Affiliation:
1. Fudan University, Shanghai, China
2. Rutgers University–Newark, NJ, USA
Abstract
As government financing of nonprofit organizations to deliver services and implement policies has become a common practice in the public administration landscape, the question of what factors affect government’s source selection has emerged as a significant one. Within this strand of research, how nonprofits’ administrative costs affect their receipt of government contracts is still not fully understood. This article explores that relationship using a large panel data set of U.S.-based international development nonprofits from 1967 to 2014. Different model specifications consistently demonstrate an inverted U-shaped relationship between a nonprofit’s level of administrative costs and its amount of government contracts. In particular, as a nonprofit’s level of administrative costs increases, its amount of government contracts will initially increase, but after its level of administrative costs reaches approximately 16% to 18% of total expenses, further increases in the nonprofit’s level of administrative costs will reduce its amount of government contracts. These findings have implications for both public and nonprofit management.
Subject
Marketing,Public Administration,Sociology and Political Science
Cited by
5 articles.
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