Article Accepted.

To appear in forthcoming edition of the

journal: NONPROFIT AND VOLUNTARY SECTOR
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Community variation in the financial health of nonprofit human service organizations: An

examination of organizational and contextual effects

Marcus Lam
Columbia University
School of Social Work

Lindsey McDougle
Rutgers University-Newark
School of Public Affairs and Administration

ABSTRCT
Nonprofit human service organizations (HSO) provide vital services to communities. Yet
studies show that the density of these nonprofits varies from one community to the next. Studies
also show that there are often fewer quantities of these nonprofits located in vulnerable
communities. Findings such as these have led to concerns regarding the ability of nonprofit HSO
to meet community needs. However, in this article, we posit that organizational density is a
limited indicator of the sectors ability to provide services, and suggest that financial health is a
more relevant indicator. We model six measures of financial capacity and sustainability as
conceptualized by Bowman (2011) and examine relationships between these measures to
indicators of community vulnerability. Results indicate that variation exists in four of our six
outcome measures (equity ratio, months of spending, mark up, and months of liquidity), and that
contextual effects (e.g., being located in a minority or low-mobility community) partially explain
these variances.

Nonprofit human service organizations (HSO) have a considerable responsibility for

maintaining Americas social safety net. In many communities, these nonprofits are one of the
primary vehicles for implementing and administering social and welfare programming intended
to promote economic stability and upward mobility among vulnerable populations (Allard, 2009;
Lam et al., 2013; Lam & Grusky, 2015). Despite their importance to communities, the density of
nonprofit HSO tends to differ significantly from one community to the next. While one might
expect to find more nonprofit HSO located in high poverty neighborhoods (given their
orientation to serve the poor) research suggests that these nonprofits are often less prevalent in
low-income areas (Allard, 2009; Grnbjerg & Paarlberg, 2001; Joassart-Marcelli & Wolch,
2003) and are more likely to locate in areas with higher public expenditures or a higher density
of similar organizations (Gronbjerg & Paalberg, 1994; Bielefed & Murdoch, 2004).
Although an understanding of variation in locational dynamics of HSO (and the factors
that influence such variation) is certainly important, few studies have examined whether
community variation exists in the financial health of these organizations. Yet, financial health is
a fundamental requirement for organizational stability, as it allows organizations to operate more
effectively (Bowman, 2011; Calabrese, 2013; DeVita & Fleming, 2001). Indeed, service
provision comprises more than just merely existing; and, to simply know that an organization
exists is no indication of service delivery capability (Marwell & Gullickson, 2013). It has long
been recognized that a critical component of effective service delivery is the proper management
of financial resources (Lohmann, 1980). Therefore, it may be possible that a small handful of
well managed and financially secure nonprofit HSO will be more effective at providing services
in a community than a large number of financially vulnerable nonprofits. Thus, the purpose of
this study is to contribute to the literature on nonprofit geography by addressing the following

two research questions: (1) Is there community variation in the financial health of nonprofit
HSO? (2) If variation does exist, to what extent is this variation explained by either
organizational (for example, assets, age, and revenue structure) or community-level differences
(for example, differences in resources and demand for services based on organizational
location)?
We operationalize our organizational outcome of interestfinancial healthusing
Bowmans (2011) six measures of financial capacity and sustainability. Together, the six
measures capture what Bowman considers to be the three broad objectives of nonprofit financial
health. Specifically, the long-term financial objective is to maintain programs and services and is
measured by the equity ratio (ER) and return on assets (RA); the short-term objective is to
maintain resiliency to sudden shocks in the resource and funding environment and is measured
by months of spending (MS) and mark up (MU); and the current-term objective relates to the
ability of an organization to pay bills on time and is measured by months of liquidity (ML) and
change in months of liquidity (CML).
Background Literature
The density of nonprofit organizations often differs significantly from one community to
the next (Allard, 2009; Grnbjerg & Paarlberg, 2001; Jossart-Marcelli & Wolch, 2003). More
affluent communities often have ample nonprofit resources and highly diverse nonprofit
landscapes (Bielefeld, 2000; Wolch & Geiger, 1983; Wolpert 1993), while lower-income
communities often have fewer nonprofits and civic institutions (Grnbjerg & Paarlberg, 2001;
Joassart-Marcelli & Wolch, 2003). In many areas these differences have resulted in unequal
access to nonprofit services for those in need, particularly for those residing in low-income
communities. Allard (2009), for instance, found that relatively high poverty neighborhoods had

fewer quantities of nonprofit social service providers and that individuals residing in these
neighborhoods had limited access to the providers in their communities.
Although findings such as this certainly raise concerns regarding the density of nonprofits
in low-income communities, the mere presence of nonprofits tells us little about the ability that
these organizations have to effectively act as service providers. In fact, Marwell and Gullickson
(2012) examined the distribution of government contracts across New York City, and reasoned
that the actual number of government dollars allocated within a given neighborhood is a
better measure of service availability than the existence or number of NPOs in that
neighborhood (p. 325). Following this line of reasoning we posit that more so than examining
access to, or even the availability of, organizations in a given community, the management of
financial resources will be a more critical component of effective service delivery in determining
an organizations capacity to serve its community (Bowman, 2011; Lohman, 1980; Finkler,
Purtell, Calabrese, & Smith, 2013).
Financial management can be defined as a set of inter-related activities that plan for,
control, appropriate, and report on the use of resources (usually monetary) to advance
organizational goals (Finkler et al., 2013; Lohmann, 1980; Sanchez-Myers, 2008). Financial
management includes many functions, such as resource acquisition, allocation, and reporting that
are critical to maintaining an organizations financial health (Sanchez-Myers, 2008). Other
functions include having adequate liquidity to respond to unexpected contingencies, or
maintaining long-term solvency by not incurring large amounts of debt relative to assets.
Without adequate financial resources through proper financial management, nonprofit HSO are
strained, both, in their ability to meet the needs of socially and economically vulnerable
populations (Reed, Lally, & Quiett, 2003) and to survive economic shocks or disruptions in

