Capital Campaign Grants, Nonprofit Efficiency, and Financial Vulnerability

• In Event: Accounting Behavior Organizations/Government & Nonprofit
  In Paper Session: Pot Pourri - Accounting Behavior Organizations, Government & Nonprofit & International Accounting

Abstract

This study investigates capital campaign grants made by private foundations to public charities. We find that both the issuance of the grant and the size of the grant are associated with a public charity’s debt ratio and operating margin, consistent with private foundations serving an important role in the philanthropic marketplace of rewarding public charities that exhibit strong financial performance. We find no association between capital campaign grants and measures of public charity efficiency, possibly because overall efficiency is less important in awarding capital campaign grants than operating grants. Alternatively, private foundations may discount efficiency ratios because of the possibility of management manipulation.

Authors

• Arthur Allen, University of Nebraska-Lincoln

• Brian P. McAllister, University of Colorado-Colorado Springs

• Timothy R Yoder, University of Nebraska-Omaha