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The Adoption and Use of the Hirschman–Herfindahl Index in Nonprofit Research: Does Revenue Diversification Measurement Matter?

  • Grace L. Chikoto
  • Qianhua Ling
  • Daniel Gordon Neely
Original Paper

Abstract

Since its introduction by Tuckman and Chang (Nonprofit Volunt Sector Q 20(4):445–460, 1991), the Hirschman–Herfindahl Index (HHI) has been widely adopted into the nonprofit literature as a precise measure of revenue concentration. This widespread adoption has been characterized by diverse composition, with the HHI’s calculation being largely determined by the nature of the available data and the degree to which it contained disaggregated measures of revenue. Using the NCCS 990 Digitized Data, we perform an acid test on whether different HHI measures yield significantly different results. Four measures of revenue concentration—an aggregated measure based on three revenue streams, an aggregated measure separating government grants from other contributions, a more nuanced measure based on seven revenue streams, and a fully disaggregated measure based on thirteen revenue streams—are used to predict two dominant nonprofit financial health dimensions: financial volatility and financial capacity. Overall, our results show that aggregation in HHI measurement matters; aggregation often downplays relationships by influencing the significance levels and magnitudes of estimates in a non-trivial way.

Keywords

Revenue concentration Hirschman–Herfindahl Index Nonprofit financial capacity Financial volatility Measurement 

Résumé

Depuis sa présentation par Tuckman et Chang (1991), l’indice de Herfindahl–Hirschman (IHH) a été largement adopté dans la documentation sur le secteur à but non lucratif comme une mesure précise de la concentration du revenu. Cette généralisation a été caractérisée par une composition diverse, dont le calcul de l’IHH a été en grande partie déterminé par la nature des données disponibles et le degré auquel il contenait des mesures de revenus ventilées. En utilisant les données numérisées NCCS 990, nous effectuons une épreuve décisive pour savoir si les différentes mesures de l’IHH produisent des résultats sensiblement différents. Quatre mesures de concentration de revenu — une mesure agrégée issue de trois sources de revenus, une mesure agrégée distinguant les subventions gouvernementales des autres contributions, une mesure plus nuancée basée sur sept sources de revenus et une mesure complètement désagrégée basée sur treize sources de revenus — servent à prévoir deux dimensions dominantes de la santé financière du secteur à but non lucratif : la volatilité financière et la capacité financière. Dans l’ensemble, nos résultats montrent que l’agrégation de la mesure de l’IHH est importante et que l’agrégation minimise souvent les relations en influençant les niveaux de signification et l’importance des estimations d’une manière non négligeable.

Zusammenfassung

Seit seiner Einführung durch Tuckman und Chang (1991) wurde der Hirschman–Herfindahl-Index (HHI) weitgehend in der Literatur zu gemeinnützigen Organisationen als eine präzise Kennzahl zur Messung der Einnahmenkonzentration übernommen. Diese verbreitete Anwendung zeichnete sich durch eine vielfältige Zusammensetzung aus, wobei die Ermittlung des HHI hauptsächlich vonder Beschaffenheit der verfügbaren Daten und dem Maß, in dem disaggregierte Messungen der Einnahmen enthalten waren, abhing. Wir führen unter Verwendung der NCCS 990 Digitized Data [vom US-amerikanischen National Center for Charitable Statistics bereitgestellte digitalisierte Daten über Steuererklärungen gemeinnütziger Organisationen auf dem Formular 990] einen Acid-Test dazu durch, ob unterschiedliche HHI-Messungen zu wesentlich unterschiedlichen Ergebnissen führen. Man verwendet hierzu vier Messungen der Einnahmenkonzentration - eine aggregierte Messung beruhend auf drei Einnahmequellen, eine aggregierte Messung, bei der Regierungszuschüsse von anderen Beiträgen getrennt werden, eine differenziertere Messung beruhend auf sieben Einnahmequellen und eine vollständig disaggregierte Messung beruhend auf 13 Einnahmequellen -, um zwei dominante Bereiche der finanziellen Solidität gemeinnütziger Organisationen vorherzusagen: die finanzielle Volatilität und die finanzielle Kapazität. Insgesamt zeigen unsere Ergebnisse, dass die Aggregation bei der HHI-Messung wichtig ist; die Aggregation spielt Beziehungen oftmals herunter, indem sie die Bedeutung und das Ausmaß von Schätzungen auf nicht unerhebliche Weise beeinflusst.

