Daniel Tinkelman

Board Composition, Committees and Organizational Efficiency: The Case of Nonprofits

This article investigates the relationship between nonprofit board composition and organizational efficiency. Overall,we find a significant statistical association between the presence of major donors on the board and indicators of organizational efficiency. Although causality cannot be demonstrated,our findings are consistent with the Fama and Jensen (1983) conjecture that major donors monitor nonprofit organizations at least in part through their board membership. The multivariate analysis shows that the ratio of total expenses to program expenses is significantly and negatively associated with higher donor representation. Decomposing the total expense ratio into its two components,we find that different factors affect the administrative and fundraising expense ratios. The percentage of major donors on the finance committee,a key committee overseeing budgets and administrative expenses,is negatively related to the organization’s administrative expenses ratio. The presence of major donors on other board committees is not significantly statistically associated with nonprofit efficiency.

When is administrative efficiency associated with charitable donations

Whether accounting measures of administrative efficiency affect donations is an important issue for nonprofit managers. Prior research is inconclusive. Some studies find a significant negative relation, whereas others find no significant relation. The authors investigate a variety of reasons for the prior divergent results. The evidence is consistent with donors reducing contributions to organizations reporting higher administrative expense ratios when the ratios are presumably most relevant and reliable. The authors suggest that certain prior studies failed to find significant associations largely because their samples contained many organizations for which the administrative ratios were unreliable or not helpful for donor needs. Model specification issues also affect prior studies but are less critical than sample composition. When the authors replicate prior studies on samples containing established, donation-dependent organizations with nontrivial amounts of fund-raising and administrative expenses, they generally detect a significant negative association.

Some Econometric Issues in Studying Nonprofit Revenue Interactions Using NCCS Data

Several econometric issues arise in using nonprofit data. After controlling for unduly influential observations and heteroskedasticity, regression analysis performed on National Center for Charitable Statistics “digitized data” from 2001 to 2003 found mixed evidence of economically significant associations between donations and other revenue streams; regressions without these controls support different conclusions. Testing does indicate that government support sends greater quality signals than program support or investment income.

Testing the Feasibility of Small Multiples of Sparklines to Display Semimonthly Income Statement Data

This paper tests the ability of 129 accounting students to look up data, perceive and compare data patterns, and detect anomalies when the amount of information in traditional single page three-year comparative income statements is expanded 25-fold by adding semimonthly data to the page in graphical form. Participants were able to use the graphs to perform most tasks correctly more often than not. Tabular presentation of the same 1100 to 2000 data points required six pages. Participants using the one-page income statements with embedded graphs were better able to identify and compare patterns than those using multipage tables, but had less success looking up precise data values. The results on pattern recognition and comparison are consistent with the proximity compatibility principle.