Data / Methods
As a result of a 10 question survey of 300 Polish nonprofit organizations administered via computer-assisted telephone interviewing, we propose a model that fits the results of the survey to theoretical expectations. A contingency table was used to find the interrelationship among categorical, interval, and ordinal variables.
There is a difference in the treatment of entitlements of people who control entities in prohibiting distribution of earnings and excess of revenues over expenditures of the organization: Equity type capital providers of for-profit firms can expect a return on money when the business makes an excess of revenues over expenditures from their operations. Nonprofit entities do not have the right to issue stock, and the equity of nonprofit entities is issued by donors and persons who have no right to express control over the nonprofit organization. Equity type capital providers of nonprofit entities, in cases where the nonprofit organization generates money or excess revenues over expenditures from operations, can consider additional support for the organization, but have no possibility to withdraw the money previously contributed. Nonprofit entities collect fund capital, rather than the equivalent equity capital, but are forced by regulations to retain the money within the nonprofit organization. Sources of fund capital include donations, government grants, or excess revenue over expenses from operations.
Expected Results
We believe that our research contributes to knowledge about the best debt to equity relationship in nonprofit entities and to economic research as a basis for better understanding the nature of nonprofit organizations. Nonprofit entities have an aim, which is a result of its owner preferences. For-profit entities are active because of expected future advantages measured in money, but nonprofit entities act because expected future advantages are measured by realization of ideas and missions that are expressions of the donors’ vision of the world.
Acknowledgments: The presented results are part of grant titled: Determinants of capital structure in nonprofit organizations. The work is supported by National Science Centre, and financed from the Polish budget resources in the years 2016-2019 according to contract UMO-2015/19/B/HS4/01686 as the research project DEC2015/19/B/HS4/01686.