Strategic Positioning and the Financing of Nonprofit Organizations: Is Efficiency Rewarded in the Contributions Marketplace?

33 Pages Posted: 12 Jan 2001

See all articles by Peter Frumkin

Peter Frumkin

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs

Mark T. Kim

Harvard University - Harvard Kennedy School (HKS)

Date Written: October 2000

Abstract

This article addresses the question of whether operational efficiency is recognized and rewarded by the private funders that support nonprofit organizations in fields ranging from education to social service to arts and beyond. Looking at the administrative efficiency and fundraising results of a large sample of nonprofit organizations over an 11 year period, we find that nonprofits that position themselves as cost efficient - reporting low administrative to total expense ratios - fared no better over time than less efficient appearing organizations in the market for individuals, foundations, and corporate contributions. From this analysis, we suggest that economizing may not always be the best strategy in the nonprofit sector.

Suggested Citation

Frumkin, Peter and Kim, Mark T., Strategic Positioning and the Financing of Nonprofit Organizations: Is Efficiency Rewarded in the Contributions Marketplace? (October 2000). Available at SSRN: https://ssrn.com/abstract=253115 or http://dx.doi.org/10.2139/ssrn.253115

Peter Frumkin (Contact Author)

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs ( email )

2300 Red River St., Stop E2700
PO Box Y
Austin, TX 78713
United States

Mark T. Kim

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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