revenue streams (Bowman, 2011). A lack of adequate financial resources can also lead to
financial bankruptcy (Clemenson & Sellers, 2013)which could ultimately end the supply of
critically needed services to many communities.
It is, therefore, important that we understand the extent to which geographic variation
exists in the financial health of nonprofit HSO particularly given the important role they play
in service provision to vulnerable communities. Despite this importance, few studies have
examined contextual explanations for variation in nonprofit financial health. The existing
research on nonprofit financial health and performance has generally focused on using
organizational-level variables (e.g., revenue concentration, debt levels, administrative expenses,
or percentage of public funding) to predict amounts of nonprofit operating reserves (Calabrese,
2013), measures of financial vulnerability (Tuckman & Chang, 1991), or nonprofit failure rates
(Hager, 2001; Walker & McCarthy, 2010). Marwell & Gullicksons (2013) study on the spatial
allocation of government contracts in New York City is the exception but does not explore
variability in nonprofit financial health explicitly. In this study, they find partial evidence that
government dollars are distributed to nonprofits that service neighborhoods most in need.
Factors Influencing Variation in Nonprofit Financial Health
To understand why there may (or may not) be community variation in nonprofit financial
health, we draw broadly from the organizational ecology literature. This body of literature
highlights the effects of environmental factors on organizational outcomes such as organizational
survival (Walker & McCarthy, 2010) or organizational processes such as strategy formulation
(Hillman, Withers, & Collins, 2009). In particular, Walker and McCarthy (2010) argue that
community based organizations (CBOs) located in resource-deprived local environments
operate in a vicious cycle in which resources required for survival are often lacking. CBOs

therefore, must devote more efforts to grassroots fundraising or building extra-local institutional
legitimacy to survive (Walker & McCarthy, 2010). In short, organizations are affected by
elements of their external environment and must engage in reciprocal transactions with this
environment in order to operate effectively (Walker & McCarthy, 2010; Hillman et al., 2009).
The boundaries of this external environment, however, are relative to the specific
activities that these organizations engage in. For example, service and program activities (which
are often more localized and specialized) will generally have a smaller geographic boundary than
fundraising and revenue generating activities (which often extend far beyond an organizations
area of operation). Bielefeld, Murdoch, and Waddell (1997), for example, found the highest
concentration of nonprofit organizations located within a one-mile radius of block groups with
high minority populations, average age, and ethnic heterogeneity. The concentration of
nonprofits decreased as the geographic boundary extended to a three- and five-mile radius. They
concluded, therefore, that ...distance is an important factor in nonprofit activity (p. 217).
Interestingly, Bielefeld, Murdoch, and Waddell (1997) also found a higher concentration
of nonprofits located within a one-mile radius of areas that had higher average per capita income
values. This, they argued, suggested that nonprofits may also desireto be closest to the
people most likely to contribute to the organization or to pay for services (p. 217). There exists
additional empirical support for the idea that nonprofits locate in resource-rich areas where
access to capital is more abundant rather than in economically distressed areas (see for example,
Zakour & Gillespie, 1998; Marsh, 1995; Bielefeld, 2000; Esparza, 2009; for exceptions,
however, see Corbin, 1999).
One question that arises from the observation that nonprofits tend to select into particular
types of environments is whether the neighborhood environment is associated with nonprofit

financial health. Local conditions may affect financial health in two important ways. First,
nonprofit HSO located in vulnerable communities may serve clients who have limited economic
resources, but who also have higher service needs. This may lead to higher program costs for
these organizations. Secondly, human services nonprofits serving vulnerable communities may
have higher fundraising expenses given that fee income, or other income generating activities,
from clients with limited economic resources may be difficult to sustain. Thus, higher overall
expenses may lead to lower net assets and lower long-term financial capacity and sustainability.
We, therefore, propose the following two hypotheses:

H1: Spatial variation in the financial health of human services nonprofits can
largely be explained by neighborhood attributes, and

H2: Human services nonprofits located in vulnerable communities will have lower
financial health compared to those not located in vulnerable communitiesthat
is, financial health will be negatively correlated with measures of community
vulnerability.
Overview of Study Site

This study focuses on the financial health of human services nonprofits across ZIP codes
in San Diego County, California.1 San Diego is an area highly variable in several dimensions
believed to influence nonprofit functioning (see for instance, Bielefeld, 2000; Bielefeld &
Murdoch, 2004). Indeed, Bielefeld (2000) found that although San Diego has considerably more
amenity-type nonprofits (e.g., arts, cultural, and educational nonprofits) than other areas, it is a
region that directs a relatively large percentage of gifts and grants to nonprofit human services
providerspotentially an indication of the extent to which human services nonprofits in the
county are relied upon to meet a variety of social and welfare needs.

Data and Methods

Sample
The financial health data used in this study was drawn from IRS Form 990, which
contains self-reported financial data on nonprofit operations (such as balance sheets, operating
statements, and statements of functional expenses). We focus on 501(c)(3) nonprofits classified
by the National Taxonomy for Exempt Entities (NTEE) as engaging in the following primary
activities: crime and legal; employment and job; food, agriculture, and nutrition; housing and
shelter; human servicemultipurpose; public safety; recreation, sports, leisure, and athletics;
and youth development.
We purchased organizational-level datasets from the National Center for Charitable
Statistics (NCCS) for nonprofit HSO in San Diego County for fiscal years 2005, 2006, and 2007.
The combined sample for all three years was 2,343 organizations. We followed data cleaning
procedures outlined in Bowman, Tuckman, and Young (2012). In particular, we excluded group
filers, 990EZ filers, non-accrual accounting method filers, non-SFAS 117 filers, and non-active
organizations.2 We also excluded nonprofits without three years of data.3 Finally, we excluded
nonprofits with values on the dependent variables outside of a relevant range. Specifically, these
included nonprofits with equity ratios (net assets/total assets) above one).4 Our final sample
included 222 human services nonprofits for the three fiscal years under study.
Address Confirmation and Identification of Satellite Location
To confirm the address of each organization (as reported on the organizations Form 990)
and to identify all associated service branches and satellite locations, we conducted a verification
process, which occurred from June to August 2010. Verification methods consisted of queries of

several sourcesincluding organizational websites (if available), Guidestar listings, local public
directories, and other administrative data sources (such as the California Secretary of States
registry of charitable organizations, and the California Department of Public Health). Upon
verification, if ZIP code information listed on the (original) Form 990 was incorrect (or missing),
the information was corrected. When location information on the Form 990 differed from
information provided by any of these sources the nonprofit was contacted directly. Deference
was given to information provided by the contact, as it was assumed that an individual currently
working for (or, volunteering with) a nonprofit would provide more accurate information.
Using these same methods, attempts were also made to identify nonprofits with multiple
service locations. Of the 222 nonprofit HSO in our sample, twenty-three were identified as
having satellite offices.5 The ZIP codes for each satellite location was identified using the same
procedures outlined above to confirm organizational addresses.
To incorporate demographic data from the ZIP codes of satellite offices into our model,
we calculated the weighted average of demographic indicators based on the number of satellite
offices in each respective ZIP code. For example, if an organizations Form 990 address was in
ZIP code 90001where 30% of the households were in povertyand had two satellite offices
located in ZIP code 90002where 60% of the households were in povertyand also had one
satellite office located in ZIP code 90003where 10% of the households were in povertythen
the value for households in poverty used for this organization was a weighted average calculated
as (.30+.60+.60+.10)/4=.40. We then created a new ZIP code identifier for each organization
with satellite offices where demographic indicators were averaged. This artificially increased the
number of ZIP codes from 66 (without incorporating service locations) to 85 (by incorporating
service locations).

