Nonprofit Arts Organizations: Debt Ratio Does Not Influence Donations—Interest Expense Ratio Does
- 29 September 2017
- journal article
- research article
- Published by SAGE Publications in The American Review of Public Administration
- Vol. 48 (7), 659-667
- https://doi.org/10.1177/0275074017724227
Abstract
Due to increased competition for scarce resources, scholars and practitioners have been devoting more attention to identifying the factors that drive private contributions to nonprofit organizations in recent years. This study aims to investigate whether capital structure decisions made by nonprofit managers have an impact on future contributions from individual donors. More specifically, it asks whether debt is associated with a reduction in future financial support. This study relies on data derived from the DataArts Cultural Data Profile to answer this question. It utilizes a log-log model where the dependent variable is defined as total private contributions in the current period. Results indicate that an increase in the interest expense to total expense ratio is associated with a decrease in future contributions. A nonprofit’s debt to assets ratio, however, does not have a statistically significant impact on future contributions.Keywords
This publication has 20 references indexed in Scilit:
- The Impact of CEO Compensation on Nonprofit DonationsThe Accounting Review, 2013
- Testing Competing Capital Structure Theories of Nonprofit OrganizationsPublic Budgeting & Finance, 2011
- Nonprofit competition in the grants marketplaceNonprofit Management and Leadership, 2010
- Which Nonprofit Organizations Borrow?Public Budgeting & Finance, 2009
- THE COMBINED EFFECT OF DONATION PRICE AND ADMINISTRATIVE INEFFICIENCY ON DONATIONS TO US NONPROFIT ORGANIZATIONSFinancial Accountability & Management, 2009
- Revenue Diversification in Nonprofit Organizations: Does it Lead to Financial Stability?Journal of Public Administration Research and Theory, 2008
- Determinants of Charitable Donations to Large U.S. Higher Education, Hospital, and Scientific Research NPOs: New Evidence from Panel DataVOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 2004
- EFFECTS OF NONPROFIT ORGANIZATION WEALTH AND EFFICIENCY ON PRIVATE DONATIONS TO LARGE NONPROFIT ORGANIZATIONSResearch in Governmental and Nonprofit Accounting, 2004
- The Uniqueness of Nonprofit Finance and the Decision to BorrowNonprofit Management and Leadership, 2002
- Strategic Positioning and the Financing of Nonprofit Organizations: Is Efficiency Rewarded in the Contributions Marketplace?Public Administration Review, 2001