Determinants and Consequences of Interlocking Boards in Nonprofit Organizations

• In Event: Nonprofit Governance and Performance

Abstract

Few studies have addressed the topic of interlocking boards in the nonprofit sector; thus, we seek to fill this gap in the literature by analyzing board interlocks in the charitable sector. In a two-part study, we first examine the determinants of nonprofit interlocks followed by the consequences of such practices. We examine determinants of nonprofit interlocks as a means of understanding the type of nonprofit characteristics that increase the likelihood of a board interlock; specifically, we consider an organization’s size, net income, donation reliance and industry. With respect to consequences, we attempt to understand the relationship between board interlocks and the amount of donations an organization receives; that is, whether an organization relying upon the synergies provided by interlocking board members secures more donations than one without these same director relationships. Using a sample of over three thousand industry-diverse nonprofit organizations in the Washington, D.C. metropolitan area, we find that larger, more efficient organizations that are more donation-reliant are more likely to have a board interlock. We also find that nonprofit entities in the health industry are more likely to interlock than those in other industries. In terms of consequences, we find that board interlocks are positively associated with the level of donations earned by an organization, consistent with the expanded network provided by these relationships.

Authors

• Amanda Peterson, East Carolina University

• Erica Harris, Rutgers University - Camden

• Rebecca Bloch, Fairfield University

• Amanda Peterson, East Carolina University