Use of Funds in a Nonprofit Organization as Predictor of Organizational Effectiveness and Efficiency

Purpose. The purpose of this study is to explore predictive relationships between how funds are used in a religious not-for-profit organization (NPO) and member recruitment. Financial data, from Seventh-day Adventist conferences at the organizational level, were correlated with data on membership recruitment from these same conferences. Method. This study used a linear time-series analysis where relationships between variables and past values were explored over a 12-year period. Financial data were collected from year-end audited statements and financial activity statements. Published statistical records were used to collect data on membership and member donations. Findings. This study concludes that Seventh-day Adventist conferences in the United States are for the most part not effective in fulfilling a primary goal in their stated mission. Cash management was not found to be a significant predictor, while both debt management and member support provide mixed results as predictors of member recruitment. Furthermore, pastoral services demonstrated mixed results in predicting recruitment of new members, and funding of direct recruitment efforts had no predictive relationship to membership growth, indicating ineffectiveness of those efforts. Organizational level funding of education was not found to be effective, but may be explained in that only insufficient data were available for the study, even though it is aggregated and stored at a national databank. Administrative efforts also provided mixed significance as a predictor of recruitment success, but it was found to be negatively related to recruitment. Recommendation. As NPOs are dependent on member support for their values and mission that can only be maintained with trust based on regular flow of information, I recommend that nonprofit organizations exercise greater transparency and provide researchers and the general public freer access to year-end financial reports, membership data, and other information that is related to the success of its mission. In addition, I recommend that nonprofit leaders and practitioners implement organizational changes that are based on effectiveness research which may provide robust results to their mission success