The Adoption and Use of the Hirschman-Herfindahl Index in Nonprofit Research: Does Revenue Diversification Measurement Matter?

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The Adoption and Use of the HirschmanHerndahl Index in Nonprot Research: Does Revenue Diversication Measurement Matter?

Grace L. Chikoto1 Qianhua Ling2

Daniel Gordon Neely3

Published online: 24 March 2015 International Society for Third-Sector Research and The Johns Hopkins University 2015

Abstract Since its introduction by Tuckman and Chang (Nonprot Volunt Sector Q 20(4):445460, 1991), the HirschmanHerndahl Index (HHI) has been widely adopted into the nonprot literature as a precise measure of revenue concentration. This widespread adoption has been characterized by diverse composition, with the HHIs calculation being largely determined by the nature of the available data and the degree to which it contained disaggregated measures of revenue. Using the NCCS 990 Digitized Data, we perform an acid test on whether different HHI measures yield signicantly different results. Four measures of revenue concentrationan aggregated measure based on three revenue streams, an aggregated measure separating government grants from other contributions, a more nuanced measure based on seven revenue streams, and a fully disaggregated measure based on thirteen revenue streamsare used to predict two dominant nonprot nancial health dimensions: nancial volatility and nancial capacity. Overall, our results show that aggregation in HHI measurement matters; aggregation often downplays relationships by inuencing the signicance levels and magnitudes of estimates in a non-trivial way.

& Grace L. Chikoto [email protected]

Qianhua Ling [email protected]

Daniel Gordon Neely [email protected]

1 University of Wisconsin Milwaukee, Bolton Hall 610, P.O. Box 413, Milwaukee, WI 53201,USA

2 College of Business Administration, Marquette University, Straz Hall, 308, P.O. Box 1881, Milwaukee, WI 53201, USA

3 University of Wisconsin Milwaukee, Lubar Hall N320, 3202 North Maryland Avenue, Milwaukee, WI 53211, USA

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1426 Voluntas (2016) 27:14251447

Rsum Depuis sa prsentation par Tuckman et Chang (1991), lindice de HerndahlHirschman (IHH) a t largement adopt dans la documentation sur le secteur but non lucratif comme une mesure prcise de la concentration du revenu. Cette gnralisation a t caractrise par une composition diverse, dont le calcul de lIHH a t en grande partie dtermin par la nature des donnes...