The Uniqueness of Nonprofit Finance and the Decision to Borrow
Article first published online: 17 JUL 2003
Copyright © 2002 Wiley Periodicals, Inc.
Nonprofit Management and Leadership
Volume 12, Issue 3, pages 293–311, Spring 2002
How to Cite
Bowman, W. (2002), The Uniqueness of Nonprofit Finance and the Decision to Borrow. Nonprofit Management and Leadership, 12: 293–311. doi: 10.1002/nml.12306
- Issue published online: 17 JUL 2003
- Article first published online: 17 JUL 2003
- Cited By
Previous studies of nonprofit capital structure (borrowing relative to assets) support contradictory decision models of borrowing, but with no control for an endowment effect, which this article shows to be an important factor in the decision to borrow. Well-endowed nonprofits borrow more relative to their physical assets. When endowment and investment income are backed out of the data, nonprofits are seen to optimize the balance between debt and physical assets.