Does Revenue Diversification Really Improve Mission Performance? Evidence from a Sample of Human Service Nonprofits

Abstract

While our understanding of the relationships between revenue diversification and nonprofit financial health has deepened over the past three decades, little is known about the association between revenue diversification and nonprofit mission performance. Moreover, there is an ongoing debate as to whether revenue diversification hinders or improves nonprofit performance. Some expect performance improvement from diversification strategies, while others contend that concentration strategies drive performance. This study aims to fill this research gap by investigating the effect of revenue diversification on nonprofit managers’ perceived mission performance. Using data from a sample of Taiwan’s human service nonprofits collected in 2020, we estimate relationships with regressions, employing a more detailed measure of organizational performance and various revenue diversification measurements. The results suggest that revenue diversification is positively associated with nonprofit managers’ perceived mission performance. This study further discusses theoretical contributions to the literature and practical implications for human service nonprofit organizations.