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Resource Dependence In Non-profit Organizations: Is It Harder To Fundraise If You Diversify Your Revenue Structure?

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Abstract

This article explores how fundraising efficiency is affected by changes in diversification of revenues in non-profit organizations. It uses random effect regression and Arellano–Bond models to study this phenomenon in a sample of 10358 US non-profits during the 1997–2007 period. We find a negative impact on fundraising efficiency when NPOs alter their locus of dependence and change their pattern of diversification. This effect is impacted by organizational size and industry. Previous studies have suggested that income heterogeneity is associated with organizational stability and financial strength. Using a change (versus level) model of funding diversity, our work shows that increased diversification leads to a higher operational inefficiency that could be penalized by potential donors.

Résumé

Cet article explore la façon dont le rendement des collectes de fonds est influencé par les changements survenus dans la diversification des revenus des organismes sans but lucratif. Il emploie des modèles de régression à effet aléatoire et Arellano-Bond pour étudier ce phénomène à l’aide des données de 10,358 organismes sans but lucratif américains datant de 1997 à 2007. Nous remarquons que le rendement des collectes subit des effets négatifs lorsque les organismes altèrent leur rapport de dépendance et modifient leur modèle de diversification. Cet effet est influencé par la taille et le secteur des dits organismes. Des études précédentes ont suggéré que l’hétérogénéité des revenus est associée à la stabilité et à la force financière de l’organisme. À l’aide d’un modèle (niveaux de comparaison) d’étude des changements de la diversité des fonds, nos travaux démontrent que la diversification accrue provoque un rendement opérationnel supérieur, qui pourrait être pénalisé par de potentiels donateurs.

Zusammenfassung

Dieser Beitrag untersucht, wie sich die Änderungen in der Einnahmendiversifizierung gemeinnütziger Organisationen auf die Effizienz der Mittelbeschaffung auswirken. Man stützt sich dabei auf die Random-Effects-Regressions- und Arellano-Bond-Modelle, um dieses Phänomen anhand einer Stichprobe von 10.358 US-amerikanischen gemeinnützigen Organisationen im Zeitraum von 1997 bis 2007 zu erforschen. Das Ergebnis zeigt eine negative Auswirkung auf die Effizienz der Mittelbeschaffung, wenn die gemeinnützigen Organisationen ihren Locus der Abhängigkeit und ihre Diversifizierungsstruktur ändern. Die Größe und Branche der Organisation beeinflussen diesen Effekt. Vorherige Studien deuteten darauf hin, dass die Einnahmenheterogenität mit der Stabilität und Finanzkraft einer Organisation in Verbindung steht. Anhand eines Änderungsmodells (im Gegensatz zu einem Ebenenmodell) der Finanzierungsdiversität wird gezeigt, dass eine größere Diversifizierung zu einer erhöhten betrieblichen Ineffizienz führt, die von potenziellen Spendern geahndet werden könnte.

Resumen

El presente artículo explora cómo la eficiencia en la recaudación de fondos se ve afectada por cambios en la diversificación de los ingresos en organizaciones sin ánimo de lucro (NPO, por sus siglas en inglés). Utiliza la regresión de efecto aleatorio y los modelos de Arellano-Bond para estudiar este fenómeno en una muestra de 10 358 organizaciones estadounidenses sin ánimo de lucro durante el período 1997–2007. Encontramos un impacto negativo sobre la eficiencia en la recaudación de fondos cuando las NPO alteran su centro de dependencia y cambian su patrón de diversificación. Este efecto se ve afectado por el tamaño organizativo y la industria. Estudios previos han sugerido que la heterogeneidad de los ingresos está asociada a la estabilidad organizativa y a la fortaleza financiera. Utilizando un modelo de cambios (frente a niveles) de diversidad de la financiación, nuestro trabajo muestra que un aumento de la diversificación lleva a una ineficiencia operativa más elevada que podría ser penalizada por los potenciales donantes.

