Wednesday, October 31, 2018

Are There Just Too Many Nonprofits?

This interesting podcast addresses the question of overcrowding in the nonprofit sector.   The podcast is based on a recent study entitled "A Field Too Crowded?  How Measures of Market Structure Shape Nonprofit Fiscal Health."  Here is an excerpt from the study:


Are there too many nonprofits? America’s nonprofit sector has steadily increased in size over the past century, raising concerns about the effect of this growth on the financial sustainability of the sector. McLaughlin (2010, p. xvi) argued that the rapid growth of the nonprofit sector has weakened the “collective power of the entire field,” whereas Callahan (2015) raised concerns that few nonprofits can ever reach the scale needed to make an impact. Concerns about competitive pressures push nonprofits to collaborate (Gazley & Guo, 2015), consolidate (Seaman, Wilsker, & Young, 2014) , and merge (La Piana, 2010)—in part to achieve better economies of scale (Egger, 2012). Although scholars and practitioners have wrestled with various aspects of whether we have “too many” nonprofits, questions remain about how we measure crowding and how we analyze the effects of a growing field. For example, Harrison and Thornton (2014) suggested that before declaring a crowded supply of nonprofits, one must carefully examine changing dimensions of the demand for nonprofits.  Anheier (2004) argued that a careful study of growth trends supports the case, at least in the United States, that we may not have exceeded our carrying capacity or “the number of organizations that can be supported by the social, economic, and political conditions, given available resources” (pp. 281-282).


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