Finance

Portfolios of the Poor: How the World's Poor Live on $2 a Day

Portfolios of the Poor: How the World's Poor Live on $2 a Day
Arabic translation.

Jonathan Morduch, Daryl Collins, Stuart Rutherford, & Orlanda Ruthven
05/24/2016

Portfolios of the Poor: How the World's Poor Live on $2 a Day (Princeton University Press, 2009) tackles the fundamental question of how the poor make ends meet. Over 250 families in Bangladesh, India, and South Africa participated in this unprecedented study of the financial practices of the world's poor.

These households were interviewed every two weeks over the course of a year, reporting on their most minute financial transactions. This book shows that many poor people have surprisingly sophisticated financial lives, saving and borrowing with an eye to the future and creating complex "financial portfolios" of formal and informal tools.

Indispensable for those in development studies, economics, and microfinance, Portfolios of the Poor will appeal to anyone interested in knowing more about poverty and what can be done about it.

Economics and the Social Meaning of Money

Economics and the Social Meaning of Money
2017. Chapter 1 in Nina Bandelj, Frederick F. Wherry, & Viviana Zelizer, eds. Money Talks. Princeton University Press.

Jonathan Morduch
05/01/2016

Economic analyses of household choices usually assume that money is fungible—that a dollar is a dollar, no matter how it was earned or by whom. But, in practice, families often earmark money earned by a particular family member or generated from a particular job. Viviana Zelizer’s The Social Meaning of Money thoroughly documents the importance of earmarking and the social relations that explain why and how. More recently, the US Financial Diaries project documents the frequency of earmarking in a sample of low- and moderate-income households in ten sites across America.   Earmarking income for particular purposes generally leads to spending patterns that deviate from patterns delivered by household-level optimization with full fungibility. Not surprisingly, economists have been slow to embrace notions of earmarking.  That, though, may be changing, as behavioral economics and game theory provide examples of how “anomalous” empirical results can open doors to the acceptance of richer theoretical approaches.

Borrowing for the Public Good: The Growing Importance of Tax-Exempt Bonds for Public Charities

Borrowing for the Public Good: The Growing Importance of Tax-Exempt Bonds for Public Charities
Nonprofit and Voluntary Sector Quarterly, 45(3): 458-477

Thad Calabrese and Todd Ely
04/29/2016

The importance of tax-exempt borrowing as a capital source to the nonprofit sector has significantly grown over time. Tax-exempt bonds issued by nonprofits has risen from an inflation-adjusted $106.3 billion in 1993 to $388.5 billion in 2010 representing an 8% compound annual growth rate over the period. The increased importance of tax-exempt borrowing relative to other borrowing for nonprofits has gone unnoticed. Here we ask what factors are associated with this trend. We find wide variation in the increasing use of tax-exempt bond usage between nonprofit sectors. While nonprofit borrowers other than hospitals have increasingly entered the tax-exempt capital market over the past decade, they still tend to be large organizations with lower risk of bankruptcy or default. Our empirical findings continue to raise the questions that others have raised: how do we make smaller, capital-starved nonprofits better able to take advantage of the tax-exempt market in a responsible manner?

Public Borrowing for Private Organizations: Costs and Structure of Tax-Exempt Debt through Conduit Issuers

Public Borrowing for Private Organizations: Costs and Structure of Tax-Exempt Debt through Conduit Issuers
Public Budgeting and Finance, forthcoming.

Todd L. Ely and Thad D. Calabrese
04/18/2016

Conduits are public organizations that issue debt on behalf of third-party borrowers, both government and private. Additional transaction costs from using conduits offset lower interest costs. We find debt issuance costs 25% higher for private organizations than the broader municipal debt market, primarily from fees charged by conduits. Further, existing issuance cost reporting focuses on upfront costs, which fail to capture the significance of annual conduit fees. Also, private borrowers have debt structures that keep more principal outstanding over longer periods of time. Despite additional costs, conduits still provide these private borrowers with substantial interest cost savings.

