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.
