The Effect of Revenue Diversification on Output Creation in Nonprofit Organizations: A Resource Dependence Perspective

Nonprofits continue to be faced with financial challenges to fulfill their missions. Both the academic literature and nonprofit practitioners have explored revenue diversification and concentration strategies to meet these challenges. While these two strategies are essentially antagonistic, both hav...

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Bibliographic Details
Published inVoluntas (Manchester, England) Vol. 29; no. 6; pp. 1190 - 1201
Main Authors Berrett, Jessica L., Holliday, Bradley S.
Format Journal Article
LanguageEnglish
Published New York Springer Science+Business Media, LLC (Springer) 01.12.2018
Springer US
Springer Nature B.V
Subjects
Concentration
Diversification
Nonprofit organizations
Original Paper
Political Science
Revenue
Social Policy
Social Sciences
Vouchers
Revenue diversification
Herfindahl–Hirschman Index
Resource dependence
Revenue concentration
Nonprofit
Mission output
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Summary:Nonprofits continue to be faced with financial challenges to fulfill their missions. Both the academic literature and nonprofit practitioners have explored revenue diversification and concentration strategies to meet these challenges. While these two strategies are essentially antagonistic, both have received support as being viable strategies to create better outcomes for the organization. This article examines whether revenue diversification or concentration strategies lead to greater mission outputs in a nonprofit context. Using resource dependence theory as a guiding framework, two opposing hypotheses are tested to gain more insight into the diversification versus concentration dilemma. A unique dataset is built and utilized to estimate a zero-inflated negative binomial regression model to assess the correlation between revenue diversification and mission outputs. Results indicate that revenue diversification (and not concentration) is associated with an increase in organizational outputs.
ISSN:0957-8765
1573-7888
DOI:10.1007/s11266-018-00049-5