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Exploring the Nexus of Nonprofit Financial Stability and Financial Growth

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Abstract

Taking a unified approach to studying nonprofit financial health, this research tackles a key question that has remained unexplored in the literature: “What lies at the intersection of the two key dimensions of financial health–financial stability and financial growth?” Specifically, we identify and compare nonprofits that exhibit high levels of financial stability and growth (high financially performing) to those that exhibit low levels (low financially performing)? Overall, we find that high financial performers (HFPs) tend to be older and larger organizations (in terms of unrestricted net assets and total revenue). HFPs are also more likely to report capital assets, and report high levels of compensation. Finally, HFPs tend to contain their overhead spending by exercising efficiency by investing in talented officers (paying more than the rest), but limiting the share of officer compensation, administrative, and fundraising expenses, as a percentage of total expenses. The results of the study should be informative to stakeholders attempting to understand the profile of an organization that is successfully able to achieve both capacity growth and financial stability.

Résumé

En adoptant une approche unifiée pour étudier la santé financière du secteur sans but lucratif, cette recherche porte sur une question clé toujours inexplorée : « Que trouve-t-on à l’intersection des deux dimensions essentielles de la santé financière, soit la stabilité financière et la croissance financière? » Nous avons précisément identifié et comparé des organismes de bienfaisance affichant un haut niveau de stabilité et croissance financières (fort rendement financier) à d’autres au niveau plus bas. Nous avons découvert qu’en général, les organismes performants ont tendance à être plus vieux et de plus grande taille (en termes d’actifs nets non restreints et de revenus totaux). Les organismes performants rapporteront aussi plus vraisemblablement leur valeur immobilisée et des taux de rémunération plus élevés. Ces organismes limitent enfin leurs dépenses générales en faisant preuve d’efficacité et recherchant des représentants talentueux (payant plus que les autres), mais en restreignant les frais de rémunération et administratifs et les dépenses de campagne de financement comme pourcentage des dépenses totales. Les résultats de l’étude devraient informer les intervenants tentant de cerner le profil d’un organisme qui réussit à être viable en termes de croissance et de stabilité financières.

Zusammenfassung

Diese Studie befasst sich mithilfe eines einheitlichen Ansatzes zur Untersuchung der finanziellen Gesundheit gemeinnütziger Organisationen mit der in der Literatur bislang nicht ergründeten wichtigen Frage: „Was liegt am Schnittpunkt der zwei Schlüsseldimensionen der finanziellen Gesundheit, d. h. am Schnittpunkt der finanziellen Stabilität und des finanziellen Wachstums?“Dazu ermitteln wir gemeinnützige Organisationen und vergleichen diejenigen, die ein hohes Maß an finanzieller Stabilität und finanziellem Wachstum aufweisen (finanziell leistungsstarke Organisationen), mit denen, die durch geringe finanzielle Stabilität und geringes finanzielles Wachstum gekennzeichnet sind (finanziell leistungsschwache Organisationen). Insgesamt stellen wir fest, dass finanziell leistungsstarke Organisationen in der Regel älter und größer sind (mit Hinblick auf das uneingeschränkte Nettovermögen) und vergleichsweise mehr Kapitalvermögen und hohe Vergütungen ausweisen. Finanziell leistungsstarke Organisationen können ihre Gemeinkosten häufig begrenzen, indem sie effizient in erfahrene Führungskräfte investieren (wobei sie mehr als andere zahlen), jedoch den Anteil der Kosten für die Vergütung von Führungskräften, für die Verwaltung und für die Mittelbeschaffung auf einen prozentualen Anteil der Gesamtaufwendungen begrenzen. Die Ergebnisse der Studie dürften für Stakeholder interessant sein, die das Profil einer Organisation nachvollziehen möchten, welche erfolgreich Kapazitätswachstum und finanzielle Stabilität erzielt.

