'A Triple-Braided Cord': Empirical Analysis of Three Theories of Nonprofit Sector Density

Abstract

The three primary strands of nonprofit formation and density are well-documented, though often as rivalrous as the nonprofit-government relationships often encased in such theories. Building on previous studies which utilize similar data to test isolated hypotheses, this paper utilizes a combination of new “digitized” data and established records of social trust and community characteristics to mount a simultaneous test of the three top theories: government failure, interdependence, and social capital. We find that all sources of funding exert substantial impact on a nonprofit’s choice of location, in addition to local levels of social capital and heterogeneous demand. Therefore, we find evidence that both demand (client-as-agent) and supply (nonprofit-as-agent) forces are at work in the nonprofit market. Though this suggests simultaneity, such a model would both acknowledge a complex system more closely resembling that of a modern marketplace for quasi-public goods and would support the existence of a triple-braided cord of established threads of thought that explains the resilience of the nonprofit sector to various causes of density.