Commercial Activity as Insurance: the Investment Behavior of Non-profit Firms
AbstractWe provide a new rationale for commercial activities by non-profit organizations whose primary concern is to supply mission output. We show that investment in commercial activity may be used to insure mission output against the uncertainty of donations, though possibly at the cost of lower expected mission output. In this case, the amount of commercial investment is positively related to the variance of donations and to the degree of risk aversion. These predictions are corroborated by empirical tests on data from non-profit operating in the state of New York.
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Bibliographic InfoPaper provided by Economics and Finance Section, School of Social Sciences, Brunel University in its series Public Policy Discussion Papers with number 03-26.
Length: 34 pages
Date of creation: Nov 2003
Date of revision:
Contact details of provider:
Postal: Brunel University, Uxbridge, Middlesex UB8 3PH, UK
Other versions of this item:
- John Bennett & Elisabetta Iossa & Gabriella Legrenzi, 2003. "Commercial Activity as Insurance: the Investment Behavior of Non-profit Firms," Economics and Finance Discussion Papers 03-26, Economics and Finance Section, School of Social Sciences, Brunel University.
- John Bennett & Elisabetta Iossa & Gabriella Legrenzi, 2006. "Commercial Activity as Insurance: the Investment Behavior of Non-Profit Firms," Keele Economics Research Papers KERP 2006/14, Centre for Economic Research, Keele University.
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-11 (All new papers)
- NEP-ENT-2004-07-11 (Entrepreneurship)
- NEP-IAS-2004-07-11 (Insurance Economics)
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