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Revenue Structure and Nonprofit Borrowing


  • Wenli Yan

    (Indiana University-Bloomington)

  • Dwight V. Denison

    (University of Kentucky)

  • J.S. Butler

    (University of Kentucky)


The capital structure of nonprofit organizations plays a crucial role in their sustainability and development. This article explores the extent to which revenue diversification is incorporated into the leverage decision. In addition, this study investigates whether government grants have an impact on the long-term liabilities of nonprofit organizations. A model of nonprofit borrowing is proposed and examined with a national sample of arts, culture, and humanities nonprofit organizations. Model estimates show that nonprofit organizations with higher degree of revenue diversification are more likely to issue debt, but do not necessarily have higher debt ratios. Arts organizations with more government financial support are also more likely to issue debt and to have higher leverage ratios.

Suggested Citation

  • Wenli Yan & Dwight V. Denison & J.S. Butler, 2009. "Revenue Structure and Nonprofit Borrowing," Public Finance Review, , vol. 37(1), pages 47-67, January.
  • Handle: RePEc:sae:pubfin:v:37:y:2009:i:1:p:47-67

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    Cited by:

    1. Rosen, Harvey S. & Sappington, Alexander J.W., 2016. "To borrow or not to borrow? An analysis of university leverage decisions," Research in Economics, Elsevier, vol. 70(1), pages 170-185.
    2. Berta SILVA & Ronelle BURGER, 2015. "Financial vulnerability: an empirical study of Ugandan NGOs," CIRIEC Working Papers 1515, CIRIEC - Université de Liège.


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