The nonprofit starvation cycle is a debilitating trend of under-investment in organizational infrastructure that is fed by potentially misleading financial reporting and donor expectations of increasingly low overhead expenses. Since its original reporting in 2004, the phenomenon has been referenced several times, but seldom explored empirically. This study uses 25 years of nonprofit data to examine the existence, duration, and mechanics behind the nonprofit starvation cycle. Our results show a definite downward trend in reported overhead costs, reflecting a deep cut in administrative expenses partially offset by an increase in fundraising expenses. The organization’s size is instrumental to its behavior, with a sharp rise in reported overhead occurring when revenues equal $100,000, but diminishing at $550,000. Finally, the brunt of the cuts have fallen on nonexecutive staff wages and professional fees, which heightens the concern of potentially ill effects derived from a fixation on overhead cost reduction.

The ability of nonprofits to weather hard times is a popular theme in the literature, yet most of the research is spent on predicting organizational closure. Unfortunately, this offers little guidance to nonprofits attempting to both survive and deliver services during crises. We use the lived experiences of 31 nonprofits—a mix of umbrella groups and direct human service providers—during the Illinois state budget impasse to understand nonprofit organization resilience in times of crisis. We establish the Nonprofit Resiliency Framework using qualitative analysis, mapping tactics in five areas: financial, human resources, outreach, program and services, and management and leadership. This study not only provides further empirical investigation of organizational resilience, but also useful advice for nonprofits on how to weather a complex financial crisis.

The literature on the relationship between government funding and private donations finds evidence of both crowd-out (a reduction in private donations due to the receipt of government funding) and crowd-in (increased donations rather than a reduction). This study uses organizational-level data and information regarding funding from multiple levels of government in Canada to provide an important contribution to the literature, which has traditionally relied upon aggregated measures of government funding. Results from dynamic panel estimations suggest that effects vary by type of charity and level of government funding source, with some subsectors displaying crowd-in, some crowd-out, and some both phenomenon depending on the level of government providing funding. These findings encourage more research into the context and variation involved in crowd-out, raising practical and theoretical questions about whether a uniform effect across subsectors or level of government funding should be expected.

Purpose: This paper aims to examine the applicability of the benefits theory of nonprofit finance to an international sample of social enterprises (SEs). Design/methodology/approach: This research analyzes the revenue sources of SEs through the lens of benefits theory. In particular, the authors test the links between revenue sources and the character of an enterprise’s mission. This study uses data on 545 SEs collected by the International Comparative Social Enterprise Models project, which was an international collaborative effort of more than 200 researchers. The authors use cross-sectional multivariate regression to identify the factors which influence the revenue portfolios of SEs. Findings: The findings provide evidence of SE revenue portfolios that are nuanced and complicated. Benefits theory helps to illuminate this nuance. The application of benefits theory to SE goes beyond the traditional characterization of the publicness and privateness of goods and services to include the intended beneficiaries, the nature of benefits they receive and the management practices followed to assure distribution of benefits to intended beneficiary groups. By analyzing the public (and private) goals of SEs, such as employment generation and food security, the authors gain an understanding of what they really do, and hence, how they can be best financed. Originality/value: This study provides empirical support to the applicability of benefits theory to SEs, which provides both theoretical advancement and practical implications.

There is a robust literature examining financial vulnerability and demise of nonprofit organizations, particularly in the United States. However, much of this knowledge stems from inconsistent definitions of nonprofit demise. Using eight comparative case studies, this study revisits traditional definitions of nonprofit life and death to better reflect actual organizational operating status. Following this reclassification, findings from this study show that certain internal and external characteristics are more important in determining a nonprofit’s operational status. In particular, nonprofits whose missions involve a particular regulation are more likely to close due to mission completion or obsolescence; however, these nonprofits also tend to either reincarnate or expand scope if other factors are favorable. The findings also appear to show that the existence of conflict or competition with an outside entity boosts nonprofit cohesion. Internal tensions, however, are particularly harmful.