Abstract
Nonprofit organizations increasingly rely on earned revenue to sustain their mission-driven activities. Previous research examining the effects of earned revenue on other income streams tends to study earned revenue in the aggregate. Using panel data from 12,372 organizations from 2010 to 2015, this analysis applies a framework of revenue embeddedness to link earned revenue activities to mission and analyze the effects of earned revenue activities on donations. Earned revenue activities offering new products or services to existing donors appear to complement individual donations. These findings have theoretical and practical applications related to how nonprofits pursue earned revenue.
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Notes
DataArts encourages grantmakers to incorporate DataArts into their application processes. According to DataArts’ website, grantmaker participation “is critical to the system, bringing thousands of cultural nonprofits onto the platform.” This reliance on grantmakers supports the decision to build the sample from profiles in states with heavy grantmaker participation.
While the first profiles date from 2001, participation stabilized in the late 2000s. In addition, changes in survey and profile formatting and processes went into effect during 2016, significantly altering the data collected as well as the participation demographics.
All revenue variables are measured in 1000 s.
Observations with missing values were dropped from the regression. These missing values primarily came from control variables (investment income and FTE). Approximately 10% of the observations (3998) had zero donations throughout this timeframe. Models omitting these observations yielded similar results. All significant variables remained significant with no change in significance or direction, and with minimal variation in coefficient magnitude. No new relationships emerged.
An inverse hyperbolic sine (IHS) transformation acts similarly to log–log transformation but allows for zero- and negative values (Burbidge et al., 1988) and would be theoretically sound. However, the IHS-transformed models exhibited curious behavior, including coefficients switching from positive to negative values, and previously significant variables losing significance. Reexamining the non-transformed models and confirming the presence of nonlinear relationships thus supports not transforming the variables.
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Acknowledgements
The author wishes to thank Drs. Stephanie Moulton, Trevor Brown, Craig Boardman, and Adam Eckerd for comments on earlier drafts on this paper. She extends gratitude to the members of Dr. Amanda Bittner’s feminist writing group for their support, as well. She also wishes to thank the DataArts for access to the data. Data interpretation rests squarely with the author and does not reflect DataArts’ views. Visit www.culturaldata.org for more information.
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Levine Daniel, J. All Earned Revenue is Not Created Equal: Revenue Embeddedness as a Framework for Exploring Crowding-In/Crowding-Out Effects. Voluntas 32, 1027–1041 (2021). https://doi.org/10.1007/s11266-021-00373-3
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DOI: https://doi.org/10.1007/s11266-021-00373-3