View Research by Author - Mark A. Hager

Citation URL: http://www.urban.org/MarkAHager

This brief presents key findings from the latest report on the Foundation Expenses and Compensation Project –- the first large-scale, long-term, systematic study of independent, corporate, and community foundations' expenses and compensation patterns and the factors behind them. It documents how differences in type, size, and operating activities of foundations affect their finances and charitable administrative expenses. This brief highlights the key findings of the full report, "What Drives Foundation Expenses and Compensation?: Results of a Three-Year Study."

This study presents the findings of a three-year study to analyze the expense and compensation patterns of the 10,000 largest foundations in the United States. It finds characteristics such as foundation type, size, and operating activities are important factors for understanding differences in foundation finances. Despite the economic downturn and the volatility of the stock market during the study years (2001 to 2003), the patterns of foundation expenses and compensation are clear and consistent over time. This is the first large-scale, long-term, and systematic study of independent, corporate, and community foundations’ expenses and compensation patterns and the factors behind them.

This study documents how foundation characteristics such as giving amount, asset size and staffing, and activities such as international giving and operating a "charitable" facility or research program, affect the expense levels at the 10,000 largest independent, corporate, and community foundations. The report shows that most foundations report modest expenses; the vast majority are unstaffed; and many are run largely by unpaid trustees. Staffing is the most significant factor affecting expenses, regardless of type. The largest foundations tend to compensate at the highest amounts, but their median percentages of compensation to giving are among the lowest.

This interim report summarizes the findings to date from the Foundation Expenses and Compensation Study, a partnership of the Urban Institute, the Foundation Center, and GuideStar. Examining the expense and compensation patterns of the nation's 10,000 largest independent, corporate, and community foundations (by giving) circa 2001, this report documents how major differences in operating styles affect the expenses of philanthropic foundations. The findings suggest that, along with foundation type and size, the missions and goals of foundations that lead to different staffing levels and types of expenses should be considered when assessing foundation expenditures.

This report is the fourth in a series of briefs on a 2003 survey of volunteer management capacity among public charities in the United States. It introduces an organizational level measure of the challenges and advantages of mobilizing volunteers called net benefits. Challenges include recruiting, training, and supporting volunteers. Advantages include better or more service delivery, cost savings, and access to specialized skills. Survey results indicate that net benefits varies by investments in volunteer management and the extent and nature of volunteer involvement. The brief includes a worksheet that charities can use to calculate their own net benefits score and compare themselves to organizations with similar characteristics.

Lessons for Boards from the Nonprofit Overhead Cost Project summarizes research findings for board members of nonprofit organizations. Widespread problems with financial reporting and controls suggest that board members should look closely at both as part of fulfilling their fiduciary responsibilities, lest weak organizational infrastructure limit mission effectiveness. The overhead cost project is a collaboration with the Center on Philanthropy at Indiana University.

Special Issues in Nonprofit Financial Reporting: A Guide for Financial Professionals documents significant problems in the reporting of expenses by functional classification in both audited financial statements and Forms 990. The guide encourages greater focus on this area by public accountants. The guide documents special problems raised by accounting for capital and in-kind gifts and offers solutions that are in conformance with generally accepted accounting principles. The information in this guide is based on research findings from the Nonprofit Overhead Cost Project, a major national study conducted in collaboration with the Center on Philanthropy at Indiana University.

Donating to Charity, based on findings from the nonprofit overhead cost project, encourages individuals to consider their own values and check into the operations of various charities before making charitable contributions. Unlike many guides that emphasize quick-fix financial ratios when determining the donation-worthiness of charities, Donating to Charity indicates that these ratios are frequently problematic and are therefore not useful in making giving decisions. The overhead cost project is a collaboration with the Center on Philanthropy at Indiana University.

This brief is the first of two that summarize results from detailed case studies of the financial management of nine nonprofit organizations. It focuses on the relationship between spending on administration and fundraising and the effectiveness of nonprofit organizations in carrying out their missions. Smaller organizations tended to invest less in organizational infrastructure, resulting in conditions that compromised their effectiveness. Part of the reason why these organizations invested less in infrastructure involved their reliance on grants with limits on how much could be spent on overhead costs. The overhead cost project is a collaboration with the Center on Philanthropy at Indiana University.

This brief is the second of two briefs that summarize results from detailed case studies of the financial management of nine nonprofit organizations. It focuses on public financial reporting and addresses issues such as weak methods for allocating staff salary costs to program, administrative, and fundraising expenses; the need for greater sophistication in accounting for capital gifts and in-kind donations; and the effects of unique IRS reporting rules on overhead and fundraising cost ratios. This brief concludes that simplistic efforts to assess and compare public charities based on their public financial reports may lead to flawed conclusions. The overhead cost project is a collaboration with the Center on Philanthropy at Indiana University.

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