Previous literature proposes that availability of substantial levels of endowment dividends or other reliable "hard money" to partially fund operations allows research administrators to manage nonprofit research institutes more effectively than if programs rely almost entirely on "soft money" from government grants and contracts. Other literature asserts that nonprofit managers have little reason to operate efficiently, and that they may shade output without detection by sponsors. Further, regulators and private watchdogs have increased demands for nonprofit accountability. However, financial performance is generally an inappropriate output measure for nonprofits because it does not measure effectiveness.; This dissertation explores these issues in terms of the funding and scientific activity of sixty independent nonprofit biomedical research institutes. Hypotheses relate to the presence and significance of hard money, to productivity, and to the legitimacy of executive compensation. Productivity evaluation uses IRS form 990 financial data, plus patent, publication, and citation bibliometrics from information science.; Findings substantiate a trichotomy of revenue dependence patterns proposed by the Carnegie Commission, as well the significance of "Brim's ratio," a hard over soft money quotient. In the present study, these quotients vary more than one-hundred-fold. Institutes with higher quotients generate significantly larger operating surpluses and incur significantly higher costs per journal article patent. When Brim's ratio is greater than two, institutes are significantly less effective than those with more balanced funding. The institutes in this study that held the largest investment funds and made the highest gains on investment transactions also had the greatest presence in the "hottest" biomedical subfield, molecular biology, and had the highest scientific impact. This is attributed to increased risk-tolerance, enhanced by large capital contributions. Involvement in molecular biology has a spillover effect which increases citation impact in other fields. A surprising finding was that institutes named after people are wealthier and scientifically more productive than those which are not. The study also found a trade-off between government and charitable gift funding, and that top executive compensation is correlated with institutional performance. Over-all, independent biomedical research institutes are run efficiently and are effective in their quality of output.
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