The economics of the church-firm : a case study of Churches of Christ in New South Wales : a non-profit organisation

Fiedler, Mervyn Rupert George. (1985). The economics of the church-firm : a case study of Churches of Christ in New South Wales : a non-profit organisation PhD Thesis, , The University of Queensland.

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Author Fiedler, Mervyn Rupert George.
Thesis Title The economics of the church-firm : a case study of Churches of Christ in New South Wales : a non-profit organisation
Institution The University of Queensland
Publication date 1985-01-01
Thesis type PhD Thesis
Total pages 545
Language eng
Subjects 14 Economics
Formatted abstract
This thesis examines the economics (micro, macro and managerial interfaces) of the church-firm. The organisational, financial and effectiveness aspects of the church - a non-profit organisation in the private sector - are probed incisively. A case study approach is used. The Churches of Christ religious denomination in New South Wales (sometimes referred to herein as the church under study) provides the focal point of the case study.

The dominating characteristic of private non-profit organisations (PNPO's) is the absence of the normative business firm goal of profit or wealth maximisation. For these organisations, its replacement by specialised service-oriented goals, the exact nature of which vary with each type of organisation, is deemed significant. Other key characteristics of these PNPO's are examined and a taxonomy is developed.

The foregoing abstraction provides a background for a critical examination of the vast and growing economic and related literature on PNPO's generally, and on churches, in particular. Further, the analyses provide the foundation for the development of an original model of the church-firm, as explained in the sequel.

The goals or targets of churches involve the provision of specialised collective goods, namely salvation and other spiritual/welfare services, as foreshadowed in the Dulles paradigms. Due to market failure, the neo-classical model incorporating allocative efficiency is deemed inapplicable to the development of an economic theory of the church-firm. In lieu, an original economic model (being a hybrid of a managerial discretion and constrained growth formulation), based on utility maximisation functions is postulated. The model is derived from the amorphous and altruistic motivation of seeking to discover and implement the will of God. The non-rival and non-excludable aspects of certain of the specialised services of the church give rise to the adaptation of aspects of the theory of pure public goods to the church-firm. The presence of externalities and Leibenstein's X-inefficiency is identified. The market failure and absence of Pareto-optimal conditions lead to the second best solution imperatives. These prescriptions are detailed in the thesis.

The descriptive model of the church-firm is translated into a set of identities involving both policy influenced and exogenous variables. The main economic policy variables identified are: numbers of Church active members; church attendance; numbers of churches; numbers of ministers; income (especially members' donations); and expenditure (especially ministers' salaries). Alternative long-term forecasts of the major policy variables are made on the basis of specified assumptions. The major exogenous variables are the macroeconomic aggregates of real household income (a component of real gross domestic product) and population, and dummy variables or proxies for certain sociological and political conditions, the most important of which is secularisation.

A major contribution of this thesis is the development of this model and its testing, by examination of the altruistic and economic behaviour of the church under study. Elements of the model are related in turn to : the organisational structure and decision-making processes of the movement; church membership growth; and church income and expenditure- The model is also used to analyse the key determinants of donor motivation, donor members' time allocation to Church attendance and professional members' (viz., ministers') incomes. The empirical validation supports the hypothesised model, subject to minor qualifications.

The empirical work undertaken in connection with this study also leads to the formulation of other major conclusions:

(i) both policy (especially real church income, length of ministry, special evangelistic etc. efforts and member commitment/spiritual factors) and exogenous (of which population and secularisation are the most significant) variables emerge as important key influences on the size of church membership;
(ii) a range of identified factors, of which the levels of personal and family incomes and the degree of member commitment (as evidenced by the extent of altruistic motivation underlying the gift), are the most significant, influence the size of members' donations;
(iii) several factors, including the degree of commitment - also a proxy for intensity of religious belief - significantly influence members' time allocation to church attendance; and
(iv) ability, as proxied by the size of church membership, emerges as the most significant determinant of the amount of ministers' incomes.

The major economic problems which currently face the church are identified. These include the following: increased provision of the churches' public goods to the community; the need for greater membership retention and growth; the scope for greater lay participation; the need for larger church incomes and their optimum allocation; the inadequacy of some ministers' remuneration; and the desirability of higher ministerial education.

The collective goods provided by the church under study are evaluated from several standpoints, with special emphasis on a benefit-cost analysis. In this analysis, expected incurred costs and imputed benefits are matched over a suitable future long-term time frame. On the bases and assumptions used in this empirical study. Churches of Christ in New South Wales are found to be making a net economic contribution.

Recommendations for policy - a few in the Federal fiscal area, but most pertaining to Churches of Christ in New South Wales - are made. Several areas where scope exists for further economic research relating to churches and private sector non-profit organisations generally are identified.

Keyword Churches of Christ in New South Wales.
Nonprofit organizations -- New South Wales -- Finance.
Church finance -- New South Wales.

Document type: Thesis
Collection: UQ Theses (RHD) - UQ staff and students only
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Created: Tue, 02 Nov 2010, 21:56:47 EST by Ning Jing on behalf of The University of Queensland Library