Laurie E. Paarlberg

Community Variations in the Size and Scope of the Nonprofit Sector: Theory and Preliminary Findings

Nonprofits reflect and shape community conditions. Understanding the nature of this relationship is important if we are to fully comprehend the role nonprofits play in contemporary society and if policy makers are to make effective use of the sector to implement local responses to community needs. Using data on Internal Revenue Service–registered nonprofits for Indian acounties, the authors examine how theories of demand, supply, and social structure predict the overall density of nonprofits in local communities. The authors find substantial county-level variations in the densities of nonprofits overall and of charitable, advocacy, and mutual-benefit nonprofits. Using multiple regression techniques, they are able to explain 20% to 46% of overall variation (depending on legal category involved) in nonprofit densities. Their findings support the supply and social structure, but not demand, explanations and reveal somewhat divergent patterns for the various types of nonprofits.The authors note several important caveats to the findings.

Community Carrying Capacity: A Network Perspective

Scholars have explored the idea of the determinants of the size of the nonprofit sector as a linear relationship between supply of resources and the demand for nonprofit services. This in turn has fueled debate about whether there are too many nonprofits for available resources. In this article, we propose that the scarcity (or abundance) of resources does not inherently determine the limits of a communitys nonprofit “carrying capacity”. Rather, network exchanges between nonprofits and other organizations may exhibit positive synergistic effects that are associated with diverse outcomes. We therefore propose a model of nonprofit carrying capacity that shifts the discussion to the ability of a community to support network exchanges among independent agents.

Extent and Nature of Overlap between Listings of IRS Tax-Exempt Registration and Nonprofit Incorporation: The Case of Indiana

To consider the capacity of nonprofits and communities that respond to public policy initiatives, the authors use a comprehensive database of Indiana nonprofits to examine two indicators of nonprofit formalization: tax-exempt registration under Section 501(c) of the IRS code and formal incorporation with the Indiana Secretary of State. The authors find that only 23% of the 54,108 nonprofits in the statewide database meet both criteria for formalization. The authors test whether more formalized nonprofits (appearing on both lists) are larger, older, and active in more institutionalized fields than those on only one or neither of the two lists. The findings generally confirm these expectations. The authors also hypothesize that larger, growing, and more institutionally developed communities will have a more formalized nonprofit sector (greater list overlap). However, few community-level variables relate meaningfully to the measure of sector formalization. Other factors that may be relevant for such an analysis are considered.

The Heterogeneity of Competitive Forces: The Impact of Competition for Resources on United Way Fundraising:

How does competition for resources affect the fundraising performance of local United Way (UW) affiliates? Drawing upon population ecology, we hypothesize a nonlinear relationship between competition and organizational performance. Using a 21-year panel data set that includes UW campaign data, contributions to specialized fundraising organizations, and contributions to the general population of nonprofit organizations, we estimate a fixed effects regression model. We find that the effect of competition differs depending upon the degree of niche overlap. Contributions to organizations with greatest niche overlap have a negative effect on contributions to local UWs. Consistent with population ecology, other types of fundraising organizations that have less niche overlap show beneficial relationships at certain levels of giving. However, few communities reach the philanthropic level at which benefits of competition occur.

Considering the Role of Social Capital for Economic Development Outcomes in U.S. Counties

The authors examine major aspects of the connection between social capital and economic development in U.S. counties. They test the conclusions of Putnam, who saw associations as a force for positive development, and Olson, who concluded the opposite. The authors find that Putnam organizations have a negative effect on income, while Olson organizations have a positive effect by decreasing levels of income inequality. Drawing on the literature distinguishing between bridging versus bonding, the authors show that bridging capital has a positive effect on development by increasing per capita income, while bonding capital has a neutral effect on both per capita income and income inequality. Finally, religious variables are tested for their relationship with economic development. Overall, congregation density has a negative influence by increasing per capita income and income inequality, controlling for geographic type. Congregations with bridging characteristics have a mixed effect on development by decreasing income and decreasing inequality.

Captured by Partners: Interorganizational Relationships and Fund Allocation Stability in United Way Systems

ABSTRACT While organizational systems are associated with innovation and adaptability, interorganizational relationships may be predisposed to stability. Using multinomial logit analysis, we test how resource dependencies affect system stability in local United Way (UW) systems between 2000 and 2010. We find strong support for the resource dependence argument. UW are less likely to drop larger, powerful partners that are strong fundraising partners. However, powerful, long-term partners not contributing to the strategic objectives of the UW system are more likely to experience a decrease in allocations. While powerful resource partners may capture the UW, UW systems continue to change through the addition of new partners and the reallocation of resources among long-term partners. However, context also affects the capacity for change. Larger UWs are more likely to add new partners and less likely to keep long-term partners.

