Funding nonprofits in a networked society: Toward a network framework of government support

Abstract

This study considers the effects of government funding to nonprofits from a network perspective. By analyzing a novel, 12-year panel dataset from the People's Republic of China, I find no evidence that government funding to a nonprofit crowds out private donations to the same organization. However, I find a substantial crosswise crowding-in effect at the ego network level: an increase of one Chinese Yuan in government funding to a nonprofit's neighbor organizations in board interlocking network can increase the private giving to the nonprofit by 0.4 Chinese Yuan. A nonprofit's network position measured by Katz centrality negatively associates with its private giving. The results suggest that, if we consider the funding system from a holistic network perspective, government should support nonprofits with confidence because of the spillover effect. Moreover, a nascent nonprofit cannot increase donor's confidence by only borrowing board members from renowned organizations.

Whom you connect with matters for transparency: Board networks, political embeddedness, and information disclosure by Chinese foundations

“…Our study finds that the presence of powerful political officials is harmful to information disclosure, especially for PFFs. Instead of emphasizing the financial benefits of government funding or political connections (Ma, 2020;Ni & Zhan, 2017;Wei, 2020;Zheng et al, 2019), this study presents a caveat that in the Chinese context, political embeddedness may restrict foundations' willingness to pursue transparency. Given that many PFFs harbor unique influence through personal ties to the state (Chan & Lai, 2018;Lai et al, 2015), such political impacts on PFFs should not be ignored in light of ensuing mismanagements and frauds among public foundations.…”

“…Amid a few exceptions, although network positions are found related to various organizational outcomes, questions remain unsettled regarding which type of network position matters. For instance, Ma (2020) remarks that Katz centrality negatively affects private donations, while Wu et al (2020) highlight the value of closeness centrality.…”

“…Since various resources are commanded by the state, in China's philanthropic sector, ties to government authorities are prevalent, especially among PFFs (Shieh, 2017). Some scholars argue that political ties generate many financial benefits for foundations, such as more donations and government funding (Ma, 2020;Ni & Zhan, 2017;Wei, 2020;Zheng, Ni, & Crilly, 2019). Generally, these findings are mainly concerned with financial resource acquisition.…”

“…The RICF database provides publicly accessible and reliable information about foundations registered in mainland China since 1981, encompassing basic profiles, programs and services, and financial activities (Ma, Wang, Dong, & Li, 2017). Recently, a comprehensive list of board members of Chinese foundations was released by the RICF (Ma, 2020), making it possible to investigate interlocking board networks. According to Q. Wang (2020), the RICF data have been utilized in about 30 studies on Chinese foundations, demonstrating its recognized usefulness and good quality.…”

China’s Overseas NGO Law and the Future of International Civil Society

“…The "restraining" scenario, which implies that national security hardliners in the central leadership will fully prevail over competing bureaucratic interests, is not the only plausible scenario. Bureaucratic wrangles, diverging sectoral agendas and local vested interests remain a core feature of Chinese policymaking, despite Xi's sweeping efforts to streamline the party-state bureaucracy from the top (see Ma 2020;Gåsemyr 2017). From an institutionalist perspective, an alternative scenario assuming enduring partial deviation between rules-in-use and rules-in-form is supported by empirical evidence that, as in other policy fields, the party-state's approach to non-profit organisations including INGOs continues to be ambiguous and driven by diverging domestic and transnational policy agendas.…”