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How does government funding affect nonprofits' program spending? Evidence from international development organizations

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  • Jiahuan Lu
  • Jianzhi Zhao

Abstract

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.

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  • Jiahuan Lu & Jianzhi Zhao, 2019. "How does government funding affect nonprofits' program spending? Evidence from international development organizations," Public Administration & Development, Blackwell Publishing, vol. 39(2), pages 69-77, May.
    • Handle: RePEc:wly:padxxx:v:39:y:2019:i:2:p:69-77
    DOI: 10.1002/pad.1849
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    Cited by:

    1. VĂTAVU Sorana & ȚĂRAN Alexandra-Mădălina & MOLDOVAN Nicoleta-Claudia & LOBONȚ Oana-Ramona, 2022. "Does Technical And Democratic Governance Have The Potential To Enhance Health Spending Allocations?," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 17(3), pages 251-268, December.
    2. Sang Hun Lim, 2021. "Welfare state and the social economy in compressed development: Self‐sufficiency organizations in South Korea," Public Administration & Development, Blackwell Publishing, vol. 41(5), pages 267-278, December.
    3. Carol Brunt & John Casey, 2022. "The impacts of marketization on international aid: Transforming relationships among USAID vendors," Public Administration & Development, Blackwell Publishing, vol. 42(3), pages 167-178, August.
    4. Gratiela Georgiana Noja & Mirela Cristea & Eleftherios Thalassinos & Marta Kadłubek, 2021. "Interlinkages between Government Resources Management, Environmental Support, and Good Public Governance. Advanced Insights from the European Union," Resources, MDPI, vol. 10(5), pages 1-23, April.

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