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Playing the Numbers Game
Author(s) -
Garven Sarah A.,
Hofmann Mary Ann,
McSwain Dwayne N.
Publication year - 2016
Publication title -
nonprofit management and leadership
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.844
H-Index - 54
eISSN - 1542-7854
pISSN - 1048-6682
DOI - 10.1002/nml.21201
Subject(s) - incentive , business , best practice , public relations , marketing , accounting , economics , management , political science , microeconomics
Abstract Nonprofit organizations are often evaluated using the program ratio: the proportion of mission‐related program expenses to total expenses. Nonprofit managers have incentives to manipulate the reporting of financial information to enhance the program ratio. This article reviews the scholarly literature on program ratio management in nonprofit organizations. Prior research has identified several motivations for and methods of program ratio management and provided limited evidence that it occurs. Researchers have explored the consequences of program ratio management and provided a list of factors mitigating such behaviors. The emerging consensus is that the program ratio is of limited usefulness in evaluating nonprofit performance.