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In 2009 and 2010, the Financial Accounting Standards Board (FASB) adopted new accounting standards for nonprofit mergers and acquisitions. The new accounting standards are an example of the constitutive role accounting can play in how people think about economic events, since the FASB defined a new concept (the “inherent contribution”) and required valuation of intangible assets that were often previously unrecognized.

The FASB’s stated goals included minimizing “pooling” accounting and maximizing transparency regarding fair value information, acquired identifiable intangible assets, and the relation between consideration paid and the fair values of identifiable assets acquired. The FASB expected many combinations would involve little or no consideration. It also expressed concern that some organizations would undervalue assets acquired, especially intangible assets.

For a sample of 2012–2017 nonprofit hospital combinations, we find general agreement with the FASB’s expectations. Almost all combinations were accounted for as acquisitions, not mergers, even though there was frequently no consideration paid. More acquirers recorded “inherent contributions” than goodwill, because the net fair value of the acquired hospital’s identifiable assets exceeded the consideration paid. Acquirers ascribed value to assets, such as intangible assets, that would have gone unreported under the prior accounting rules, although lower levels of intangible assets were recognized in nonprofit business combinations, relative to total non-goodwill assets acquired, than in public companies’ acquisitions.

The purpose of this article is to develop a nonprofit integrated social accounting (NISA) model that takes into account the particular objectives of nonprofit organizations (achieving their mission and remaining viable as an organization), their specific characteristics (e.g., the engagement of volunteers), and their economic, social and environmental impacts. The conceptual framework includes defining social accounting, setting the boundaries of the reporting entity, identifying the objectives of nonprofit reporting, identifying the users of the accounts and their information needs, and considering the questions that have to be answered in order to know if the organization is achieving its goals. From the conceptual framework, the NISA model is developed, incorporating four elements: (1) economic and human resources; (2) economic, social and environmental value creation; (3) internal systems and processes; and (4) organizational learning, growth and innovation. Overall, the model provides a mechanism to address both functional and strategic accountability concerns of the organization, its effectiveness and efficiency, and to drive behavior through feedback and readjustment. In this way, accounting plays an important role in shaping the ‘reality’ of the organization.

This paper provides a review and synthesis of past research regarding financial disclosure management by nongovernmental nonprofit organizations and suggests directions for future study. The primary purpose of this review is to summarize the evidence on financial disclosure management to help regulators and other stakeholders understand why, how, and to what extent nonprofits engage in this behavior. The paper begins by defining disclosure management in nonprofit organizations and exploring the motivations for why it might occur. Next is a survey of the nongovernmental nonprofit financial reporting environment: objectives, common practices, and the informational needs of users of nonprofit financial reports. Research exploring the motives, methods, and consequences of disclosure management is summarized. The evidence suggests that nongovernmental nonprofit managers have a variety of incentives to manage reported numbers and that they do in fact alter spending decisions, choose accounting methods, and design cost allocations to achieve certain performance benchmarks. Furthermore, this review sheds light on the consequences of disclosure management and what can or should be done to limit it.

Research in nonprofit accounting is steadily increasing as more data is available. In an effort to broaden the awareness of the data sources and ensure the quality of nonprofit research, we discuss archival data sources available to nonprofit researchers, data issues, and potential resolutions to those problems. Overall, our paper should raise awareness of data sources in the nonprofit area, increase production, and enhance the quality of nonprofit research.

The ability of financial statement users, investors, donors and academic researchers to compare financial information issued by nonprofit universities, hospitals, fund-raising organizations and government agencies is affected by their understanding of current accounting recognition and reporting guidance. Public nonprofit organizations report different financial results from private nonprofit organizations. This study looks at the events that brought about the divergence in nonprofit financial accounting recognition and reporting for higher education institutions, discusses specific differences, and offers a look at additional changes in recognition and reporting for the sector currently underway.

Prior research has shown that many donors utilize charity ratings for decisions and they give more to higher rated charities. Because ratings are partly or completely based on financial information, the financial reporting quality of highly rated charities is more critical to donors than that of the poorly rated ones. In this study, we examine whether the financial reporting quality of charities systematically varies with charitable ratings. Examining a sample of human service charities, we find that highly rated organizations are more likely to underreport fundraising expenses and overstate program ratios. Highly rated organizations appear to be exercising accounting discretion to achieve this desirable outcome. Collectively, our findings suggest that stakeholders should be cautious when they use the rating information.

We investigate the determinants and consequences of nonprofit lobbying activity by analyzing 501(c)(3) nonprofit lobbying choices as reported on the primary tax form, Form 990. Under the Internal Revenue Code (IRC), nonprofits may lose their tax exempt status if they engage in a substantial amount of lobbying. We examine lobbying choices across three dimensions: (1) the test used to determine whether lobbying activities are substantial (i.e., making an H-election) (2) whether lobbying activities are directly related to the mission of the nonprofit (i.e., program related) (3) whether an affiliate nonprofit lobbies on behalf of a nonprofit. Results indicate lobbying choices are associated with the amount of lobbying reported and the amount of contributions received. Additionally, our results provide some evidence that nonprofit lobbying choices allowed under the IRC are underutilized.

The purpose of this paper is twofold. The first is to map the most influential literature in nonprofit finance and financial management. The second is to understand why the literature has evolved the way it has, including isolated silos developing in certain disciplines.

The review includes articles assembled from three sources: a core list, an expert list and journal archive searches on phrases that emerged. Using social origins theory as a guide, we coded 119 articles for traits such as root discipline, methodology and author characteristics.

Research tends to stay confined within the doctoral discipline of the author, who publishes in journals valued by their discipline. This has caused limited cross-referencing across disciplines, and it has allowed different understandings and judgments of the same phenomenon to exist in different fields. Data availability drives much of the research agenda, but author teams of mixed disciplines are promising.

Unlike a traditional literature review, this study identifies factors that have had a formative influence on the development of the diverse field of nonprofit finance and financial management. This diversity has resulted in a fractured field held in silos with few indigenous developments. Using social origins theory as a guide, this study provides an overview of the most consequential literature through the analysis of authors and institutional characteristics. This approach provides an evolutionary perspective and illustrates how this disciplinary adherence has created a research topography that limits progress for both scholars and practitioners.

From 2006 onwards very large Belgian nonprofit organizations (NPOs) are legally required to appoint an external auditor. In this context we investigate whether auditor choice in favor of a sector expert, being a higher quality auditor, is associated with NPOs’ expectations regarding several auditor attributes. We find that NPOs are more likely to choose a sector expert if they attach higher importance to an auditor’s client focus and relationship with management. NPOs are less likely to choose a sector expert if they care more about the practical execution of the audit. We provide recommendations for increasing the appeal of sector expertise as valuable auditor attribute. The resulting quality increase of NPOs’ financial statements and audit reports could benefit various stakeholders.

Despite the enormous size of the nonprofit sector, there has been very little empirical research done on the capital structure of nonprofit organizations, and no one has examined the potential effects of borrowing on individual contributions. Using a representative sample of nonprofits, the empirical analysis first determines whether secured or unsecured borrowing by nonprofits influence future contributions. The results for the full sample support a “crowding-out” effect. When the analysis is repeated on a subsample of nonprofits that are older, larger, and more dependent upon donations, the results are more ambiguous: secured debt has little or no effect, while unsecured debt has a “crowd-in” effect. The empirical analysis is then expanded to test whether nonprofits with higher than average debt levels have different results than nonprofits with below average debt levels. The results suggest that donors do remove future donations when a nonprofit is more highly leveraged compared to similar organizations.