The strategic use of pensions by not-for-profit organizations

Thad Calabrese, Elizabeth A.M. Searing

Research output: Contribution to journalArticle

Abstract

Defined benefit pension plans are an important and unexplored aspect of not-for-profit compensation, covering between 15% and 21% of the estimated national not-for-profit workforce. Here we consider whether pension contributions and actuarial assumptions are mechanisms for achieving not-for-profit financial management objectives such as smoothing consumption, managing reported net earnings, and minimizing pension liabilities. The empirical results indicate a variety of these behaviors. Not-for-profit pension plan sponsors use accumulated net assets to smooth consumption. Further, not-for-profits manage reported profits downwards when they exceed expectations by increasing pension contributions, but both minimize contributions and liberalize actuarial assumptions when they underperform relative to their desired earnings targets.

Original languageEnglish (US)
Pages (from-to)388-414
Number of pages27
JournalJournal of Pension Economics and Finance
Volume18
Issue number3
DOIs
StatePublished - Jul 1 2019

Fingerprint

Not-for-profit organizations
Pensions
Liability
Workforce
Defined benefit pension plans
Financial management
Pension plans
Consumption smoothing
Sponsor
Empirical results
Assets
Profit

Keywords

  • Earnings management
  • financial management
  • not-for-profits
  • pension contributions

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

Cite this

The strategic use of pensions by not-for-profit organizations. / Calabrese, Thad; Searing, Elizabeth A.M.

In: Journal of Pension Economics and Finance, Vol. 18, No. 3, 01.07.2019, p. 388-414.

Research output: Contribution to journalArticle

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