Sketching the Elephant – Using IRS Data to Investigate the Sensitivity of Nonprofit Organizations’ Donors to Efficiency Ratios

Document Type



The problem that we were trying to research was the effect on donations to non-profit organizations of certain reported financial information. Specifically, we examined the ratio of the administrative expenses to total expenses. I spent about a quarter of the time on background research of prior literature on the world of non-profit accounting, and the other three-fourths of my time was empirical work using statistical software to analyze large databases of regulatory reports. We identified two different prior studies on the impact of administrative ratios on donations. The two prior studies came to different conclusions. By replicating the studies on three different large data sets, and testing a variety of empirical models and sample specifications, we tried to reconcile the findings of these prior studies, and identify the possible reasons for their differing conclusions. We found that the relation between administrative ratios and donations is partially dependent upon certain characteristics of the organization. We also found that certain features of the empirical models affect the ability of researchers to detect the relation. The findings will be of interest to non-profit administrators and to future researchers in the field.

Information about the Student Author

Class of 2006, Major: Public Accounting

Summary of Research Experience

Before undertaking this project, I was oblivious to the process of accounting research. It was interesting to learn how to go about publishing an academic paper. It was a joy working with Professor Tinkelman. He was knowledgeable in the area of non-profit accounting and was always eager to answer my questions. I thoroughly learned from the process of researching, experimenting, and writing an accounting-based paper. It is no doubt because of my Eugene Lang research project that I was recognized recently as the outstanding undergraduate student in the Lubin School of Business at the 13th Annual Lubin Alumni Achievement Award Luncheon held December 2, 2005.

Dissemination of Results

We first presented our paper at the meeting of the government and nonprofit section of the American Accounting Association in April, at Harvard University’s Kennedy School of Government in Cambridge, Massachusetts. A revised version of the paper was accepted for presentation at the American Accounting Association Annual Meeting on August 8th in San Francisco as well as at the ARNOVA Annual Meetings, to be held in November in Washington, D.C. It was a joy to attend and speak at these professional meetings in Cambridge and San Francisco. Our paper has also been submitted for publication to the Nonprofit and Voluntary Sector Quarterly, the main interdisciplinary academic journal specifically devoted to nonprofit organizations.

Faculty Mentor

Daniel Tinkelman, Associate Professor of Accounting

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