Assembling the Puzzle of the Nonprofit-Economic Development Linkage

Abstract This study seeks to quantify the impact of the nonprofit sector on economic development by more clearly defining the diverse roles that nonprofits may play in development – instrumental, expressive, and connective. We begin by summarizing existing research on nonprofit organizations and economic development. Using secondary data, we test our model in 360 U.S. metropolitan areas for the years 2001–2006. Do nonprofit organizations produce economic growth? Our statistical findings suggest, “Not really” and “It depends.” While some forms of nonprofit organizations (business associations) are positively related to growth, others such as congregations and social and fraternal associations may have a dampening effect. Overall, our findings suggest complex relationships between individual forms of capital, organizational structures, and development that may be place and time dependent. While our findings currently provide little guidance for policy makers attempting to promote economic development, our findings do have important implications for nonprofit and public policy scholars. Any attempt to explore the relationship between nonprofit activity and development must untangle indicators of individual behavior (church attendance or census return rates) from indicators of organizational structures (such as the number of specific organizations). Second, any effort to understand the impact of the nonprofit sector should disaggregate sector measures based upon a conceptual understanding of the diverse roles of various organizational types (for example, human service organizations versus social and fraternal organizations). Finally, growth and development and the role of the sector are contextual, exhibiting significant regional and temporal variation.

A Field Too Crowded? How Measures of Market Structure Shape Nonprofit Fiscal Health:

This article explores how various dimensions of market structure, often used to measure organizational crowding, affect the fiscal health of nonprofit organizations. Using 2011 National Center for Charitable Statistics (NCCS) nonprofit sector data, our findings generally support population ecology’s model of a curvilinear relationship between density and days of spending. However, we also find that single dimensions of market structure do not fully capture the effects of market competition. Increasing density has a negative effect on the fiscal health of organizations in markets in which resources are more evenly distributed among actors, whereas increasing density of organizations has a positive effect on organizational fiscal health in markets in which resources are less evenly distributed among actors. These results are sensitive to different specifications of fiscal health and field of nonprofit activity.

Means, motive and opportunity: exploring board volunteering

Purpose The purpose of this paper is to better understand the conditions associated with serving on boards by investigating the factors that distinguish older volunteers who serve on nonprofit boards from those who only volunteer programmatically. Design/methodology/approach Surveys of 354 residents of Southeastern North Carolina over age 50. Measures include education, wealth, retirement status, public service motivation (PSM), patterns of residential mobility, secular and religious organization meeting attendance, and volunteer activity in the past year. Data were analyzed using a Heckman probit selection model. Findings Respondents who have higher levels of education, are retired, or have lived in the community for longer periods are more likely to report board volunteering, but are not any more likely to volunteer programmatically. Those with higher levels of PSM are more likely to report general volunteering, but are not any more likely to volunteer on boards. Two measures reveal divergent findings based on type of volunteering: moving frequently in one’s lifetime and attending weekly religious services are associated with a greater likelihood of programmatic volunteering but a reduced likelihood of serving as a board member. Research limitations/implications Limitations include self-reported, cross-sectional data, and a geographically restricted American sample that is older, more educated, and more likely to own a second home than average. Practical implications In order to better address board member recruitment, nonprofits should consider extending opportunities through strategies targeting retired community newcomers. Originality/value This study contributes an analysis of PSM among nonprofit board members, and identifies factors that distinguish programmatic and board volunteers, in order to better understand the conditions associated with board service.

Testing a Two-Stage Grant Allocation Process: The Case of the United Way

Drawing upon transaction costs economics, we examine the determinants of the two-stage allocation process within the local United Way (UW) system. We use a unique multiyear data set that captures local UW allocations to nonprofit grantees at four points in time (2000, 2004, 2008, and 2010). We find that the first stage is screening, in which organizations’ legitimacy, mission, and financial performance are preliminary determinants of partnership in the UW system. In the second stage, UWs incentivize existing grantees with high legitimacy to stay in the system through larger allocation share. These determinants are stable over time. However, size of these effects varies across size of UW system; this finding suggests that transaction costs influence the likelihood of using performance measures to evaluate grantees in the first stage of the allocation process.