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How does government funding affect nonprofits' program spending? Evidence from international development organizations
Author(s) -
Lu Jiahuan,
Zhao Jianzhi
Publication year - 2019
Publication title -
public administration and development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.574
H-Index - 44
eISSN - 1099-162X
pISSN - 0271-2075
DOI - 10.1002/pad.1849
Subject(s) - government (linguistics) , agency (philosophy) , scope (computer science) , government spending , business , corporate governance , public economics , service delivery framework , service (business) , compromise , public administration , economics , public relations , economic growth , finance , political science , marketing , sociology , welfare , social science , philosophy , linguistics , computer science , law , market economy , programming language
Summary Under the new governance models, the scope of government funding of nonprofit activities in service delivery and policy implementation is extensive. There is a long‐standing concern that government funding may compromise nonprofit operations and lead to unintended consequences. This research examines the concern by exploring the effect of government funding on nonprofits' spending on programs and services. Existing theories and empirical evidence propose competing arguments concerning the relationship between government funding and nonprofits' program spending. Using a 20‐year panel dataset of international development nonprofits registered with the United States Agency for International Development, we find that nonprofits receiving more government funding spend significantly higher proportions of their organizational resources on development programs. Government funding seems to increase nonprofits' program spending and to make them more focused on their mission‐related activities.