Nonprofits in Good Times and Bad Times

Christine L. Exley, Nils H. Lehr and Stephen Terry

Journal of Political Economy Microeconomics, 2023, vol. 1, issue 1, 42 - 79

Abstract: Need fluctuates over the business cycle. We conduct a survey revealing a desire for nonprofit activities to countercyclically expand during downturns. We then demonstrate, using comprehensive US nonprofit data drawn from millions of tax returns, that the public’s hopes are disappointed. Nonprofit expenditure, revenue, and balance sheets fluctuate procyclically: contracting during national and local downturns. This finding is evident even for a narrow group of nonprofits that the public most wishes would expand during downturns, for example, those providing critical needs such as food or housing. Our new facts contribute to the charitable giving, nonprofit, and business cycle literatures.

Date: 2023
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Working Paper: Nonprofits in Good Times and Bad Times (2022)
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