Nonprofit Behavior Altered by Monetary Donations : Evidence from the U.S. Hospice Industry

This study investigates whether reliance on monetary donations alters nonprofit firms' behaviors. Specifically, in the hospice industry, shortening patients' length of stay (LOS) speeds 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. A 2SLS regression 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. Overall, we find that monetary donations alter the behavior of nonprofit organizations