Dependent Variables
We operationalized financial health using six measures of financial capacity and
sustainability suggested by Bowman (2011). These six measures are organized into three
categories: long-term, short-term, and current-term financial objectives (Table 1). The six
financial health measures were first calculated separately for each fiscal year, and then averaged
across the three years (2005-2007). The final averaged values were used as our outcome
variable(s).
<<Table 1>>
Long-Term Financial Health. Long-term financial capacity was measured by the equity
ratio (ER). A low ER indicates that creditors have claim to a high proportion of an organizations
assets, and that the organization has limited financial capacity. Long-term financial sustainability
was measured by the return on assets (RA). Negative values indicate that an organization is not
covering its expenses. Low positive values indicate that an organization is only marginally
covering its expenses.
Short-Term Financial Health. Short-term financial capacity was measured by months
of spending (MS)also referred to as unrestricted operating reserves. Short-term financial
sustainability was measured by mark up (MU). Positive values on this measure indicate that an
organization is maintaining or building reserves. High and negative values indicate that an
organization is depleting reserves. An adequate MU percentage depends on an organizations
assets and is measured by the status quo mark up (SQMU). Thus, an organization with large
assets will require larger reserves in order to meet asset replacement and repair needs (Bowman,
2011).

10

Current-Term Financial Health. Current-term financial capacity was measured by

months of liquidity (ML). In general, an organization should maintain between one to two ML
(Bowman, 2011). Current term financial sustainability was measured by the change in ML and
was calculated as the difference between the end of year ML and the beginning of year ML,
divided by spending on operations.
Independent Variables
Community Vulnerability. Measures of community vulnerability were obtained from
San Diego Association of Government (SANDAG), and included indicators used to identify
communities of concern in the San Diego region. As described by SANDAG, communities of
concern are vulnerable or disadvantaged areas of the county that require greater attention and
resources in order to promote social equity and environmental justice. These include: (1) lowincome, (2) minority, (3) low-mobility, and (4) low-engagement communities.
Low-income communities are those where 33% or more of households in the area have
an annual income of less than $30,000.6 Minority communities are those where 65% or more of
the population is non-White. Low-mobility communities are those where 25% or more of
households in the area have no automobile available for immediate use, and/or 25% or more of
the population is disabled, and/or 20% or more of the population is aged seventy-five or older.
Finally, low engagement communities are those where 20% or more of households in the area do
not speak English as a primary language, and/or 20% or more of the population in the area is
aged twenty-five and older has less than a high school education. The data used to generate each
of these four community types was obtained from SANDAG annual population estimates for
2005, 2006, and 2007, as well as the 2000 US Census of the population. Each community

11

indicator was collapsed into a dichotomous variable. Descriptive statistics for these variables are
presented in Table 2.7
Organizational-Level Covariates. We controlled for several organizational-level
covariates. First, older and larger organizations are more likely to have greater financial stability
(Hager, Galaskiewicz, Bielefeld, & Pins, 1996). Therefore, we controlled for organizational age,
organizational assets, and presence of an endowment. Organizational age was measured in years
from the date when the organization first received its 501(c)(3) tax-exempt status through
January 1, 2008. Organizational assets were calculated as the log of the dollar value of the
organizations current and non-current term assets. Presence of an endowment was measured as a
dichotomous variable. We also controlled for revenue concentration given that organizations
with higher revenue diversity are likely to have greater sophistication in securing and managing
their finances (Carroll & Stater, 2009).
Analysis Procedure
Given the nested structure of our data (organizations nested within ZIP codes) we use a
two level random intercept model to determine the degree of variance in our outcome variables
attributable to differences at the organizational level (age, assets, and endowments), and the
variation attributable to differences based on where the organization is located (ZIP code level
variables). Although ZIP codes are demographically diverse geographic areas, within these areas
service needs as well as resource capacities may be similar and affect organizational operations
in a similar manner. Therefore, it is reasonable to expect that some of the variance in our
outcome variables will result from effects due to ZIP code level characteristics (in addition to
organizational characteristics).

12

We estimated a two-level random intercepts model for each outcome variable. Random
intercept models, also referred to as multilevel models, are appropriate for nested data. One of
the hallmarks of these models is to partition the residual term into within group (i.e.,
organizations clustered within ZIP codes or level 1) and between group (i.e., between ZIP
codes or level 2) variance (see Raudenbush & Bryk, 2002; Seltzer, 1994; Diez-Roux, 2000).
Thus, each ZIP code will have a unique intercept value based on the ZIP code residual or random
effects estimate.
Random intercept models account for within group dependence of the error estimates
rather than assume independence of errors, as in OLS regression and thus more accurately
estimate standard errors (Raudenbush & Bryk, 2002; and Seltzer, 1994). We estimate the
following mixed model:
Yij=+ B1(X1ij)++Bm(Xmij)+ 01jX01j+njXnj +(Uj+rij)
rij~N(O,2)
Uj~N(0,)
Where =average value of outcome after controlling for model covariates; B=organizational
level covariates; =ZIP code level covariates; r=organizational level residual within ZIP codes;
U=ZIP code level residual; =variance of U; 2=variance of r (Seltzer, 1994; Raudenbush &
Bryk, 2002).
Given that our outcome variables are measured in different metrics (the ER, RA, MU,
and CML are proportions while the MS and ML are counts) we collapse the variables into
quintiles and model them as ordinal. In doing so, we are able to employ a linear regression
approach for our multilevel models (rather than a Poisson regression for the count variables or a

13

specialized regression approach for the proportions) and treat the outcome as quintiles for ease of
interpretation.8
All organizational-level covariates (at level 1) were grand mean centered.9 Analyses were
conducted using the xtmixed command with robust standard errors in Stata (v.12). Results were
confirmed with the HLM software package.
Results
Summary Statistics
Table 2 provides summary statistics for each of the variables used in the analysis. Each
quintile contains approximately twenty percent of the sample (or, 44 observations). Values of
each outcome variable are presented by quintile (20th, 40th, 60th, 80th, and maximum) along with
minimum and median (the fifty percent percentile) values.
For our organizational-level covariates, Table 2 shows that on average human services
nonprofits in our sample were approximately 22.5 years of age at the end of fiscal year 2007.
The organizations also had on average of seventy-two percent of revenue concentrated in one
source, and had assets of about $5.66 million. Approximately eleven percent of our sample was
presumptively endowed.10 Finally, Table 2 also shows summary statistics for our four predictors
assessing community vulnerability. These statistics indicate that of the 85 ZIP codes identified in
this study, 48% were low-income communities; 12% were minority communities; 5% were low
mobility communities; and 33% percent were low engagement communities.
<<Table 2>>
In Table 3 we include a correlation matrix with all covariates and dependent variables in
our model. As shown, there are no significant correlations among the covariates.
<<Table 3>>

