Differentiated Government Control: Political Connections and Revenues to NGOs in China

Abstract

This dissertation hypothesized a theory of differentiated government control that posits the strength of NGOs’ political connections is positively associated with their major revenues in authoritarian China. This dissertation quantitatively tested this theory using a sample of 2,021 foundations in China. The main findings are as follows. First, organizational legitimacy, i.e., nonprofit evaluation, tax exemption qualification, and pretax deduction qualification are positively associated with foundations’ donation income; higher degrees of political connections count only partially the more charitable donations; political connections potentially leverage the association between pretax deduction qualification and charitable donations in favor of politically connected foundations. Second, foundations’ political connections are partially positively associated with their income from government grants; issue area (meaning what foundation work on) is not significantly associated with government grants; among organizational legitimacy measures only nonprofit evaluation shows a positive relationship with government grants; however, nonprofit evaluation matters only for foundations with strong political connections. Third, different levels of political connections show different levels of association with both charitable donations and government grants that foundations received. Specifically, individual political connections are associated with neither source of revenues; organizational political connections remain associated with charitable donations and government grants as discussed above; the two levels of political connections do not interact; the insignificance of individual political connections may indicate the government’s retreat from despotic intervention of foundation operations. The findings in this dissertation suggest that the Chinese government has adapted its strategies to control the nonprofit sector through the use of more sophisticated measures than are generally acknowledged. To some extent, differentiated government control consolidates the recent research on the multidimensions of government-nonprofit relations in China.