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Revenue Diversification and Investment Policy: The Case for Nonprofits

Patricia Hatfield, Sandra Richtermeyer and Shelly Webb
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Patricia Hatfield: Bradley University, USA
Sandra Richtermeyer: Xavier University, USA
Shelly Webb: Xavier University, USA

Journal of Applied Management and Investments, 2014, vol. 3, issue 4, 214-219

Abstract: Nonprofit organizations (NPOs) develop an investment policy for the investing of net assets. The NPO literature is void of studies that explain why some NPOs invest conservatively while others invest aggressively. Recent literature has focused on the importance of revenue diversity for NPOs. Findings suggest that the more diverse the revenue sources the more prepared the NPO is to avoid financial distress. Our study examines whether revenue diversity and investment policy are strategically related. We find that NPOs with fewer revenue sources are more likely to invest in risk-free assets and bonds and avoid risky securities.

Keywords: nonprofits; diversification; investment policy; risk (search for similar items in EconPapers)
Date: 2014
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Handle: RePEc:ods:journl:v:3:y:2014:i:4:p:214-219