Funding Nonprofits in a Networked Society: Toward a Network Framework of Government Support
Authors: Ji Ma, Ph.D
Abstract: This study considers the effects of government funding to nonprofits from a network perspective. By analyzing a novel, 12-year panel dataset from the People's Republic of China, I find no evidence that government funding to a nonprofit crowds out private donations to the same organization. However, I find a substantial crosswise crowding-in effect at the ego network level: an increase of one Chinese Yuan in government funding to a nonprofit's neighbor organizations in board interlocking network can increase the private giving to the nonprofit by 0.4 Chinese Yuan. A nonprofit's network position measured by Katz centrality negatively associates with its private giving. The results suggest that, if we consider the funding system from a holistic network perspective, government should support nonprofits with confidence because of the spillover effect. Moreover, a nascent nonprofit cannot increase donor's confidence by only borrowing board members from renowned organizations.