial Reporting

This article examines the charity financial reporting regimes of three common law jurisdictions: Ireland, the UK and the US. It assesses whether these respective disclosure models improve either nonprofit behaviour or enforcement odds. Three core aspects of the regimes are reviewed: the reliability of the disclosed information, the consistency of such information and its ability to facilitate comparison between charities, and the level of enforcement arising from disclosure. Particular attention is paid to oversight mechanisms, including audits, and their rates of effectiveness in the regulation of charities. The article examines ongoing efforts to reform broader international accounting standards and considers the impact such moves are likely to have at both regional and national level for charity accountability. It concludes that given the markedly different spheres in which for-profits and nonprofits operate, care should be taken in modelling charity disclosure regimes on those developed for for-profit entities.

Comparing Stewardship Across Faith-Based Organizations

Nonprofits theory on the role of organizational context focuses on generalizing principles such as neoinstitutionalism and institutional isomorphism. Organizational culture theory focuses on internal organizational culture, ignoring the larger community culture that influences nonprofit behavior. Relying on anthropological understandings of culture as comprising both the values and symbols of a community and its structures and practices, this article describes three support systems for faith-based nonprofits that come out of founding religious traditions. Using comparative case studies across 81 faith communities and FBOs in the United States, research suggests that systems are generalizable across religions and localities, but they come out of specific religious cultures adapted to fit the U.S. system.

Differences between non-profit and for-profit hospices: patient selection and quality

This research compares the behavior of non-profit organizations and private for-profit firms in the hospice industry, where there are financial incentives created by the Medicare benefit. Medicare reimburses hospices on a fixed per diem basis, regardless of patient diagnosis. Because under this system patients with lower expected costs are more profitable, hospices can selectively enroll patients with longer lengths of stay. While it is illegal for hospices to reject potential patients explicitly, they can influence their patient mix through referral networks. A fixed per diem rate also creates an incentive shirk on quality and to substitute lower skilled for higher skilled labor, which has implications for quality of care. By using within-market variation in hospice characteristics, the empirical evidence suggests that for-profit hospices differentially take advantage of these incentives. The results show that for-profit hospices engage in patient selection through significantly different referral networks than non-profits. They receive more patients from long-term care facilities and fewer patients through more traditional paths, such as physician referrals. This mechanism of patient selection is supported by the result that for-profits have fewer cancer patients and more patients with longer lengths of stay. While non-profit and for-profit hospices report similar numbers of staff visits per patient, for-profit firms make significantly less use of skilled nursing providers. We also find some weak evidence of lower levels of quality in for-profit hospices.

Three Faces of the State and the Nonprofit Sector

Recent changes in the U.S. nonprofit sector reflect the influence of market-based public policies and values. In this article, the authors suggest a framework to assess the effects of these policies and values on nonprofit sector characteristics. They propose three models of the state along with three corresponding models of the nonprofit sector. Using recent implementation of market-based policies in two policy domains, foster care and job training, they find that the market-based policies have significantly altered nonprofit behavior and structure. They conclude with suggestions for research using their models of the state and the nonprofit sector.

Testing Competing Capital Structure Theories of Nonprofit Organizations

The static trade‐off and pecking order capital structure theories are analyzed and applied to nonprofit organizations. In addition, this paper also considers how nonprofits adjust their leverage over time. The analyses consider the unique role of donor‐restricted endowments in the decision to borrow, as well as different types of borrowing by nonprofits. The results indicate that nonprofit capital structure choices are best explained using the pecking order theory, in which internal funds are preferred over external borrowing. Further, nonprofit endowment is not found to increase leverage. Despite the unambiguous findings across varying definitions of leverage, the results also suggest that a “modified pecking order” is a more apt descriptor of nonprofit behavior.

Beyond taxonomy

AbstractMuch of the considerable confusion about the definition of social entrepreneurship in academic literature stems from a lack of empirical research on the subject. This article advances social entrepreneurship research beyond conceptualization discussions by developing and validating an instrument that quantifies the incidence of nonprofit entrepreneurial behavior. Information from 145 Kansas City Metropolitan Area nonprofit organizations was collected to validate the underlying constructs represented in the instrument. Behavior differences were depicted between entrepreneurial and nonentrepreneurial nonprofits. Using principal component factor analysis, the research illustrates social entrepreneurship as a unique nonprofit behavior that occurs at the intersection of innovation, proactiveness, and risk taking.

Behavior of Nonprofit Organizations in For-Profit Markets: The Curious Case of Unprofitable Revenue-Raising Activities

When nonprofit organizations in the U.S. engage in activities that are substantially related to their legal mission they pay no profits taxation, but profit from unrelated business (UB) activities is taxed. Since UB activity has no apparent justification other than to generate revenue, we attempt to explain why no profit is so frequently reported. We examine the accounting allocation of joint costs, such as depreciation, between the taxed and untaxed activities in six industries - including health, education, and the arts - and also the specific kinds of UB activities undertaken. We find evidence that the reported unprofitability of UB activity masks true profitability.

Calibrating the Reliability of Publicly Available Nonprofit Taxable Activity Disclosures

The topic of nonprofit commercialization has received increased attention from various groups including donors, regulators, and researchers. Perhaps the most commercial of all activities undertaken by nonprofits are those considered to be so far removed from an organization's exempt mission that the Internal Revenue Services (IRS) considers them to be taxable. Examination of these taxable activities can provide unique and valuable insights into the effects of purely commercial activities on nonprofit behavior. Nonprofits report their taxable activities on the confidential IRS 990-T. Although some information on taxable activities is reported on the publicly available IRS 990, unavailability of the IRS 990-T has prevented prior examination of its accuracy and reliability. Using a unique data set of otherwise confidential IRS 990-Ts, the authors calibrate the reliability of taxable activities as reported on the IRS 990, providing a roadmap for researchers to follow when examining nonprofits' taxable activities using publicly available data.