Journal Articles
Nonprofit and Voluntary Sector Quarterly (2024)-
Despite the abundance of literature related to nonprofit overhead, the following questions remain unclear: (a) How high is too high for individual donors when considering an organization’s overhead? (b) Is there a difference between nonprofit subsectors in individual donors’ aversion to nonprofit overhead? Moreover, (c) Does trust play a role in individual donors’ overhead aversion? This study used a survey experiment and randomly assigned participants to one of four overhead ratio conditions (5%, 20%, 35%, and 50%). We find that individuals’ donations to human service nonprofits substantially decrease when the overhead reaches 35%. In contrast, their donations to health care nonprofits do not decrease until the ratio reaches 50%. In addition, we find that donors lose trust in nonprofits when overhead costs are higher, leading to decreased donations. The findings contribute to the theoretical understanding of donors’ giving behavior, offering practical implications for promoting sustainable giving.
Nonprofit and Voluntary Sector Quarterly (2024)-
Past empirical studies demonstrate a positive connection between revenue concentration and organizational efficiency. This supports the idea that concentrating revenue helps minimize transaction costs of nonprofit organizations, resulting in greater efficiency. However, this finding contradicts the belief that revenue concentration increases the risk of revenue volatility, leading to service delivery disruptions and reduced efficiency in nonprofits. Moreover, these studies have used an efficiency measure that might not be suitable. To address this, our study examines the relationship between revenue concentration and organizational efficiency using a more appropriate measure. Analyzing data from Habitat for Humanity, we discover a U-shaped relationship: nonprofits are most efficient when fully diverse or fully concentrated in revenue. These findings contribute to the ongoing debate on nonprofit revenue diversification, with significant implications for nonprofits. They also highlight the importance of using more appropriate efficiency measures in future scholarly research.
Journal of Drug Issues (2024)-
Cannabis dispensaries in the U.S. aim to contribute to communities through philanthropy, but some nonprofits hesitate to accept donations. This exploratory case study in Colorado investigates nonprofits’ perceptions of cannabis philanthropy by surveying 317 organizations. Despite cannabis being illegal federally but legal at the state level, most respondents viewed cannabis philanthropy positively. Of the respondents who had negative views, many believe their negative views would shift if cannabis were federally legalized. Furthermore, the majority do not consider funds derived from cannabis sales as “tainted” or coming from a morally questionable source. The findings shed light on the complexity of how cannabis philanthropy is perceived, informing how nonprofits can adapt proactively to evolving cannabis philanthropy dynamics, particularly considering potential shifts in federal law. Additionally, the study reveals a favorable environment for the cannabis industry to engage in philanthropy and partnerships with nonprofits, and the potential positive impacts of such activities.
Public Performance & Management Review (2023)-
Previous studies have found that commercialized nonprofits may be less likely to offer free access to programs and services. This study draws on theoretical insights from the literature on nonprofit efficiency, the principal-agent problem, and nonprofit professionalism, going a step further to examine when commercialization leads to the exclusion of those unable to pay. Studying performing arts nonprofits in the United States from 2008 to 2016, the results suggest that the observed negative effects of commercialization on free access are not due to commercialized nonprofit leaders leaning towards efficiency through a cost-benefit mentality or pursuing their interests, but due partially to commercialized nonprofits moving toward professionalism. The findings have important implications for nonprofit professionalization, co-creation, and revenue portfolio management.
Nonprofit Management and Leadership (2023)-
Despite concerns raised by some scholars, recent publications have demonstrated that commercialization brings multiple benefits to nonprofits. However, while discussion of the positive effect of commercialization on nonprofit efficiency is on the rise in the literature, very few studies have empirically assessed the relationship. This study fills this gap by examining whether commercialization contributes to greater nonprofit efficiency and under what conditions this effect is more likely. Using fixed effects models with 2008–2018 data, the results from this study indicate that commercialization contributes to nonprofit efficiency in the performing arts subsector. Moreover, findings suggest that the relationship is more positive when performing arts nonprofits receive less government funding. The study concludes with implications for research and practice.
Nonprofit Management and Leadership (2023)-
With limited resources and increased demand, efficiency is essential for nonprofits. However, there is minimal research into understanding nonprofit leaders' perceptions of efficiency. This study is based on interviews with Habitat for Humanity leaders across the United States. Applying a case study approach with qualitative content analysis and descriptive statistics, two key findings emerge. First, some nonprofit leaders are conflating efficiency and effectiveness. Second, in more than half of the cases, nonprofit leaders' perceptions of their organizations' efficiency failed to align with a commonly accepted objective measure of efficiency applied to those organizations. These results raise concerns and have significant implications for nonprofit performance and communication with key stakeholders.
American Review of Public Administration (2022)-
While the public values of efficiency, effectiveness, and equity have been extensively studied in the public sector, very little research exists in the nonprofit context. In particular, we lack an understanding of what public values nonprofit leaders prioritize, why they prioritize certain public values over others, and how they balance or make tradeoffs between public values. Thirty-six Habitat for Humanity affiliate leaders from the United States were interviewed for this research. Interestingly, while the nonprofit leaders in the sample represent the same mission, they all prioritize different public values—though a plurality focuses on equity. We also found that the three primary challenges they perceive in achieving these public values relate to access, quality, and capacity. While Habitat leaders already apply strategies to deal with these challenges, we offer some additional suggestions for Habitat affiliates and similar affordable homeownership nonprofits to consider.
