Past literature in nonprofit management uses the overhead ratio of nonprofits as a measure of efficiency. Although the overhead ratio might measure top-heaviness, we argue that it does not measure nonprofit efficiency. To investigate this, we use financial and operational data to rank the efficiency of Habitat for Humanity affiliates with the overhead and administrative ratio, as well as data envelopment analysis (DEA) and stochastic frontier analysis (SFA), two of the most popular efficiency measures. While the DEA and SFA rankings are statistically correlated, overhead ratio rankings are negatively correlated with both SFA and DEA rankings. We argue that nonprofit scholars, managers, and donors should move away from concepts and measures of efficiency based on financial ratios, and toward ones that embrace maximizing what nonprofits are able to make and do.

The complexity and diversity of the nonprofit sector provides a rich landscape for academic scholarship; and, growing numbers of nonprofit scholars and their associated research publications have established the field of nonprofit research. Yet, it is unclear if this research has been applied appropriately to the evolving landscape of the sector. Although literature reviews have helped us to understand the status of academic scholarship in the field of nonprofit research, these reviews have primarily focused on particular topics without considering the field as a whole. Thus, in this study we review all contemporary nonprofit scholarship (n=972) from three prominent nonprofit journals. The review documents the development of nonprofit research as presented in these journals over the last five years and offers recommendations for future research consideration.

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