Nonprofits compete in donation markets for resources and are expected to report on the financial stewardship of the organization. Without a clear comparative signal to differentiate organizations in this resource market, simple financial ratios have been used as proxy measures of relative organizational efficiency. Two conceptual models can be applied to the use of these ratios: first, as dichotomous conformance thresholds that identify poor performers who are unable to meet some minimum standard, or second, as directly comparable scales of performance where more optimized ratios can be used to distinguish the best performers. These two different conceptual models imply two different managerial approaches and potential organizational outcomes. This research assesses the extent to which nonprofits that are evaluated by an external evaluator appear to use the ratios as thresholds to pass or as scales to optimize.
AshleyS.Van SlykeD. (2012). The influence of administrative cost ratios on state government grant allocations to nonprofits. Public Administration Review, 72(Suppl. 1): S47-S56.
2.
BarmanE. (2002). Asserting difference: The strategic response of nonprofit organizations to competition. Social Forces, 80, 1191-1222.
3.
BarmanE. (2008). With strings attached: Nonprofits and the adoption of donor choice. Nonprofit and Voluntary Sector Quarterly, 37, 39-56.
4.
BarmanE. (2013). Classificatory struggles in the nonprofit sector: The formation of the national taxonomy of exempt entities, 1969-1987. Social Science History, 37, 103-141.
5.
BevanG.HoodC. (2006). What’s measured is what matters: Targets and gaming in the English public health care system. Public Administration, 84, 517-538.
6.
BhattacharyaR.TinkelmanD. (2009). How tough are better business bureau/wise giving alliance financial standards?Nonprofit and Voluntary Sector Quarterly, 38, 467-489.
7.
BiesA. (2001). Accountability, organizational capacity, and continuous improvement: Findings from Minnesota’s nonprofit sector. New Directions for Philanthropic Fundraising, 31, 51-80.
8.
BoyneG.MeierK.O’TooleL.WalkerR. (2005). Where next? Research directions on performance in public organizations. Journal of Public Administration Research and Theory, 15, 633-639.
9.
BrooksA. (2004). Evaluating the effectiveness of nonprofit fundraising. Policy Studies Journal, 32, 363-374.
CameronK. (1981). Domains of organizational effectiveness. Academy of Management Review, 24, 25-47.
12.
CarmanJ. (2009). Nonprofits, funders, and evaluation accountability in action. American Review of Public Administration, 39, 374-390.
13.
CnaanR.JonesK.DickinA.SalomonM. (2011). Nonprofit watchdogs: Do they serve the average donor?Nonprofit Management and Leadership, 21, 381-397.
14.
DehejiaR.WahbaS. (2002). Propensity score-matching methods for nonexperimental causal studies. Review of Economics and Statistics, 84, 151-161.
15.
de LeonE.PettijohnS.De VitaC. (2012). Community services block grant administrative expenses. Washington, DC: The Urban Institute.
16.
DiMaggioP.PowellW. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48, 147-160.
17.
EbrahimA. (2003). Making sense of accountability: Conceptual perspectives for northern and southern nonprofits. Nonprofit Management and Leadership, 14, 191-212.
18.
EcclesR. (1991). The performance measurement manifesto. Harvard Business Review, 69(1), 131-137.
19.
EckerdA.MoultonS. (2011). Heterogeneous roles and heterogeneous practices: Understanding the adoption and uses of nonprofit performance evaluations. American Journal of Evaluation, 32, 98-117.
20.
ForbesD. (1998). Measuring the unmeasurable: Empirical studies of nonprofit organization effectiveness from 1977 to 1997. Nonprofit and Voluntary Sector Quarterly, 27, 183-202.
21.
FroelichK. (1999). Diversification of revenue strategies: Evolving resource dependence in nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 28, 246-268.
22.
FroelichK.KnoepfleT.PollakT. (2000). Financial measures in nonprofit organization research: Comparing IRS 990 return and audited financial statement data. Nonprofit and Voluntary Sector Quarterly, 29, 232-254.
23.
FrumkinP. (2005). On being nonprofit: A conceptual and policy primer. Cambridge, MA: Harvard University Press.
24.
FrumkinP.JastrzabJ.VaalerM.GreeneyA.GrimmR.CramerK.DietzN. (2009). Inside national service: AmeriCorps’ impact on participants. Journal of Policy Analysis and Management, 28, 394-416.
25.
FrumkinP.KimM. (2001). Strategic positioning and the financing of nonprofit organizations: Is efficiency rewarded in the contributions marketplace?Public Administration Review, 61, 266-275.
26.
GronbjergK. (1994). Using NTEE to classify non-profit organisations: An assessment of human service and regional applications. Voluntas, 5, 301-328.
27.
GronbjergK.PaarlbergL. (2001). Community variations in the size and scope of the nonprofit sector: Theory and preliminary findings. Nonprofit and Voluntary Sector Quarterly, 30, 684-706.
28.
HeinrichC. (2003). Outcomes-based performance management in the public sector: Implications for government accountability and effectiveness. Public Administration Review, 62, 712-725.
29.
HeinrichC.MaffioliA.VazquezG. (2010). A primer for applying propensity-score matching (Impact-Evaluation Guidelines Technical Notes No. IDB-TN-161). Washington, DC: Inter-American Development Bank.
30.
HermanR.RenzD. (2008). Advancing nonprofit organizational effectiveness research and theory: Nine theses. Nonprofit Management and Leadership, 18, 399-415.
