TITLE:
An Investigation into the Efficacy of Nonprofit Organizations
AUTHORS:
Roshan Amble
KEYWORDS:
Nonprofit Efficiency, Nonprofit Management, 990 Form, Financial Correlations
JOURNAL NAME:
Open Journal of Business and Management,
Vol.11 No.3,
May
24,
2023
ABSTRACT: Many nonprofit organizations allocate their funds
inefficiently. Inefficient spending within a nonprofit organization diminishes
its ability to positively influence communities and causes. Prominent online
platforms like Charity Navigator, Charity Watch, and GuideStar exist to vet the
transparency, reliability, and efficacy of nonprofits around the world. Other
nonprofit researchers have also attempted to combine and compare multiple databases,
typically consisting of 990 forms and auditing reports, to evaluate the
accuracy of documentation and probabilities of fraud. I built a custom database
using all publicly available 990 forms available from the U.S. Internal Revenue
Service, sorted nonprofits on each scraped metric, and created correlation
matrix plots to establish cases of inefficiency through composite metrics.
These metrics were augmented to find general relations that could form a set of
financial protocols which will increase efficiency. I then used common economic
principles to deduce correlations across 40 variables. The inefficiencies
prevalent in the nonprofit industry are induced by certain economic principles
that pertain specifically to the nonprofit industry. When these metrics are
evaluated in correlation with each other, specific cases and possible solutions
to the inefficiencies faced by thousands of nonprofits emerge and can be
further analyzed.