We continue our examination of the investment performance of nonprofit charities and foundations. This analysis tests hypotheses about what types of organizations do better. Our motivating intuition is that nonprofits with greater focus on investment performance will secure higher returns. Our hypotheses are tested by regressing the rate of return for each organization on various characteristics. As expected, nonprofits whose primary business is predominantly financial, such as insurance providers and pension or retirement funds, consistently earn higher returns. The data also support our hypotheses that larger nonprofits, older nonprofits, and private foundations will tend to outperform. The evidence is mixed as to whether nonprofits that pay higher executive salaries or spend more on management earn higher returns.
Heutel, Garth, and Richard Zeckhauser. "The Investment Returns of Nonprofit Organizations: Part II, The Value of Focused Attention." Nonprofit Management and Leadership 25.19 (Fall 2014): 59-75.