31.
HofstedeG. (1981). Management control of public and non-for-profit activities. Accounting, Organizations and Society, 6, 193-211.
32.
HoodC. (2006). Gaming in targetworld: The targets approach to managing British public services. Public Administration Review, 66, 515-521.
33.
IrwinR. (2005). State regulation of nonprofit organizations: Accountability regardless of outcome. Nonprofit and Voluntary Sector Quarterly, 34, 161-178.
34.
JonesM. (2007). The multiple sources of mission drift. Nonprofit and Voluntary Sector Quarterly, 36, 299-307.
35.
KanterR.SummersD. (1994). Doing well while doing good: Dilemmas of performance measurement in nonprofit organizations and the need for a multiple-constituency approach. In McKevittD.LawtonD. (Eds.), Public sector management: Theory, critique, and practice (pp. 220-236). Thousand Oaks, CA: Sage.
36.
KeatingE.ParsonsL.RobertsA. (2006). Misreporting fundraising: How do nonprofit organizations account for telemarketing campaigns? (Working Paper No. 37). Cambridge, MA: The Hauser Center for Nonprofit Organizations.
37.
KrishnanR.YetmanM.YetmanR. (2006). Expense Misreporting in Nonprofit Organization. The Accounting Review, 81(2), 399-420.
38.
KrishnanR.YetmanM. (2011). Institutional drivers of reporting decisions in nonprofit hospitals. Journal of Accounting Research, 49, 1001-1039.
39.
LightP. (1994). Sustaining nonprofit performance: The case for capacity building and the evidence to support it. Washington, DC: Brookings Institution Press.
40.
LuneH. (2002). Weathering the storm: Nonprofit organization survival strategies in a hostile climate. Nonprofit and Voluntary Sector Quarterly, 31, 463-483.
41.
MoultonS.EckerdA. (2012). Preserving the publicness of the nonprofit sector: Resources, roles, and public values. Nonprofit and Voluntary Sector Quarterly, 41, 656-685.
42.
MurrayV. (2001). The state of evaluation tools and systems for nonprofit organizations. New Directions for Philanthropic Fundraising, 31, 39-50.
43.
NeelyA. (1999). The performance measurement revolution: Why now and what next?International Journal of Operations & Production Management, 19, 205-228.
44.
PinaV.TorresL. (1992). Evaluating the efficiency of nonprofit organizations: An application of data envelopment analysis to the public health service. Financial Accountability & Management, 8, 213-224.
45.
RingP.PerryJ. (1985). Strategic management in public and private organizations: Implications of distinctive contexts and constraints. Academy of Management Review, 10, 276-286.
46.
RitchieW.KolodinskyR. (2003). Nonprofit organization financial performance measurement: An evaluation of new and existing financial performance measures. Nonprofit Management and Leadership, 13, 367-381.
47.
RoaH. (1998). Caveat emptor: The construction of nonprofit consumer watchdog organizations. American Journal of Sociology, 103, 912-961.
48.
RosenbaumP.RubinD. (1983). The central role of the propensity score in observational studies for causal effects. Biometrika, 70, 41-55.
49.
RushingW. (1974). Differences in profit and nonprofit organizations: A study of effectiveness and efficiency in general short-stay hospitals. Administrative Science Quarterly, 19, 474-484.
50.
SaidelJ. (1991). Resource interdependence: The relationship between state agencies and nonprofit organizations. Public Administration Review, 51, 543-553.
51.
SalamonL. (2003). The resilient sector: The state of nonprofit America. Washington, DC: Brookings Institution Press.
52.
SalamonL.AnheierH. (1992). In search of the non-profit sector II: The problem of classification. Voluntas, 3, 267-309.
53.
SargeantA.WestD.FordJ. (2004). Does perception matter?: An empirical analysis of donor behaviour. The Service Industries Journal, 24(6), 19-36.
54.
SloanM. (2009). The effects of nonprofit accountability ratings on donor behavior. Nonprofit and Voluntary Sector Quarterly, 38, 220-236.
55.
SteinbergR. (1997). On the regulation of fund raising. In BurlingameD. (Ed.), Critical issues in fund raising (pp. 234-244). San Francisco, CA: Jossey-Bass.
56.
SzperR.PrakashA. (2011). Charity watchdogs and the limits of information-based regulation. Voluntas, 22, 112-141.
57.
TinkelmanD. (2006). The decision-usefulness of nonprofit fundraising ratios: Some contrary evidence. Journal of Accounting, Auditing, & Finance, 21, 441-462.
58.
TinkelmanD.MankaneyK. (2007). When is administrative efficiency associated with charitable donations?Nonprofit and Voluntary Sector Quarterly, 36, 41-64.
59.
VenkatramanN.RamanujamV. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review, 11, 801-814.
60.
VerbruggenS.ChristiaensJ.MilisK. (2011). Can resource dependence and coercive isomorphism explain nonprofit organizations’ compliance with reporting standards. Nonprofit and Voluntary Sector Quarterly, 40, 5-32.
61.
VossG.CableD.VossZ. (2000). Linking organizational values to relationships with external constituents. Organization Science, 11, 330-347.
62.
WestphalJ.GulatR.ShortellS. (1997). Customization or conformity? An institutional and network perspective on the content and consequences of TQM adoption. Administrative Science Quarterly, 42, 366-394.