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Multivariate Findings
Given that the outcomes are expressed in quintiles, we converted their values to
percentage points by multiplying the coefficients in the results tables (Tables 5-8) by 20.
Variance Estimates. We first present estimates of the between ZIP code () and within
ZIP code (2) variance from the unconditional models and estimates of the Intraclass Correlation
(ICC) (Table 4). An ICC value of .04 would suggest that approximately 4% of the total variance
is explained by ZIP code level differences. This would indicate that if one theoretically
controlled for all organizational level covariates, there would remain approximately 4% residual
variance due to ZIP code level effects (such as higher demand for services, or shared resources
or management practices).
Given that organizations within one ZIP code may have shared experiences due to ZIP
code level effects, they will be more alike than organizations clustered in a different ZIP code.
Thus, the ICC can also be thought of as the correlation among units within the same group
(Gelman & Hill, 2007, p. 448). While there is no explicit rule to determine when an ICC is large
enough to warrant a multilevel modeling approach, a value less than .05 can be considered small
and the degree of clustering negligible (Raykov, 2013). Even for these small ICC values,
however, a multilevel modeling approach is appropriate if contextual effects are of substantive
interest to the researcher (Raykov, 2013). Thus, we consider any non-zero ICC value of
importance and have modeled all of our outcome variables accordingly.
The results in Table 4 indicate some degree of clustering (or between ZIP code variance)
for the ER, MOS, MU, and ML with respective ICC estimates of 0.04, 0.10, 0.08, and 0.11. The
RA and CML outcome variables have ICC estimates of zero indicating that all of the variance is
explained at the organizational level (i.e., there is no ZIP code clustering effect).11

15

<<Table 4>>
Long-Term Financial Capacity: Equity Ratio (ER). Table 5 presents the results of the
additive models for the ER. Controlling for organizational variables did not reduce the
magnitude of the ICC (Model 5b). More importantly, however, adding neighborhood measures
all but eliminated between neighborhood variance (ICC=0.01) (Model 5c). Adding both
organizational and ZIP code covariates reduced the ICC to zero (Model 5d).
Significant predictors of ER (in model 1) included revenue concentration, minority, lowengagement, and low-mobility communities. Specifically, a one-unit increase in the revenue
concentration index (RCI) corresponded to a -2.62 quintile decrease in ER. Converting this
coefficient to a percentile corresponded to a 52 percentile (-2.62*20=-52.4) decrease for a oneunit increase in revenue concentration. Interpreting this in terms of the actual values of ER
indicates that for an organization in the 80th percentile, with ER of 0.92 (see Table 2), a one unit
increase in the RCI would correspond to a decrease in ER to the 28th percentile and an ER of
0.27, while holding all other covariates in the model constant.
Organizations located in minority communities are expected to have ER values
approximately one-quintile lower; and nonprofits in low engagement and low-mobility
communities are expected to have ER values 0.52 quintiles and 0.39 quintiles higher,
respectively.
<<Table 5>>
Short-Term Financial Capacity: Months of Spending (MS). For MS (Table 6),
organizational covariates did not reduce the ICC (Model 6b). ZIP code level covariates reduced
the ICC to 0.09 (Model 6c), and adding both organizational and ZIP code covariates reduced the
ICC to 0.08 (Model 6d).

16

Endowed organizations were 23 percentiles higher (1.15*20=23)corresponding to a

MS value of 1.9 (50th percentile) for a non-endowed organization compared to 4.8 (73rd
percentile) for an endowed organization. A one-unit increase in the revenue concentration index
corresponded to a 19 percentile decrease (-0.96*20= -19.2)moving from 1.9 (50th percentile)
to 0.74 (31st percentile). A one-unit increase in the log of assets corresponded to a threepercentile increase (0.17*20=3.4), moving from 1.9 (50th percentile) to 2.4 (53rd percentile).
Organizations located in low-mobility communities were predicted to be 15 percentiles higher.
This implies a difference of 1.6 in MS (50th percentile = 1.98 vs 65th percentile=3.6).
<<Table 6>>
Short-Term Financial Sustainability: Mark Up (MU). For MU (Table 7),
organizational covariates reduced the ICC from 0.08 to 0.04 (Model 7b). ZIP code level
covariates reduced the ICC to 0.07 from the conditional model (Model 7c), and adding both
organizational and ZIP code level predictors reduced the ICC to 0.03 (Model 7d).
The endowment, revenue concentration, and log of assets values were all significant.
Endowed organizations were 19 percentiles lower (-0.96*20=-19.2). This implies a difference of
4% for non-endowed (50th percentile=0.04) vs. endowed organizations (31st percentile=0.001).
A one-unit increase in the RCI corresponded to a 25 percentile decrease (1.27*20=25.4)
moving from 0.04 (at the 50th percentile) to -0.01 (25th percentile). A one-unit increase in the log
of assets corresponded to a five-percentile increase (0.23*20=4.6)moving from 0.04 (50th
percentile) to 0.06 (55th percentile).
<<Table 7>>
Current-Term Financial Capacity: Months of Liquidity (ML). For ML (Table 8),
organizational covariates did not decrease the ICC (Model 8a). Adding ZIP code level covariates

17

reduced the ICC to 0.09 (Model 8b), and adding both organizational and ZIP code level
covariates reduced the ICC to 0.10 from the unconditional model (Model 8c). Finally,
organizations in minority communities were 21 percentiles lower (-1.03*20=-20.6) on ML. This
implies a difference of 1.4 ML less for organizations in minority communities (50th percentile=1
vs. 71st percentile=2.14).
<<Table 8>>
Discussion
First, we discuss findings relating to variation in the financial health of nonprofit HSO.
Next, we discuss findings relating to the financial health of nonprofit HSO and measures of
community vulnerability.
Variation in Financial Health
Our first research hypothesis stated that a portion of the variation in financial health could
be explained by where organizations were locatedthat is, contextual or ZIP code level factors.
The results for the MOS and MU outcome measures support this hypothesis; the results for the
ER and ML partially support this hypothesis; and results for the RA and CML do not support this
hypothesis.
For the MS, the interceptinterpreted as the predicted MS of an organization at the
average values of organizational level covariates and not located in a community of concern
was 2.94 or approximately the third quintile, corresponding to a MS of two months (Table 6). A
MS of two months is close to the national median value for nonprofit HSO (Bowman, 2011,
p.92). However, this average intercept value varies by about 0.35 standard deviations (square
root of =0.121, Table 6) or nearly a 14-percentile difference across ZIP codes. In other words,
communities are served by nonprofits that have different short-term capacities with a difference

