Importance of funding sources to the scale of activity of social enterprises

Abstract

In the past few decades the sector of non-governmental organisations undergone significant changes. Those changes consist in adaptation of business behaviour which bases on stability of NGOs’ financing and possibility to realise the social mission more efficiently. This process is mostly described as economisation of non-profit organisations and it arouses a lot of controversy among numerous researchers. It became an incentive of development for non-governmental organisations as those entities which run a business not for profit but to fulfil goals in social domain. The realisation of those goals, apart from paid activity, requires numerous support sources which determine the scale of a social effect. Purpose – The aim of the paper is a comparative analysis of the influence of funding sources on the scale of activity of NGOs running a business (ie. social enterprises) and NGOs not running such an activity. Design/methodology/approach – ANOVA analysis and ranking method were used to achieve this goal. Following regressive methods were also used: step regression, interactive trees (Classification and Regression Trees - C&RT), reinforced trees, MARSplines and neural networks. Findings – The scale of activity of social enterprises (NGOs running a commercial sale of goods and services) is statistically significantly higher than of non-profit ones. Non-governmental organisations also demonstrate a bigger involvement in use of private resources. The main source of revenues, determining the scale of business of profit-oriented and non-profit NGOs, are European funds. Originality/value – The paper can significantly contribute to international discussion on effects of economisation of non-profit organisations which is understood as a commercial sale of goods and services. This contribution is due to a small number of studies based on empirical research which show a real influence of financing sources on the activity scale of social enterprises.