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

Second Edition

Edited by Bruce A. Seaman and Dennis R. Young

Building on the success of the first edition, this thoroughly revised and expanded edition explores (1) areas of general agreement from previous research; (2) areas of conflicting results and unexplored questions; (3) the relative roles of theory, data availability and empirical analysis in explaining gaps in our knowledge; and (4) what must be done to improve our knowledge and extend the literature. Selected original chapters addressing especially challenging topics include the value of risk management to nonprofit decision-making; nonprofit wages theory and evidence; the valuation of volunteer labor; property tax exemption for nonprofits; when is competition good for the third sector; and product diversification and social enterprise; international perspectives; the application of experimental research and the macroeconomic effects of the nonprofit sector.
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Chapter 23: Nonprofit organizations and the macroeconomy

Richard Steinberg


This chapter explores interactions between aggregate economic variables (including income, GDP, wealth, economic growth rates, and income inequality) and the nonprofit sector (including revenues, costs, expenditures, entry, and exit). Nonprofit organizations probably affect macroeconomic variables, but very little is known about the size and direction of such effects. The largest problem in existing studies is that they do not clearly state their counterfactual assumptions about how other institutions would react to a reduction in the nonprofit role. More is known about the effect of the macroeconomy on the density and economic impact of nonprofits. Revenues and expenditures follow the business cycle, but the need for nonprofit services in some subsectors runs counter to the business cycle. This mismatch causes higher costs and service gaps, but is inherent in regulations, donor responses, and current nonprofit managerial cultures.

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