Handbook of Research on Nonprofit Economics and Management
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Handbook of Research on Nonprofit Economics and Management

Edited by Bruce A. Seaman and Dennis R. Young

Nonprofit organizations are arguably the fastest growing and most dynamic part of modern market economies in democratic countries. This Handbook explores the frontiers of knowledge at the intersection of economics and the management of these entities. The authors review the role, structure and behavior of private, nonprofit organizations as economic units and their participation in markets and systems of public service delivery, assess the implications of this knowledge for the efficient management of nonprofit organizations and the formulation of effective public policy, and identify cutting edge questions for future research.
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Chapter 2: Revenue Interactions: Crowding Out, Crowding In, Or Neither?

Daniel Tinkelman


Daniel Tinkelman Introduction Nonprofit organizations in the USA receive money from a variety of sources. According to Chang and Tuckman (1994), in 1986 fewer than 6 percent of all nonprofit organizations had only one revenue source. According to the National Center for Charitable Statistics (NCCS) (2008) data on nonprofit filings with the IRS, in 2004 US nonprofit organizations reported receiving more than $1.1 trillion in total revenues. Program revenues comprised 71 percent of the total. Donations and government grants accounted for 23 percent, and such other sources of income as rentals and sales of securities accounted for the remaining 6 percent. Private donations are only a part of the 23 percent figure, which also contains government grants. NCCS data for 1998 to 2000 help us understand the relative importance of private donations and government grants; private donations amounted to 8 percent of total revenues, and government grants represented 11 percent (Horne, 2005). Thus the primary support of the nonprofit sector comes from program revenues. The program revenues include substantial government support for the services provided by nonprofit organizations, through such government programs as scholarships to college students and Medicare and Medicaid payments for health care. The composition of the nonprofit revenue stream varies widely across types of nonprofit organizations. Horne (2005, p. 28) notes that while government grants and contracts only comprised 1 percent of the revenues of the religion sector, they accounted for 53 percent of those of the crime-related nonprofit organizations. Hospitals in his sample derived less than...

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