For my intensive OSCAR research project this summer, I am studying a particular type of income for human services nonprofits that is called “program service revenue.” This type of income is earned often through providing services for a fee and is tax-exempt if related to the mission of the nonprofit. As such, program service revenue may prove a powerful source of revenue diversification for nonprofits.
By examining data collected annually from nonprofits through the IRS Form 990, I hope to discover the impact of “earned income” (or exempt program service revenue) on the overall revenue and change in net assets over time.
Management books and articles circulating among nonprofit leaders often (if somewhat vaguely) tout this type of revenue as potentially diffusing a heavy reliance on individual contributions and grant awards. In theory, earned income can enable a service nonprofit to raise some of its own funds by doing what it does best – fulfilling its mission.
In doing background research for my proposal, I found little academic evidence as to the success or failure of earned income strategies in the broad human services sector.
As an Accounting student with prior workplace experience in a nonprofit finance office, the path to research presented itself rather clearly this past spring during the intensive OSCAR project application process. Knowing the fast-paced nature of human services nonprofits, where day-to-day operations and scarce resources infrequently lend time for study of scholarly questions, I decided to further research the earned income question in order to expand the scholarly research base in nonprofit accounting and (hopefully) generate practical implications for nonprofit managers.
Under the mentorship of Dr. Karen Kitching (School of Business, Accounting Department), I am performing linear regression analysis to study program service revenue as a variable in revenue growth. The data collection process thus far has included Freedom of Information Act requests to various agencies to access federal government contracts data (one possible type of program service revenue), utilizing the Guidestar charitable database to create a sample of federal employer identification numbers and other financial data representing relevant charities, and extracting relevant IRS form 990 data from the National Center for Charitable Statistics database.
I’m thrilled to have received this opportunity for research through OSCAR, and I look forward to presenting the results of the study.