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Financial factors that influence the size of nonprofit operating reserves

Financial factors that influence the size of nonprofit operating reserves ABSTRACTAlthough operating reserves can aid nonprofit organizations in alleviating periods of fiscal stress, they are not widely used. This study examines organizational factors that impact the level of operating reserves in nonprofit organizations. It also explores the relationship of operating reserves with organizational demographics and financial health variables using a six-year (1998-2003) unbalanced panel regression model containing 460,437 observations. Findings demonstrate a positive relationship between operating reserves and administration ratio, profit margin, operating margin, and organization age. Conversely, the size of operating reserves is negatively related to leverage ratio, donations, and organization size. Revenue diversification, however, shows a mixed relationship with operating reserves among different types of nonprofit indicating complexity in risk-reducing strategy. This study contributes to understanding factors relevant to the presence, or absence, of nonprofit operating reserves. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Public Budgeting Accounting & Financial Management Emerald Publishing

Financial factors that influence the size of nonprofit operating reserves

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References (34)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1096-3367
DOI
10.1108/JPBAFM-27-01-2015-B003
Publisher site
See Article on Publisher Site

Abstract

ABSTRACTAlthough operating reserves can aid nonprofit organizations in alleviating periods of fiscal stress, they are not widely used. This study examines organizational factors that impact the level of operating reserves in nonprofit organizations. It also explores the relationship of operating reserves with organizational demographics and financial health variables using a six-year (1998-2003) unbalanced panel regression model containing 460,437 observations. Findings demonstrate a positive relationship between operating reserves and administration ratio, profit margin, operating margin, and organization age. Conversely, the size of operating reserves is negatively related to leverage ratio, donations, and organization size. Revenue diversification, however, shows a mixed relationship with operating reserves among different types of nonprofit indicating complexity in risk-reducing strategy. This study contributes to understanding factors relevant to the presence, or absence, of nonprofit operating reserves.

Journal

Journal of Public Budgeting Accounting & Financial Management – Emerald Publishing

Published: Mar 1, 2015

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