摘要

本文研究了在非营利组织中,筹款效率如何受到收入多样性变化的影响。文中使用随机效应回归和 Arellano-Bond 模型来研究 1997–2007 年期间 10358 家美国非营利组织中的这一现象。我们发现,当 NPO 变换其依赖的地点并改变多样化的模式时,会对筹款效率产生负面影响。该效应受到组织规模和行业的影响。之前的研究表明,收入的不均匀性与组织稳定性和财务实力有关。使用一个筹款多样性的变化(对比等级)模型,我们的工作显示,多样性增强导致运营效率更为低下,这将受到潜在捐赠者的惩罚.

ملخص

يكتشف هذا المقال كيف تتأثر كفاءة جمع التبرعات عن طريق التغييرات في تنويع الإيرادات في المنظمات الغير هادفة للربح. إنه يستخدم تأثير إنحدار عشوائي ونماذج (Arellano-Bond) لدراسة هذه الظاهرة في عينة من 10358 من الولايات المتحدة لمنظمات غير ربحية خلال الفترة 1997-2007 نجد أن لها تأثير سلبي على كفاءة جمع التبرعات عندما المنظمات الغير ربحية (NPOs) تبدل الموضع للتبعية وتغير نمط تنوعها. يتأثر هذا التأثير من خلال الحجم التنظيمي والصناعة. أشارت دراسات سابقة أن عدم تجانس الدخل يرتبط بالإستقرار التنظيمي والقوة المالية. بإستخدام تغييرات (مقابل المستويات) نموذج لتنوع التمويل، يظهر عملنا أن زيادة التنويع يؤدي إلى عدم كفاءة تشغيلية عالية التي يمكن معاقبتها عن طريق الجهات المانحة المحتملة. .

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Notes

  1. This categorization is only a form of grouping of a broad range of different sources. Revenue streams can be expanded in different categories such as government funding, service fees, corporate giving, investment incomes, and in-kind donations. Moreover, it is important to take into account that there is a great cross-national variation in the revenue structure of NPOs (Salamon and Anheier 1998).

  2. There is a notable concern about the accuracy of the information detailed on the IRS form. Some categories are vague, and there are data entry errors (Gordon et al. 1999). Moreover, organizations tend to misreport fundraising. However, this disclosure of information represents an organizations’ most visible statement of its financial condition and management priorities (Frumkin and Kim, 2001).

  3. The authors thank Reviewer 1 for her/his suggestion to include other measures of organizational size.

  4. Donor reaction (less funds received) and organizational complexity (more expenses) are the two explanations for the negative relationship between the diversification of the revenue structure and fundraising efficiency. We appreciate Reviewer 2’s insightful comments about exploring the influence of revenue diversity on amounts received and fundraising expenses.

  5. Detailed results of the individual coefficients of each sector are available upon request.

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Authors and Affiliations

  1. Business Administration Department, Universidad Complutense de Madrid, Campus de Somosaguas, 28223, Madrid, Spain

    Ignacio Sacristán López de los Mozos, Antonio Rodríguez Duarte & Óscar Rodríguez Ruiz

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  1. Ignacio Sacristán López de los Mozos
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  2. Antonio Rodríguez Duarte
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  3. Óscar Rodríguez Ruiz
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Correspondence to Óscar Rodríguez Ruiz.

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ANNEX

ANNEX

  • Arts, Culture, and Humanities—NTEE category A

  • Education—NTEE category B

  • Environment and Animals—NTEE categories C, D

  • Health—NTEE categories E, F, G, H

  • Human Services—NTEE categories I, J, K, L, M, N, O, P

  • International, Foreign Affairs—NTEE categories Q

  • Public, Societal Benefit—NTEE categories R, S, T, U, V, W

  • Religion Related—NTEE categories X

  • Mutual/Membership Benefit—NTEE categories Y

  • Unknown, Unclassified—NTEE categories Z.

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Sacristán López de los Mozos, I., Rodríguez Duarte, A. & Rodríguez Ruiz, Ó. Resource Dependence In Non-profit Organizations: Is It Harder To Fundraise If You Diversify Your Revenue Structure?. Voluntas 27, 2641–2665 (2016). https://doi.org/10.1007/s11266-016-9738-8

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