Fundamental Reporting Differences in Nonprofit Operating Models
Abstract
Not all nonprofit organizations rely on donations to achieve their social mission. Some nonprofit organizations, which Dart (2004) classifies as social enterprises, generate revenue through commercial transactions. This study identifies significant operating, monitoring, and efficiency differences between traditional fundraisers and social enterprises. Using panel data and fixed effects regressions, I find that social enterprises report more revenue persistence and better program ratios - a common metric for evaluating nonprofit performance - than traditional fundraisers. I also find that social enterprises are less likely to audit their financial statements than traditional fundraisers. Furthermore, when evaluating operating efficiency, social enterprises appear to have a higher asset turnover to program revenues, suggesting that this model may be more concerned with the operating efficiency of the social program. These results provide evidence that if the operating model is not considered, financial information can give misleading results when comparing traditional fundraisers and social enterprises. Additionally, the operating model may drive management decisions about investments, operations, and external monitoring, defining different goals in nonprofit behavior.
Subject Area
Accounting|Business administration|Management
Recommended Citation
Castro Cardenas, Angelica G, "Fundamental Reporting Differences in Nonprofit Operating Models" (2024). ETD Collection for University of Texas, El Paso. AAI31238620.
https://scholarworks.utep.edu/dissertations/AAI31238620