Jessica Berrett

Past empirical studies demonstrate a positive connection between revenue concentration and organizational efficiency. This supports the idea that concentrating revenue helps minimize transaction costs of nonprofit organizations, resulting in greater efficiency. However, this finding contradicts the belief that revenue concentration increases the risk of revenue volatility, leading to service delivery disruptions and reduced efficiency in nonprofits. Moreover, these studies have used an efficiency measure that might not be suitable. To address this, our study examines the relationship between revenue concentration and organizational efficiency using a more appropriate measure. Analyzing data from Habitat for Humanity, we discover a U-shaped relationship: nonprofits are most efficient when fully diverse or fully concentrated in revenue. These findings contribute to the ongoing debate on nonprofit revenue diversification, with significant implications for nonprofits. They also highlight the importance of using more appropriate efficiency measures in future scholarly research.

Despite concerns raised by some scholars, recent publications have demonstrated that commercialization brings multiple benefits to nonprofits. However, while discussion of the positive effect of commercialization on nonprofit efficiency is on the rise in the literature, very few studies have empirically assessed the relationship. This study fills this gap by examining whether commercialization contributes to greater nonprofit efficiency and under what conditions this effect is more likely. Using fixed effects models with 2008–2018 data, the results from this study indicate that commercialization contributes to nonprofit efficiency in the performing arts subsector. Moreover, findings suggest that the relationship is more positive when performing arts nonprofits receive less government funding. The study concludes with implications for research and practice.