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Resource Dependence In Non-profit Organizations: Is It Harder To Fundraise If You Diversify Your Revenue Structure?

2016; Springer Science+Business Media; Volume: 27; Issue: 6 Linguagem: Inglês

10.1007/s11266-016-9738-8

1573-7888

Ignacio Sacristán López de los Mozos, Antonio Rodríguez Duarte, Oscár Rodriguez Ruíz,

Microfinance and Financial Inclusion

This article explores how fundraising efficiency is affected by changes in diversification of revenues in non-profit organizations. It uses random effect regression and Arellano–Bond models to study this phenomenon in a sample of 10358 US non-profits during the 1997–2007 period. We find a negative impact on fundraising efficiency when NPOs alter their locus of dependence and change their pattern of diversification. This effect is impacted by organizational size and industry. Previous studies have suggested that income heterogeneity is associated with organizational stability and financial strength. Using a change (versus level) model of funding diversity, our work shows that increased diversification leads to a higher operational inefficiency that could be penalized by potential donors.