Resumen

Asumiendo un enfoque unificado para estudiar la salud financiera de las organizaciones sin ánimo de lucro, la presente investigación aborda una cuestión clave que ha seguido sin ser explorada en el material publicado: “¿Qué se encuentra en la intersección de las dos dimensiones claves de la salud financiera - la estabilidad financiera y el crecimiento financiero?” Específicamente, identificamos y comparamos a las organizaciones sin ánimo de lucro que exhiben niveles elevados de estabilidad y crecimiento financieros (rendimiento financiero elevado) con aquellas que exhiben bajos niveles (rendimiento financiero bajo). En general, encontramos que las organizaciones con mejor rendimiento financiero (HFP, por sus siglas en inglés) tienden a ser organizaciones más grandes y más antiguas (en términos de activos netos e ingresos totales no restringidos). También es más probable que las HFP notifiquen activos de capital y niveles elevados de compensación. Finalmente, las HFP tienden a contener sus gastos generales mediante el ejercicio de la eficiencia invirtiendo en directivos con talento (pagando más que el resto), pero limitando la parte de los gastos de compensación del directivo, administrativos y recaudación de fondos, como porcentaje del gasto total. Los resultados del estudio deben ser informativos para las partes interesadas que traten de comprender el perfil de una organización que es capaz de lograr de manera satisfactoria tanto el crecimiento de la capacidad como la estabilidad financiera.

Chinese

通过采用标准统一的方法对非营利性组织的财务健康进行研究,本研究对各类文献中尚未涉及的以下重要问题进行了探究:“财务健康两大维度(财务稳定性与财务增长水平)的交叉点是什么?” 特别地,我们找出了财务稳定性与财务增长水平较高的非营利性组织(财务表现水平高)以及财务稳定性与财务增长水平较低的非营利性组织(财务表现水平低),并对两者进行了比较。总体而言,财务表现水平高的通常是历史较悠久、较大型的组织(在非限制性净资产与总收入方面)。财务表现水平高的组织更可能被录得资本资产以及高水平报酬。最后,财务表现水平高的组织倾向于通过以下手段控制间接费用开支:通过投资于有才能的管理人员(较其他组织投资更高)以提高效率,但是限制管理人员报酬以及行政与资金筹集费用在总开支百分比中的份额。本研究的结果为想了解能够同时实现产能增长与财务稳定的组织的情况的利益相关者提供了有用的信息:。.

Arabic

إتخاذ نهج موحد لدراسة الصحة المالية الغير ربحية، يتناول هذا البحث السؤال الرئيسي الذي ظل غير مكتشف في الأدب: “الذي يقع عند تقاطع إثنين من الأبعاد الأساسية للصحة المالية - الإستقرار المالي والنمو المالي؟” على وجه التحديد، فإننا نحدد ونقارن المنظمات الغير ربحية التي تظهر مستويات عالية من الإستقرار المالي والنمو (عالي الأداء ماليا) لتلك التي تظهر مستويات منخفضة (منخفض أداء مالي)؟ بشكل عام، نجد أن الذين يؤدون الأداء المالي العالي (HFPs) يميلون إلى أن يكونوا المنظمات الأقدم والأكبر (من حيث صافي الأصول الغير مقيد وإجمالي الإيرادات. الذين يؤدون الأداء المالي العالي ((HFPsهم أيضا” أكثر تعرضا” للإبلاغ عن أصول رأسمالية، و يبلغوا عن مستويات عالية من التعويض. أخيرا”، يميل الذين يؤدون الأداء المالي العالي ((HFPs إلى إحتواء النفقات العامة من خلال ممارسة الكفاءة من خلال الإستثمار في المسؤولين الموهوبين (الدفع أكثر من البقية)، لكن الحد من نسبة تعويض المسؤول ،الإدارة، ونفقات جمع التبرعات، كنسبة مئوية من إجمالي النفقات.ينبغي أن تكون نتائج هذه الدراسة مفيدة لأصحاب المصلحة في محاولة لفهم لمحة عن المنظمة القادرة بنجاج على تحقيق نمو القدرات والإستقرار المالي على حد سواء.

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Correspondence to Grace L. Chikoto-Schultz.

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Chikoto-Schultz, G.L., Neely, D.G. Exploring the Nexus of Nonprofit Financial Stability and Financial Growth. Voluntas 27, 2561–2575 (2016). https://doi.org/10.1007/s11266-016-9786-0

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