18

of about 1.6 months (50th percentile versus 64th percentile). As will be discussed in detail below,
this difference can be partially explained by the location effect of being in a low mobility
community in addition to organizational level differences.
For the ML, the intercept of 2.93 was also at approximately the third quintile
corresponding to a value of 1.5 months (Model 8c, Table 8). This is slightly lower than the
national median of 1.9 for human services nonprofits (Bowman, 2011, p. 92). However, as with
the MS, this intercept value varied by about 0.44 standard deviations (square root of =0.192) or
18-percentiles across ZIP codes. In other words, communities are served by human services
organizations that have differing current term capacities with a difference of about 1.2 months
(50th percentile=1 versus 68th percentile=2.16). And this difference can be partially be explained
by the location effect of being in a minority community.
Finally, the MU intercept of 2.96 was estimated to vary by about 0.22 standard deviations
(square root of =0.49, Table 7) or by nine percentiles across ZIP codes. This is a difference of
about 0.03 (50th percentile=0.04 versus 59th percentile=0.07). It should be noted, however, that
the adequacy of this value depends on the amount of an organizations hard assets (e.g., land and
buildings) (Bowman, 2011). More hard assets require greater reserves for maintenance and
replacement. This amount is captured in the status quo mark up covariate in model 4 (Table 4).
The status quo mark up covariate is not significantly related to MU, indicating that MU values
are not tied to the organizations hard assets. This is not a surprising finding but may leave the
organization in a precarious financial situation when maintenance or replacement of hard assets
becomes necessary.
For the ER, the small ICC estimate from the unconditional model (ICC=0.043, Table 5,
Model 5a) suggests that the clustering effect may be negligible. Once organizational and ZIP

19

code variables are accounted for, there remains no variance between neighborhoods (Table 5,
Model 5d) and the remaining variance (sigma=1.617) is at the organizational level. Thus the
significance of the ZIP code variablesminority, low mobility, and low engagement
communitiesshould be interpreted with caution. While there maybe some ZIP code level
effects, such as being located in a minority community, it is likely that the organizational level
factors account for most of this variance.
Financial Capacity, Sustainability, and Community Vulnerability
Our second research hypothesis stated that community variation in the financial health of
human services nonprofits would be negatively correlated with measures of community
vulnerability. Our findings indicated that two of our four communities of concern variables were
significantly associated with our financial health outcome measures. Specifically, human
services nonprofits located in minority communities were, as expected, predicted to be on
average about one-quintile (or 20 percentiles) lower on the ML measure. There was 1.2 fewer
months of liquidity for nonprofit HSO located in minority communities (i.e., 60th percentile=1.54
vs. 40th percentile=0.38, see Table 2 for ML). However, a small reduction in the ICC, from 0.11
(Model 8a) to 0.10 (Model 8c), suggests that there may also be organizational effects driving this
difference. Thus, this finding should also be interpreted with caution.
The low mobility community covariate was significantly associated with the MS, but in
the opposite direction than expected. In particular, nonprofit HSO located in low-mobility
communities were on average about 0.76 quintiles (or, 15 percentiles) higher on the MS,
compared to those not located in low-mobility communities. This suggests nonprofit HSO
located in low-mobility communities are expected to have 1.6 more MS (50th percentile=1.98 vs.
65th percentile=3.6, see Table 2 for MS).

20

Organizational Covariates
Of the organizational covariates, endowed nonprofits were predicted to have higher MS
(23 percentiles=1.15*20), but lower MU values (-19 percentiles=-0.96*20). The higher MS value
is not surprising given that, in general, endowed nonprofits tend to have more assets and
therefore more short-term capacity. However, the negative coefficient for MU is unexpected and
suggests that this particular sample of endowed nonprofits may have higher expenses related to
ownership of their assets and thus not increasing their unrestricted net assets enough to cover
expenses. This conclusion is supported by the non-significant findings between status quo
markup and MU (Table 7).
Organizational assets were also significantly related to MS and MU in the expected
direction, albeit with somewhat small effects0.17 quintiles or about three percentiles for MS
and 0.23 quintiles or about five percentiles for MU.
Finally, higher revenue concentration was negatively associated with ER, MS, and MU.
For those who argue that less revenue concentration is preferred, our finding may not come as a
surprise. A common notion is that high revenue concentrationrelying on just one or two
revenue sourcesis to be avoided as it leaves the organization heavily dependent on the
circumstances of a few funders. Similar to investment portfolios, revenue diversification is
preferred and allows the organization to mitigate the risk of revenue fluctuations. However, it is
far from conclusive that universally, lower revenue concentration is better. Rather, there may be
distinctive revenue portfolios for each nonprofit based on its mission and funding environment
(Foster & Fine, 2007). Thus, while we find a negative correlation between three of our outcomes
and the RCI, this may not lead to financial vulnerability.
Implications

21

Can variation in financial health be explained by where a nonprofit HSO is located? For
the short term (MS), and current term (ML) capacity measures, the answer appears to be yes.
This has implications for nonprofit HSO as well as for the communities in which they serve.
Bowman, 2011 describes current term capacity as the amount of liquid working capital required
to pay current bills. We estimate that human services nonprofits located in minority communities
may have 1.2 months lower current term capacity. The reality of nonprofit financial management
is that it often operates on a current term basis, often not having adequate reserves or savings in
case of an emergency or to weather a disruption in funding. This is not unlike vulnerable families
struggling on the fringes of poverty. As the former executive director of the iconic Hull House in
Chicago noted prior to its declaration of bankruptcy in 2012, we are very used to socialservice agencies being always on the brink of destructionSome of the board members didnt
get the idea of living on the edge. They were coming out of an economy where, if your house is
under water, you walk away from it. The fact is, some of us had learned to breathe under water,
and they didnt understand that (Clemenson & Sellers, 2013, p. 256). Thus a 1.2-month
difference in liquidity can mean the difference between an organization closing its doors or
operating through the next month. For low mobility communities, on the other hand, nonprofit
HSO appear to be more financially robust with, on average, 1.6 more MS.
With these considerations in mind, philanthropic and government funders should
encourage minimum reserve requirements (e.g., three months of liquid net assets) acquired
through annual surpluses rather than operating at a deficit or a strictly break-even point.12
Nonprofit organizations are, after all, businesses and in order for these organizations to grow and
expand their services requires them to have enough capital reserves to make investments or
subsidize services to a larger pool of vulnerable clientele. Given both the difficulty and stigma

