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The crowding‐out effect within government funding: Implications for within‐source diversification
Author(s) -
Zhao Jianzhi,
Lu Jiahuan
Publication year - 2019
Publication title -
nonprofit management and leadership
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.844
H-Index - 54
eISSN - 1542-7854
pISSN - 1048-6682
DOI - 10.1002/nml.21351
Subject(s) - diversification (marketing strategy) , receipt , revenue , crowding out , business , government (linguistics) , public economics , compromise , public relations , marketing , finance , economics , accounting , political science , monetary economics , linguistics , philosophy , law
The benefits and risks of revenue diversification lead scholars to propose within‐source diversification as a possible compromise. Although this revenue strategy sounds promising, no scholarly attention has been devoted to empirically examining it. This study explores within‐source diversification across government funding, specifically whether nonprofit receipt of support from a major government funder affects support from other government funders. Using a panel dataset of U.S.‐based international development nonprofits from 1995 to 2014, we find that nonprofits with more funding from the major funder are associated with significantly less funding from other funders. This crowding‐out effect weakens as organization size grows. The findings imply that the within‐source diversification strategy might be more desirable for larger organizations with the capacity to manage multiple funding relationships.