Nonprofit Exit Rate
By Arnold Kling
We find that [nonprofit] entry behavior resembles that of for-profits but greatly differs on the exit side. New public charities begin smaller than incumbents. The survivors grow much faster than incumbents while the variance in their growth rates declines with age. The hazard rate of exit for new nonprofits is extremely low, while the hazard rate of exit is negatively related to size and age.
I would think that the nonprofit sector would be more effective if the exit rate were high. That would signify that donors are paying attention and moving funds to nonprofits that work well.
In any case, my guess is that more research on nonprofits would be quite useful. It seems to me that economists have largely overlooked the sector.