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Nonprofit organizations play an essential role in the provision of collective goods. Focusing on a unique subsector in the United States, this study examines the extent to which nonprofit hospitals' provision of community benefits is related to their revenue streams. Building on existing theories, we postulate that as the proportion of a certain revenue source (i.e., government grants, private contributions, and program fees) increases, its corresponding benefits also increase. Using data from the Internal Revenue Service (IRS) 990 filed by tax-exempt hospitals nationwide, we performed panel data analysis with year and id fixed effects using robust standard errors. The findings show that the proportion of private donations is positively associated with community benefits, whereas that of program income is negatively related to community benefits. Overall, nonprofits' decision to serve disadvantaged groups and larger communities is associated with their income sources. The study raises implications that are pertinent to nonprofit management, public administration, and health administration.

AbstractIn the study and practice of public administration, it is often assumed that higher levels of budgetary support for non‐program expenses, such as administrator salaries, accounting, grant writing, and marketing, are evidence of inefficiency and wasteful spending. As such, grant makers and researchers often use the ratio of organizations' administrative to total costs to measure the efficiency of public services. While this perspective has some validity, it also significantly minimizes the effect of administrative functions on sustainability, an important aspect of long‐term performance in public service organizations. We use standardized cost data from a 14‐year panel of approximately 3,000 nonprofit nursing homes and find an inverted U‐shaped relationship between administrative cost ratios and financial sustainability, which suggests a "sweet spot" in the level of administrative support that tends to promote organizational sustainability. This sweet spot occurs when administrative costs are about 40 percent of total organizational costs.

This study examines the role of process accountability in the association between government grants and nonprofit financial effectiveness. Using the Internal Revenue Service Form 990 from 2013 to 2017, our mediation analyses find that government grants make nonprofits accountable for their processes. However, process accountability can reduce nonprofit financial effectiveness and suppress the positive relationship between government grants and nonprofit financial effectiveness. We uncover the underlying mechanism by which government grants affect nonprofit financial efficacy and suggest that too much emphasis on process accountability may hamper the benefits of government support of nonprofit service provision and financial effectiveness.

AbstractMany nonprofits are multi‐service organizations that provide a range of services. However, how nonprofits manage their service portfolios has not received much scholarly attention in nonprofit management research. In this research note, informed by studies on product diversification in strategic management research in the business management literature, we explore the effect of a nonprofit's service diversification on its service costs, using nonprofit hospitals as an empirical context. Through a longitudinal study of U.S. nonprofit acute care hospitals, we find that a nonprofit hospital's level of service diversification is associated with a decrease in its average service costs. Further, both related diversification and unrelated diversification are associated with a decrease in average service costs, but the association of related diversification is greater. This research note informs an understudied line of inquiry in nonprofit management research and calls for more research attention to nonprofits' service portfolios.

Managing financial resources is one of the most important responsibilities of every organization; however, the literature still cannot provide an answer to an important question: how does financial health matter to organizational mortality, especially for nonprofit organizations? To advance our knowledge in this regard, this study empirically examines the effects of solvency, profitability, margin, and liquidity on nonprofit dissolution. Higher solvency, profitability, and margin have significant effects on reducing the likelihood of nonprofit dissolution, but liquidity does not function as a significant predictor.

AbstractNonprofit organizations increasingly compete for limited resources and recognize volunteers as vital assets. That said, which nonprofits are more successful in harnessing volunteers than others and enlisting more volunteers while responding to environmental changes? Guided by the resource‐based theory, this study theorizes that a nonprofit's human, social, and financial resource management competencies relate to its volunteer use. Also, applying contingent resource‐based theory extends our theoretical arguments as to why a nonprofit needs to develop its resource management competencies for the use of volunteers facing a community's financial hardship. Our zero‐inflated negative binomial analysis using the IRS 990 and U.S. Census data (2010–2012) finds that (1) a nonprofit's higher human, social, and financial resource management competencies have an important influence on using volunteers, and (2) a nonprofit having higher financial resource management competencies can use more volunteers when its community experiences economic hardship. These findings pinpoint that volunteer use is not separable from organizational holistic resource management competencies and suggest that turbulent environments can cause a significant shift in the management competencies required for volunteer use.

"Internal controls" refer to organizational rules and procedures used to safeguard assets and to detect fraud, waste, and abuse. This study examines the relationship between internal control deficiencies and municipal bond borrowing costs. The most severe form of internal control deficiencies (i.e., material weaknesses) is associated with higher borrowing costs for municipal bonds, between 10 and 18 basis points. Credit ratings mediate some of the effect of material weaknesses in internal controls but the indirect effect is relatively small. The effect of internal control deficiencies on borrowing costs was consistent in the time period before and after the financial crisis.

One of the primary barriers to equal treatment in the workplace is how victims are treated following a complaint of discrimination. If complaints are not taken seriously or if employees experience retaliation, this discourages others from objecting to discriminatory treatment. This research focuses on retaliation claims and organizational characteristics associated with those claims, using data from U.S. federal government agencies. We evaluate whether leadership reporting structure, staff capacity to manage complaints, and manager representativeness are associated with the rate of retaliation incidents reported by employees. Agencies where the Equal Employment Opportunity (EEO) Director reports directly to the agency head have lower rates of retaliation claims. Conversely, agencies with more EEO staff, per employee, have higher rates of retaliation claims. Manager representativeness is not associated with retaliation claims. Importantly, increased discrimination complaints may not signify a "bad" agency. Instead, this could signify that employees are filing because they believe their claims will be addressed fairly.