Nonprofit behavior altered by monetary donations: evidence from the U.S. hospice industry

Miao Guo (), Lei Guo () and Yang Li ()
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Miao Guo: Hunan University
Lei Guo: University of Chinese Academy of Social Science
Yang Li: The University of Nottingham Ningbo China

The European Journal of Health Economics, 2024, vol. 25, issue 2, No 3, 207-220

Abstract: Abstract This study investigates whether reliance on monetary donations alters nonprofit firms’ behaviors. Specifically, in the hospice industry, a shorter patients’ length of stay (LOS) speeds up overall patient turnover, allowing a hospice to serve more patients and expand its donation network. We measure hospices’ donation reliance using the donation–revenue ratio, which indicates the importance of donations for revenue structure. By exploiting the supply shifter of donation, we adopt the number of donors as an instrument to control for the potential endogeneity issue. Our result suggests that a one-percentage-point increase in the donation–revenue ratio decreases patient LOS by 8%. Hospices that are more reliant on donations serve patients diagnosed with diseases that have shorter life expectancies to achieve a lower average LOS of all patients’ stay. Overall, we find that monetary donations alter the behavior of nonprofit organizations.

Keywords: Nonprofit; Hospice; Monetary donation; Length of stay; Financial incentive (search for similar items in EconPapers)
JEL-codes: I1 L2 L3 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10198-023-01571-0

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