The Effects of Capital Campaigns on Local Nonprofit Ecologies

Abstract

When charities launch capital campaigns, they hope to attract large amounts of resources in a relatively short period of time; however, other charities in the area are likely to see such campaigns as disruptive to the natural distribution of resources to area nonprofits by disproportionately directing area donations to a single organization. This study seeks to understand the effects capital campaigns have on both the fundraising performance of other nonprofits and the makeup of a local nonprofit ecology. The analysis uses data from a randomly sampled set of nonprofit arts organizations that had capital campaigns for facilities projects between 1994 and 2007 and Internal Revenue Service Form 990 data on 501 (c) (3) nonprofit organizations in each county. The results illustrate that a capital campaign positively affects the fundraising performance of other charities in a local nonprofit ecology, but that campaigns decrease the size of a local nonprofit ecology.

Are Disasters Disastrous to Nonprofit Organizations? Investigating the Financial Implications of Hurricane Sandy for Nonprofits

“…Nonprofit finances should be evaluated in an open, not a closed, system perspective (Prentice, 2016b). Recent studies provided evidence on the impacts of environmental factors on nonprofit financial health and added new variables to the model, like resource distribution (Paarlberg et al., 2018), minority communities (Lam & McDougle, 2016), and effects of capital campaigns (Woronkowicz, 2018). A sudden environmental shock, like a natural disaster, is another example of an environmental factor, which is less understood in nonprofit literature.…”