Which Nonprofit Organizations Borrow?

Abstract

The tax benefit, bankruptcy value, and pecking-order theories of corporate capital structure are discussed in context of nonprofit organizations. A bivariate probit model shows that coefficients differ between models meaning mortgages and tax-exempt bonds are not equivalent forms of debt. Organizations with proportionally more program revenues, contributions, total assets, total revenues, and executive compensation are more likely to have a mortgage. Nonprofits that rely on special event fund-raising or contributions have a lower probability of using bond financing. The use of debt is also influenced by the nature of the organization's mission as measured through the NTEE classification.

Public mandates, market monitoring, and nonprofit financial disclosures

“…These codes, included with the Form 990 data, break the data into 26 major categories (such as education, arts and health), and have been used by Fisman and Hubbard (2003) and Denison (2009), among others. The individual NTEE coefficients are not reported in the results due to space, although F-Tests are included to test their significance, when appropriate.…”

Inercias de financiación en el sector de la cooperación al desarrollo

“…Este mayor control deriva también en una mayor transparencia de la ENL (Gálvez Rodríguez, Caba Pérez y López Godoy, 2012), en particular en la calidad de los informes financieros presentados (Verbruggen, Christiaens y Milis, 2011), aunque también requiere un mayor trabajo de justificación administrativa (Froelich, 1999). Igualmente, los fondos públicos inciden en el comportamiento financiero de la entidad, reduciendo el margen operativo (Calabrese, 2013;Handy y Webb, 2003) y modificando la ratio de endeudamiento (Denison, 2009;Yan, Denison y Butler, 2009). Junto a ello, la evidencia empírica muestra también la influencia de la financiación pública sobre la configuración del órgano de gobierno de la ENL (Guo, 2007;Herman y Renz, 2008).…”

Borrowing for the Public Good

“…As a result, an organization with unrelated business activity would be more likely to use taxable debt because it has no such restrictions and the interest costs would reduce its unrelated business income tax (Denison, 2009). As a result, an organization with unrelated business activity would be more likely to use taxable debt because it has no such restrictions and the interest costs would reduce its unrelated business income tax (Denison, 2009).…”

“…While Denison (2009) analyzes levels of tax-exempt bonds outstanding using cross-sectional data and Yan et al (2009) examine financial borrowing for arts nonprofits, we use panel data to ask why the importance of tax-exempt borrowing has grown relative to other borrowing between 2001 and 2009 across the entire nonprofit sector. Whereas the existing literature analyzes whether a nonprofit has debt outstanding or the amount of debt outstanding (whether tax exempt, taxable, or combined), we focus instead on what factors are related to the amount of tax-exempt bonds in nonprofits' debt portfolios relative to other liabilities.…”

“…Analysis of Growth in Importance of Tax-Exempt Borrowing Relative to Other Borrowing byNonprofit Organizations, 2001-2009 …”