Cash holding models in nonprofit organizations: an integrative approach

This study proposes a model to better explain the cash holdings of nonprofit organizations (NPOs) using a sample of 9,185 charities from England and Wales for 2015-2022 (51,685 annual observations). We adapt the traditional variables of Opler et al. (1999) to NPOs and combine them with those already proposed by Fisman and Hubbard (2003) and some additional NPO’s specific variables. Our results show that most of the explanatory power comes from the traditional adapted variables although specific variables are also significant. Therefore, we propose an integrative model for determining NPO cash holdings. We also find that the pecking order arguments are the most appropriate to explain the behavior of the NPOs.