Study Probes Nonprofit Financial Management Practices

(From Chronicle of Philanthropy) Traditionally, nonprofits are expected to adhere to specific financial management norms to appear trustworthy in the eyes of donors and other stakeholders. However, a new study out of The City University of New York suggests that charities following widely accepted norms for nonprofit financial management generally perform worse than those embracing alternative approaches. For example, conventional wisdom holds that fundraising costs should be as low as possible to avoid creating an impression that donor money is being wasted. However, the reluctance to spend on fundraising may result in less money being available to spend in the future.

The study analyzed data from 4,130 charities over three decades and is among several studies conducted in recent years that re-evaluate the conventional wisdom regarding how nonprofits should be run.

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