The Matthew Effect in Philanthropy: Foundation Grantmaking to Human Service Nonprofits

• In Event: 355 - Section on Economic Sociology Roundtable Session (one-hour).
  In Refereed Roundtable: Table 09. From Niche to Market

Abstract

The size of foundation endowments and the tax exempt status of these grantmaking institutions fuel perennial interest in foundation support for the nonprofit sector. This paper builds on the “social relations” perspective on philanthropic relations which encourages attention to both parties in a philanthropic exchange: recipients as well as donors (Ostrander 2007; Ostrander and Schervisch 1990). Previous studies of foundation philanthropy emphasize how supply-side characteristics of foundation donors impact the distribution of funding. In contrast, this study focuses on how the demand-side characteristics of nonprofit grant recipients influence the distribution of foundation grants to human service nonprofits in Chicago. Drawing on organizational theory, the analysis demonstrates that nonprofit success in obtaining foundation grants is associated with organizational characteristics (mission, age and size), success in obtaining government grant support, previous endorsements from local and national foundations, and embeddedness in local networks. The pattern of foundation grantmaking illustrates what sociologist Robert Merton labeled the “Matthew effect” stemming from his observation that recognition for scientific work favors the more prominent scientist in collaborative research (1968). The Matthew effect in philanthropy describes a pattern of giving in which nonprofits that were previously funded by foundations are more likely to receive additional foundation funding in the future. Such “repeat players” have a competitive advantage over “new entrants” in the grants economy. Repeat players secure more total foundation dollars, receive larger mean grants, and enjoy longer periods of continuous funding. These findings suggest different strategies that nonprofits might employ when seeking foundation support.

Author

• Heather MacIndoe, University of Massachusetts-Boston