22

associated with building capital reserves (Calabrese, 2013), though, it is wise for funders to
encourage human services nonprofits to operate with annual surpluses in order to accumulate
reserve funds.
The negative association between ML and minority communities also supports earlier
research by Joassart-Marcelli and Wolch (2003) who found that the extent of poverty in many
low-income areas of southern California often led to severely resource-deprived human service
agencies; and that this, in turn, led to lower program expenditures and to lower quality services.
Limitations
One limitation of this research stems from the use of IRS Form 990 data. While the selfreported nature of Form 990 can lead to over or under reporting of financial metrics, it is
nevertheless acceptable and comparable to audited financial statements (Froelich, Knoepfle, &
Pollack, 2000). Another limitation is the use of ZIP codes as our definition of community. ZIP
codes range in geographical size. Therefore, the service area of human services nonprofits
located in smaller ZIP codes may have different effects on organizations compared to those
located in larger ZIP codes.
Our focus on just San Diego County also presents a limitation. While it has a diverse
nonprofit sector, San Diego County may not be representative of other counties in the United
States, thus we are limited in the generalizability of our findings. We did find, however, that on
average, the capacity measures (ER, MS, and ML) for human services nonprofits in San Diego
not located in a community of concern, are comparable to national median values.
Due to data availability, we also did not control for other community level attributes such
as levels of social capital, political participation and ideology, or levels of volunteerismall of
which may affect the amount and types of resources available to human service nonprofits in a

23

given community. Moreover, other types of organizational resources were not taken into
consideration that may affect financial health. For example, human service nonprofits may draw
from a variety of non-monetary resources such as volunteer labor, in kind donations, and the
strength of the governing boards networks. Another limitation is in the use of the NTEE
classification system. While we use the primary human service category (P), which captures the
broadest group of organizations, this may nevertheless leave out organizations that provide
human service as a secondary rather than a primary activity. We also did not consider the impact
of our financial health measures on organizational survivability and only compare our predicted
values to national medians as reported in Bowman (2011). Thus, we cannot say definitively that
low measures on any of the outcomes leads to organizational closures. Our study also focused on
the three years (2005-2007) just prior to the recession of 2008, which may account for the
relative financial stability of our six outcome measures. Undoubtedly, examining the three years
during and after the recession would paint a much different financial picture.
Directions for Future Research
We follow Marwell and Gullicksons (2013) reasoning that simply focusing on the
geographical distribution of the number of nonprofits paints only a partial picture of the ability of
nonprofits to serve their communities. In this study, we have attempted to delve deeper, to
investigate more nuanced measures of financial capacity and sustainability as well as links to
measures of community vulnerability. Our findings offer partial support to previous studies
which have shown that nonprofits located in areas with greater vulnerability and thus fewer
resources, tend to reflect the conditions of the community (i.e., battered agencies) (Reed, Lally,
& Quiett, 2003).

24

Our study is just a first step, however, analyzing the three years just prior to the Great
Recession of 2008. A follow up study can be conducted on years during and following the Great
Recession to examine how nonprofit HSO coped with and adapted to such dire environmental
distress (see footnote 12). Future studies should also include other indicators of the ability for
nonprofits to serve their communities such as measures of effectiveness or quality of service.
Future studies should also examine a greater variety of measures relating to community
vulnerability, direct indicators of resource, or alternative geographical units of analysis (e.g.,
census tracts). Finally, there is also a possibility that organizations may self-select into specific
neighborhoods rather than being affected by neighborhood conditions. Given that we model our
data cross-sectionally, however, we were not able to differentiate between these two processes.
Future studies should examine longitudinal changes in the financial health and neighborhood
effects over a longer period of time in order to tease out this process.
Overall, this study supports the idea that minority communities are not just vulnerable in
terms of its residents but also in terms of its organizational landscape and efforts should be made
to build the financial infrastructure of nonprofits to ensure that human service nonprofits have
the financial resources required to better meet individual and community needs.

25

ENDNOTES
1

Previous research has shown that ZIP code-level data can be an acceptable geographic

unit of analysis for community-level studies (i.e., Small & McDermott, 2006; Fox & Rodriguez,
2014).
2

Non-active are shell organizations where ...total expenses are equal to or less than the

sum of depreciation and interest paid, have no cash, and zero or negative assets (Bowman,
Tuckman, & Young, 2012, p. 13). Thus we exclude organizations where total assets equal to or
less than zero.
3

Bowman (2011) recommends using at least three years worth of data to measure valid

capacity and sustainability measures.

4

Examination of these records revealed that values on the original Form 990 were filled

out incorrectly. For example, one organizations total assets were incorrect and its net assets
were also incorrect.
5

We conclude that for organizations without satellite offices, the address reported on

their Form 990 operates as both an administrative and service office. This is reasonable given
that a nonprofit operating at only one address will likely have both service and administrative
functions occurring at this one locale.
6

While 40% is a threshold often used for impoverished conditions (Wilson, 1996;

Jargowsky, 1997), Swaroop and Morenoff (2006) found that participation in civic organizations
decreased when rates of disadvantage in a community reach approximately thirty-three percent.
7

For further details regarding SANDAGs methodology for calculating communities of

concern, see: (http://www.sandag.org/uploads/2050RTP/F2050rtp4.pdf).

26

We thank Andrew Gelman and his statistics consulting group at the Columbia

University Statistics Department for suggesting the simpler quintile approach.

9

This is preferable to group mean centering if the focus of the study is on contextual

(level 2) factors, and level 1 covariates are viewed as nuisance variables that need to be
controlled for (Enders & Tofighi, 2007, p. 128).
10

A nonprofit is presumptively endowed if it has securities and other investments

exceeding its total expenses (Bowman, 2011).

11

Given that the questions of interest in this study relates to the degree of variance

explained by ZIP code level factors, and that the unconditional models for the RA and CML do
not show clustering effects, only the results of the additive models for the ER, MS, MU, and ML
outcomes will be presented.
12

We thank the comments of an anonymous reviewer for this suggestion.

27

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31

Table 1. Bowman (2011) financial capacity and sustainability definitions and formulas
Long Term Objective: Maintain Services
Measure

Question Addressed

Formula (non-endowed)

Formula (endowed)

Equity Ratio (Capacity)

How much of the organization's assets

are financed by debt to meet its long
term objective of maintaining services?

(net assets)/(total assets)(a)

(total net assets endowment

assets)/(total assets
endowment assets)(b)

Return on Assets
(Sustainability)

Is the organization earning enough to

maintain positive equity ratio and have
the long term sustainability to maintain
services?

100%*(change in net
assets)/(total assets)(c )

100% * (operating
surplus)/(total assetsendowment assets)(d)

Short Term Objective: Resilience

Months of Spending
(Capacity)

How much does the organization have

in reserves to maintain spending on
services in case of financial shocks or
loss in revenue?

12*(unrestricted financial assetsequity in PP&E)/(spending on

operations)(e)

12* (operating reserves or cash

plus savings + 10% of
marketable
securities)/(spending on
operations)(f)

Mark up (Sustainability)

What is the amount of surplus relative to

the size of the budget?

100%*(change in unrestricted
net assets +
depreciation)/(spending on
operations)(g)

100% * (operating surplus +

depreciation)/(spending on
operations)(h)

Status Quo Mark up

How much should be set aside to

maintain capital preservation?