Nonprofit Management and Leadership (2022)-
Public scrutiny of the nonprofit sector often focuses on excessive overhead spending, seeing it as an obstacle to mission fulfillment. Yet, there have been few prior studies on the impact of overhead expenditures on the effectiveness of nonprofit organizations. Building and utilizing a unique dataset of Habitat for Humanity affiliates across the United States between 2010 and 2016, this paper analyses the relationship between overhead spending and effectiveness using fixed effects and mediation models. Results indicate that an increase in the overhead ratio leads to greater nonprofit effectiveness in terms of more houses built and revenue raised. However, findings suggest that overhead ratios of more than 15% yield positive but diminishing returns. Findings also show that organizational capacity indicators such as investments into salaries, professional fees, marketing, information technology, and fundraising mediate a positive relationship between the overhead ratio and nonprofit effectiveness. Implications for both scholars and practitioners are discussed.
Nonprofit and Voluntary Sector Quarterly (2021)-
Benchmarking nonprofit performance can be challenging, constraining the ways nonprofits can use operational data to learn from each other and highlight organizational progress. Valid output or outcome data are scarce, and there is much to learn about measuring performance even when these data are available. Data envelopment analysis (DEA) is a mathematical linear programming technique that can be used to measure performance in a way that not only produces valid efficiency scores but also allows for benchmarking nonprofits with similar service missions. Using financial and production data from the nonprofit transportation sector, we walk through an example to explore DEA as a tool to measure and benchmark nonprofits. We conclude with suggestions for practice, emphasizing that DEA is useful for stakeholders looking to benchmark nonprofits by underscoring production and performance.
Public Performance & Management Review (2021)-
Nonprofits continue to be faced with the pressure to succeed under financial restrictions. While donors assert that financial restrictions help nonprofit service delivery, nonprofit professionals claim that financial restrictions hinder service delivery. Applying both principal-agent and resource dependence theories, this study tests competing hypotheses to understand whether donor-imposed financial restrictions help or hinder nonprofit service delivery. Using a sample of national arts and culture nonprofits in the United States from 2011 to 2018, our results indicate a negative relationship between financial restrictions and program outputs. We find that donor-imposed financial restrictions hinder nonprofit service delivery. We also find that the relationship turns more negative when financial restrictions are mostly derived from permanently restricted donations. The findings challenge the donors’ view that imposing restrictions on donations ensures that nonprofits will further their missions. This study extends prior research by focusing on program outputs rather than financial performance, while also having theoretical implications for scholars and practical implications for both nonprofit and public managers, and donors.
Voluntas (2021)-
The growing push in nonprofit studies toward panel data necessitates a methodological guide tailored for nonprofit scholars and practitioners. Panel data analysis can be a robust tool in advancing the understanding of causal and/or more nuanced inferences that many nonprofit scholars seek. This study provides a walk-through of the assumptions and common modeling approaches in panel data analysis, as well as an empirical illustration of the models using data from the nonprofit housing sector. In addition, the paper compiles applications of panel data analysis by scholars in leading nonprofit journals for further reference.
Journal of Public and Nonprofit Affairs (2020)-
The complexity and diversity of the nonprofit sector provide a rich landscape for academic scholarship; and, growing numbers of nonprofit scholars and their associated research publications have established the field of nonprofit research. Yet, it is unclear if this research has been applied appropriately to the evolving landscape of the sector. Although literature reviews have helped us to understand the status of academic scholarship in the field of nonprofit research, these reviews have primarily focused on particular topics without considering the field as a whole. Thus, in this study we review all contemporary nonprofit scholarship (n=972) from three prominent nonprofit journals. The review documents the development of nonprofit research as presented in these journals over the last five years and offers recommendations for future research consideration.
Nonprofit Management and Leadership (2019)-
Past literature in nonprofit management uses the overhead ratio of nonprofits as a measure of efficiency. Although the overhead ratio might measure top-heaviness, we argue that it does not measure nonprofit efficiency. To investigate this, we use financial and operational data to rank the efficiency of Habitat for Humanity affiliates with the overhead and administrative ratio, as well as data envelopment analysis (DEA) and stochastic frontier analysis (SFA), two of the most popular efficiency measures. While the DEA and SFA rankings are statistically correlated, overhead ratio rankings are negatively correlated with both SFA and DEA rankings. We argue that nonprofit scholars, managers, and donors should move away from concepts and measures of efficiency based on financial ratios, and toward ones that embrace maximizing what nonprofits are able to make and do.
Voluntas (2018)-
Nonprofits continue to be faced with financial challenges to fulfill their missions. Both the academic literature and nonprofit practitioners have explored revenue diversification and concentration strategies to meet these challenges. While these two strategies are essentially antagonistic, both have received support as being viable strategies to create better outcomes for the organization. This article examines whether revenue diversification or concentration strategies lead to greater mission outputs in a nonprofit context. Using resource dependence theory as a guiding framework, two opposing hypotheses are tested togain more insight into the diversification versus concentration dilemma. A unique dataset is built and utilized to estimate a zero-inflated negative binomial regression model to assess the correlation between revenue diversification and mission outputs. Results indicate that revenue diversification (and not concentration) is associated with an increase in organizational outputs.