Financial Management for Public, Health, and Not-for-Profit Organizations

Financial Management for Public, Health, and Not-for-Profit Organizations
5th ed. Thousand Oaks, CA: CQ Press

Finkler, Steven A., Daniel L. Smith, Thad D. Calabrese, and Robert M. Purtell
02/16/2016

Now in its Fifth Edition, Financial Management for Public, Health, and Not-for-Profit Organizationsis the leading textbook on financial management in the government, health, and not-for-profit sectors providing a comprehensive yet practical introduction to the financial decision-making and management skills required of students and practitioners in the field.  Assuming readers have no prior training in financial management, the authors artfully combine the principles and theory and analytics of accounting and finance.  Coverage includes cost analysis, budget preparation, budget and variance analysis, management control, and recording and reporting financial information, with an emphasis on preparing and analyzing financial statements. The authors detail the foundational principles of each of the methods introduced in the book, and through step-by-step equations, figures, and exhibits, they illustrate how to execute financial management in practice.

Leveling the Playing Field: The Taxpayer Relief Act of 1997 and Tax-Exempt Borrowing by Nonprofit Colleges and Universities

Leveling the Playing Field: The Taxpayer Relief Act of 1997 and Tax-Exempt Borrowing by Nonprofit Colleges and Universities
National Tax Journal, Forthcoming

Todd L. Ely and Thad D. Calabrese
02/16/2016

As part of the Tax Reform Act of 1986, non-hospital nonprofit organizations were subject to a $150 million cap on tax-exempt debt outstanding. This federally-imposed constraint was lifted by the Taxpayer Relief Act of 1997. This paper examines how this credibly exogenous policy change – which was little noticed outside of the municipal bond industry – reduced the cost of capital, and, as a result, led to a significant increase in the use of tax-exempt debt overall and relative to other financing sources by nonprofit colleges and universities. Using two different comparison groups and a difference-in-differences estimation strategy, we find that nonprofit colleges and universities significantly increased the use of tax-exempt borrowing and altered capital structures following the policy change in 1997 with some variation by degree of constraint.

A Deficit Model of Collaborative Governance: Government-Nonprofit Fiscal Relations in the Provision of Child Welfare Services

A Deficit Model of Collaborative Governance: Government-Nonprofit Fiscal Relations in the Provision of Child Welfare Services
Journal of Public Administration Research and Theory, 25(4): 1031-1058.

Nicole Marwell and Thad Calabrese
12/01/2015

Much existing scholarship on nonprofit organizations’ receipt of government funds appears to assume that there is something highly problematic about this relationship. Although rarely articulated in these studies, the concern about the negative effects of government funding turns on a view of nonprofits that privileges their private character. In this paper, rather than examining how public funds constrain private action, we inquire about how government deploys private organizations, via the mechanism of government funding, to secure a public good.  Using a case study of the nonprofit child welfare sector in New York State, we theorize a deficit model of collaborative governance in which nonprofits have been deputized by the state to secure children’s social rights but do not receive sufficient resources to cover the costs of securing those rights. Then, we connect this theory to organization-level financial management practices that pose challenges to the nonprofits of both survival and service quality. This nonprofit organizational instability concerns the state insofar as it threatens the securing of individuals’ social rights.

Credit is Not a Right

Credit is Not a Right
in Microfinance, Rights, and Global Justice (edited by Tom Sorell and Luis Cabrera). Cambridge University Press.

Gershman, John and Jonathan Morduch
08/01/2015

Muhammad Yunus, the microcredit pioneer, has proposed that access to credit should be a human right. We approach the question by drawing on fieldwork and empirical scholarship in political science and economics. Evidence shows that access to credit may be powerful for some people some of the time, but it is not powerful for everyone all of the time, and in some cases it can do damage. Yunus’s claim for the power of credit access has yet to be widely verified, and most rigorous studies find microcredit impacts that fall far short of the kinds of empirical assertions on which his proposal rests. We discuss ways that expanding the domain of rights can diminish the power of existing rights, and we argue for a right to non-discrimination in credit access, rather than a right to credit access itself.

 

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