3.4%*(total assets/spending on
operations)(i)

3.4% * (total assets

endowment assets)/(spending
on operations)(j)

Current Term Objective: Paying Bills

Months of liquidity
(Capacity)

How much does the organization have

in working capital to pay bills?

12 * (nonprofit current assets

current liabilities temporarily
restricted net assets)/(spending
on operations)(k)

Is the organization maintaining

(months of liquidity, year t)
adequate amount of liquidity for the
(months of liquidity, year t-1)
current term?
(a) pre-2008 Form 990, lines: (73B/59A); post-2008 Form 990, lines: Part X, (33B/16B)
Change in liquidity
(Sustainability)

32

12 * (nonprofit current assets

current liabilities temporarily
restricted net assets)/(spending
on operations)(k)
(months of liquidity, year t)
(months of liquidity, year t-1)

(b) pre-2008 Form 990, lines: (73B-54aB-54bB-56B)/(59A-54aB-54bB-56B); post-2008 Form 990, lines: Part X, (33B-11B-12B)/(16B-11B12B)
(c) pre-2008 Form 990:100* (73B-73A)/(59A); post-2008 Form 990: Part X, 100*(33B-33A)/(16B)
(d) pre-2008 Form 990: 100*[(1e+2+3+6c+9c+10c+11)+.05*(54aA+54bA+56A)-17]/(59B-54aB-54bB-55cB); post-2008 Form 990: [(Part
VIII,1hA+2gA+5A+6dA+8cA+9cA+10cA+11eA)+.05*(Part X,11A+12A)-(Part IX,25A)]/(Part X,16B-11B-12B)
(e) pre-2008 Form 990: 12*[(67B)-(55cB+57cB-64aB-64bB)]/(44A-42A); post-2008 Form 990: 12*[Part X:27B-(10cB-20B-23B)-21B]/(Part
IX:25A-22A)
(f) pre-2008 Form 990: 12*[(45B+46B)+.10*(54aB+54bB)]/(17-42A); post-2008 Form 990: 12*[Part X:(1B+2B)+.10*(11B-12B)]/(Part
IX:25A-22A)
(g) pre-2008 Form 990: 100*(67B-67A+42A)/(44A-42A); post-2008 Form 990: 100*[(Part X:27A-27B)+(Part IX:22A)]/(Part IX: 25A-22A)
(h) pre-2008 Form 990: 100*[(1e+2+3+6c+9c+10c+11)+.05*(54aA+54bA+56A)-(68B-68A)-(69B-69A)-44A+42A]/(44A-42A); post-2008
Form 990: [(Part VIII,1hA+2gA+5A+6dA+8cA+9cA+10cA+11eA)+.05*(Part X,11A+12A)-(Part X,28B-28A)-(Part X,29B-29A)-(Part
IX,25A+22A)]/(Part IX,25A-22A)
(i) pre-2008 Form 990: 3.4*(59A)/(44A-42A); post-2008 Form 990: 3.4*(Part X:16B)/(Part IX: 25A-22A)
(j) pre-2008 Form 990: 3.4*(73B-54aB-54bB-56B)/(44A-42A); post-2008 Form 990: 3.4*(Part X:33B-11B-12B)/(Part IX: 25A-22A)
(k) pre-2008 Form 990: 12*[(45B+46B+47cB+48cB+49B+52B+53B)-(60B+61B+68B)]/(44A-42A); post-2008 Form 990: 12*[Part
X:(1B+2B+3B+4B+8B+9B)-(17B+18B+19B+21B+28B)]/(Part IX:25A-22A)

33

Table 2 - Summary Statistics of Outcome Variables and Covariates

1st quintile
Outcome Variables(a)(b)

min

equity ratio

2nd quintile

3rd quintile

4th quintile

5th quintile

20th

40th

50th

60th

80th

max
1.00

-6.75

0.13

0.53

0.66

0.78

0.92

return on assets

-12.30

-0.05

0.00

0.01

0.05

0.14

20.01

months of spending

-345.88

-0.15

1.35

1.98

3.28

7.88

287.45

mark up

-6.66

-0.03

0.02

0.04

0.08

0.20

19.38

status quo mark up(d)

-0.05

0.01

0.03

0.03

0.05

0.13

5.26

0.38

1.03

1.54

4.12

161.17

-0.10

0.05

0.27

0.89

357.73

months of liquidity

-242.20

-1.05

change in months of liquidity

-8.47

-0.64

Organization Covariates(a)(b)

mean

standard dev.

Min

Max
1

revenue concentration index(d)

0.72

0.20

0.22

age (in years)

22.53

1.5

79.81

assets (in millions)

5.66

15.57
13.90

0.021

133

Endowed (dichotomous)

0.11

0.31

Zip Code Covariates(e)(f)

mean

standard dev.

Min

Max

low income(g)

0.48

0.50

minority (h)

0.12

0.32

low mobility (i)

0.05

0.21

low engage (j)

0.33

0.47

(a) N=222
(b) Average values for FY 2005-2007
(c) not an outcome variable, used as covariate for mark up model
(d) RCI = (Revenue(i)/Total Revenue)2
(e) N=85
(f) Average values for 2005-2007

34

(g) dichotomous where 1= 33% or more of households have an annual income < $30,000
(h) dichotomous where 1=65% or more of the population is non-White
(i) dichotomous where 1=25% or more of households have no automobile; and/or 25% or more of the population is disabled; and/or 20% or
more of the population is >=75
(j) dichotomous where 1= 20% or more of households do not speak English as a primary language; and/or 20% or more of the population
aged twenty-five and older has less than a high school education

35

Table 3. Correlation Table of Model Covariates and Outcome Variables (N=222)

1
(1) Equity Ratio(a)

10

11

12

13

14

(2) Return on Assets(a)

-0.30

1.00

(3) Months of Spending (a)

-0.02

0.01

1.00

(4) Mark up(a)

0.09

0.03

-0.34

1.00

(5) Status Quo Mark Up (a)

0.07

0.00

-0.41

0.74

1.00

(6) Months of Liquidity (a)

-0.04

0.00

0.84

-0.19

-0.36

1.00

(7) Change in Months of Liquidity(a)

0.07

0.00

-0.32

0.92

0.86

-0.19

1.00

(8) Endowed

-0.13

0.19

0.21

0.05

0.03

0.12

0.06

1.00

(9) Revenue Concentration Index

-0.18

-0.01

-0.05

-0.04

-0.07

-0.02

-0.05

-0.18

1.00

(10) Age

0.12

-0.12

0.12

-0.09

-0.13

0.11

-0.10

0.06

-0.25

1.00

(11) Log of Assets

0.09

0.10

0.13

0.06

0.10

0.02

0.02

0.26

-0.16

0.38

1.00

(12) Low Income Community(b)

0.04

0.08

-0.08

0.03

0.10

-0.08

0.01

-0.08

-0.14

0.02

0.06

1.00

(13) Minority Community(b)