Resumen

Desde su introducción por Tuckman y Chang (1991), el Índice Hirschman–Herfindahl (HHI) ha sido adoptado ampliamente en el material publicado sobre entidades sin ánimo de lucro como una medición precisa de la concentración de ingresos. Esta amplia adopción se ha caracterizado por diversas composiciones, estando determinado el calculo de HHI por la naturaleza de los datos disponibles y el grado en el que contenía mediciones de ingresos desagregadas. Utilizando los Datos Digitalizados de NCCS 990, realizamos una prueba ácida sobre si mediciones diferentes de HHI ofrecen resultados diferentes de manera significativa. Se utilizan cuatro mediciones de la concentración de ingresos - una medición agregada basada en tres corrientes de ingresos, una medición agregada que separa las subvenciones gubernamentales de otras aportaciones, una medición más matizada basada en siete corrientes de ingresos, y una medición totalmente desagregada basada en trece corrientes de ingresos - para predecir dos dimensiones dominantes de la salud financiera de las entidades sin ánimo de lucro: la volatilidad financiera y la capacidad financiera. En general, nuestros resultados muestran que sí importa la agregación de la medición HHI; la agregación a menudo quita importancia a las relaciones influyendo en los niveles de significación y en las magnitudes de las estimaciones de una forma no trivial.

摘要

自从被Tuckman and Chang(1991)引用后,赫尔芬达-赫希曼指数(HHI)便被广泛应用于非营利领域,作为精准测量收入集中度的工具。这种广泛的应用呈现多样化态势,计算赫尔芬达-赫希曼指数在很大程度上由可用数据的性质及其分解测量收入的程度决定。通过使用NCCS990数字化数据,我们针对不同的赫尔芬达-赫希曼指数测量方法是否产生明显不同的结果进行了酸性测试。四种收入集中度测量方法—基于三个收入源的分解测量法,分离政府救助和其他出资的分解测量法,基于七个收入源的更加细致入微的测量法,以及基于十三个收入源的完全分解测量法—被用于预测两个主要的非营利组织财务健康方面:财务波动性和财务承受力。总体而言,我们的结果显示,分解测量赫尔芬达-赫希曼指数确有重大影响,分解测量会对预测的重要级别和重要性产生重大影响,但对彼此关系不够重视。

要約

タックマン(Tuckman)とチャン(Chang) (1991年)による導入以来、ハーシュマン・ハーフィンダール・インデックス (HHI)は、売り上げ集中の精密な測定として非営利団体の資料に広く採用されている。HHIの計算は多様な組成で特徴づけられており、利用可能なデータと収入の手段における分散の程度の性質によって決定されており、広く適用されている。NCC 990 のデジタル化されたデータを使用して、HHI 測定収率が大幅に異なるかどうかをテストするために酸性テストを実施する。売り上げの集中の特性は、3件の収入源に基づく集計の測定における4件の収入の集中の測定法に基づく。つまり他の寄付から分配された国庫補助金の測定法、 7件の収入源に基づく軽微な測定法、13件の収益の流れに基づく完全に分散された測定、2件の独占的な非営利団体の財務の健全性すなわち経済的不安と財務能力の測定に用いられる。総合的にHHIの 計測における集計は重要であり、頻繁な集約において有意水準と推定値の大きさに影響を及ぼす関係が軽視されているという結果が出た。

ملخص

منذ تقديمه عن طريق (Tuckmanو Chang) (1991)، إعتمد مؤشر(Hirschman-Herfindahl (HHI))على نطاق واسع في الأدب الغير ربحي كمقياس دقيق لتركيز الإيرادات. وقد إتسم هذا الإتخاذ الواسع من خلال التركيبة المتنوعة، مع حساب (HHI) ليتم تحديدها إلى حد كبيرعن طريق طبيعة البيانات المتاحة والدرجة التي تتضمن تدابير مفصلة للإيرادات. بإستخدام المركز الوطني للإحصاء الخيري (NCCS) البيانات الرقمية، يمكننا إجراء الإختبار الحاسم على ما إذا كانت قياسات(HHI) المختلفة تسفرعن نتائج مختلفة إلى حد كبير. أربعة مقاييس لتركيز الإيرادات - إجراءات مجمعة على أساس ثلاثة مصادر للدخل، هي مقياس تجميع فصل المنح الحكومية من مساهمات أخرى، وهو مقياس أكثر دقة إستنادا˝ إلى سبعة مصادر للدخل، مقياس مصنف تم حسابه بالكامل على أساس ثلاثة عشر تيارات الإيرادات - يتم استخدامه للتنبؤعلى اثنين مهيمنين لأبعاد الصحة المالية الغير ربحي: التقلبات المالية والقدرة المالية. بشكل عام، تظهر نتائجنا أن التجميع في قياس (HHI) مهم؛ التجميع غالبا˝ ما يقلل من أهمية العلاقات من خلال التأثير على أهمية المستويات ومقادير التقديرات بطريقة غير تافهة.

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Copyright information

© International Society for Third-Sector Research and The Johns Hopkins University 2015

Authors and Affiliations

  • Grace L. Chikoto
    • 1
  • Qianhua Ling
    • 2
  • Daniel Gordon Neely
    • 3
  1. 1.University of Wisconsin – MilwaukeeMilwaukeeUSA
  2. 2.College of Business AdministrationMarquette UniversityMilwaukeeUSA
  3. 3.University of Wisconsin – MilwaukeeMilwaukeeUSA

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