Surviving the Riptide: The Role of Macro Resource Environments in Nonprofit Sustainability

• In Event: Growing Gifts for Good: Examining Fundraising in the Nonprofit Sector

Abstract

As nonprofit studies has emerged as an important subfield in public sector research the literature has evolved through various phases of development focusing first on broad theoretical and normative frameworks, followed by an emphasis on governance and cross-sector dynamics, and later an empirical focus on management, leadership, and organizational sustainability. The most recent wave of scholarship has been especially salient in an era marked by a rapid growth of professional academic programs focusing on nonprofit management and social entrepreneurship since research directly informs the skills and strategies taught in the classroom.

This study addresses a critical gap in our understanding of nonprofit success: the relative contribution of managerial quality—such as financial practices, governance, fundraising, and human resources—to long-term financial sustainability, especially compared to structural features of the macro-resource environment. Structural features of the macro-resource environment include the local density of philanthropic infrastructure like foundations, giving circles, and United Way chapters that impact available resources, local attitudes toward volunteering and giving, the history of government partnerships and local preferences for third party government, and the ability of dominant nonprofits to exert market power and control resources with a local market for donors. These factors vary significantly across metropolitan areas resulting in large differences in resource environments in which the nonprofits operate.

Various bodies of research from fields of industrial economics, corporate strategy, organizational ecology, and entrepreneurship provide evidence that market structure can promote organizational sustainability in some contexts and can make survival near impossible in others. A robust curriculum on nonprofit management that lacks a strong empirical framework of market dynamics has the potential to contribute to managerial burnout in cases where strong leadership will never be enough to overcome an unfavorable resource environment.

This paper advances research on nonprofit macro-resource environments by developing a local generosity index. Data on individual giving, private foundation grants, community foundation activities, corporate philanthropy, volunteering, professional fundraising, board member wealth, political giving, and density of supporting organizations has been compiled from six data sources (IRS 990 data, 1023 data, IRS 1040 measures of itemized deductions, 8872 data on political contributions, and the American Time Use Survey) at the county and metropolitan levels. The data will be used to establish a baseline distribution of each factor across the 900+ micropolitan and metropolitan areas. Exploratory factor analysis will be deployed to see whether all resource streams covary together or whether there are distinct dimensions or multiple independent resource streams to consider. The end goal is to construct an index that accurately captures the level of philanthropic capital available within a community to better disentangle the relationship between resource environments and organizational performance. An effective index might empower nonprofit leaders to factor macro-resource environments into planning and motivate local civic leaders to improve the quality of philanthropic support.

Author

• Jesse Lecy, Arizona State University
  Presenting Author