-0.06

-0.02

0.05

-0.09

-0.03

0.04

-0.05

-0.10

-0.07

0.02

0.00

0.29

1.00

(14) Low Mobility Community(b)

0.09

0.00

0.06

-0.01

-0.05

0.07

-0.03

-0.10

-0.11

0.10

0.00

0.24

-0.01

1.00

(15) Low Engagement Community(b)

-0.01

0.12

0.01

-0.10

-0.04

-0.04

-0.07

-0.07

0.02

0.09

0.00

0.24

0.55

-0.09

(a) Outcome Variable

(b) ZIP code level covariate

36

Table 4. Unconditional random intercepts model of financial capacity and sustainability measures for
human service nonprofits FY2005-2007 (San Diego County, CA) (n=222)(a)
Long Term
Objectives

Constant(b)
Random Effects Parameters

2
Intraclass Correlation (c)

Short Term
Objectives

Current Term
Objectives

Mark up
(MU)

Months
of
Liquidity
(ML)

Change in
Months of
Liquidity
(CML)

2.99**
(0.11)

2.97**
(0.11)

3.02**
(0.11)

2.99**
(0.08)

0.2
1.78
0.10

0.15
1.85
0.08

0.21
1.78
0.11

0.00
1.41
0.00

Equity
Ratio (ER)

Return on
Assets
(RA)

Months of
Spending
(MS)

2.99**
(0.10)

2.99**
(0.09)

0.09
1.91
0.04

0.00
1.41
0.00

(a) robust standard errors

(b) standard error in parenthesis
(c) ICC= tau/(tau+sigma^2)
**p<0.05

37

Table 5. Comparative random intercepts model of long term capacity

(equity ratio -ER) for human service nonprofits FY2005-2007 (San Diego
County, CA) (n=222)(a)
Model 5a
Model 5b Model 5c Model 5d
Organizational Covariates
Endowed (dichotomous)

0.31
(0.30)
2.37**
(0.48)
0.01
(0.01)
-0.07
(0.06)

Revenue Concentration
(proportion)
Age (in years)

Log of Assets
-

Zip Code Covariates

(dichotomous)
low income community
minority community
low mobility community
low engage community
-

Constant

0.18
(0.31)
-2.62**
(0.45)
0.002
(0.002)
-0.06
(0.06)

-0.14
(0.22)
-0.96**
(0.29)
0.54**
(0.21)
0.43**
(0.20)

-0.24
(0.19)
-1.09**
(0.24)
0.39**
(0.39)
0.52**
(0.19)

2.99**
(0.10)

2.99**
(0.10)

3.02**
(0.16)

3.07**
(0.15)

0.09
1.91
0.04

0.11
1.64
0.06

0.01
1.89
0.01

0.00
1.62
0.00

Random Effects Parameters

2
Intraclass Correlation
(a) robust standard errors;
standard error estimates in
parenthesis
**p<0.05
*p<0.10

38

Table 6. Comparative random intercepts model of short term capacity

(months of spending - MS) for human service nonprofits FY2005-2007 (San
Diego County, CA) (n=222)(a)
Model 6a
Model 6b
Model 6c Model 6d
Organizational Covariates
Endowed (dichotomous)

1.12**
(0.24)
-0.97*
(0.48)
-0.004
(0.01)
0.16**
(0.05)

Revenue Concentration
(proportion)
Age (in years)
Log of Assets

1.15**
(0.23)
-0.96**
(0.47)
-0.01
(0.01)
0.17**
(0.05)

Zip Code Covariates

(dichotomous)
low income community

minority community

low mobility community

low engage community

-0.04
(0.26)
-0.45
(0.34)
0.67**
(0.30)
0.25
(0.28)

-0.10
(0.23)
-0.43
(0.30)
0.76**
(0.76)
0.34
(0.23)

2.99**
(0.11)

2.99**
(0.10)

2.94**
(0.15)

2.94**
(0.13)

0.2

0.16

0.18

0.12

2
Intraclass Correlation
(a) robust standard errors;
standard error estimates in
parenthesis
**p<0.05
*p<0.10

1.78
0.10

1.5
0.10

1.77
0.09

1.49
0.08

Constant

Random Effects Parameters

39

Table 7. Comparative random intercepts model of short term sustainability

(mark up -MU) for human service nonprofits FY2005-2007 (San Diego County,
CA) (n=222)(a)
Model 7a
Model 7b Model 7c Model 7d
Organizational Covariates
Endowed (dichotomous)

-0.94**
(0.38)
0.20
(0.20)
-1.22**
(0.52)
-0.01
(0.01)
0.23**
(0.06)

Status Quo Mark up

Revenue Concentration
(proportion)
Age (in years)
Log of Assets
Zip Code Covariates
(dichotomous)
low income community

minority community

low mobility community

low engage community

Constant
Random Effects Parameters

2
Intraclass Correlation

-0.96**
(0.39)
0.21
(0.19)
-1.27**
(0.51)
-0.01*
(0.01)
0.23**
(0.06)

0.25
(0.26)
-0.35
(0.30)
0.32
(0.36)
0.05
(0.26)

0.07
(0.22)
-0.48
(0.30)
0.21
(0.35)
0.12
(0.24)

2.97**
(0.11)

0.23**
(0.10)

2.85**
(0.17)

2.96**
(0.15)

0.15
1.85
0.08

0.08
1.67
0.04

0.13
1.84
0.07

0.05
1.68
0.03

(a) robust standard errors; standard error estimates in parenthesis

**p<0.05
*p<0.10

40

Table 8. Comparative random intercepts model of current term capacity

(months of liquidity - ML) for human service nonprofits FY2005-2007 (San
Diego County, CA) (n=222)(a)
Model
Model 8a
Model 8b
Model 8c
8a
Organizational Covariates
Endowed (dichotomous)

-0.19
(0.36)
-0.312
(0.48)
-0.01
(0.01)
-0.02
(0.06)

Revenue Concentration
(proportion)
Age (in years)
Log of Assets

-0.18
(0.35)
-0.36
(0.47)
-0.01
(0.01)
-0.01
(0.06)

Zip Code Covariates

(dichotomous)
low income community

minority community

low mobility community

low engage community

Constant

3.02**
(0.11)

3.03**
(0.11)

0.05
(0.27)
-0.99**
(0.33)
0.58*
(0.32)
0.50
(0.27)

2.92**
(0.14)

0.04
(0.27)
-1.03**
(0.33)
0.58*
(0.32)
0.53*
(0.27)

2.93**
(0.14)

Random Effects Parameters

0.21

0.25

0.17

0.19

2
Intraclass Correlation
(a) robust standard errors;
standard error estimates in
parenthesis
**p<0.05
*p<0.10

1.78
0.11

1.75
0.12

1.74
0.09

1.71
0.10

41