Home Month Research Seminar - Balance Sheet Insolvency and Contribution Revenue in Public Charities

Research Seminar - Balance Sheet Insolvency and Contribution Revenue in Public Charities

Tuesday, April 23, 2019 - 12:00pm to 1:15pm
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Using Form 990 data reported by public charities, we document significant bunching of nonprofit organizations at near-zero net assets, the threshold for insolvency. Bunching occurs despite the fact that creditors cannot force nonprofit organizations into involuntary bankruptcy in the same manner as for-profits. We show that the extent of bunching is greater among organizations that rely more heavily on contribution revenue, and that bunching organizations are able to maintain contribution revenue by avoiding insolvency. Charitable donors appear to regard the net assets threshold as a salient reference point in their assessment of an organization's viability; nonprofit managers, in turn, respond to the reference dependence of their donors.

Presented by SPP Assistant Professor Luke Spreen

Location: 
1203 Van Munching Hall