Social Capital and the Growth of the Nonprofit Sector^*

Abstract

Objectives. This article examines the extent to which nonprofit organizational foundings are determined by various forms of social capital. Our hypothesis is that, controlling for other relevant social, political, and economic factors, communities with higher levels of social capital should experience more extensive growth in their nonprofit sectors. Methods. Using data derived from the Social Capital Community Benchmark Survey and the IRS “charitable organization” Business Master Files, we test our hypothesis using a negative binomial event count regression on nonprofit organization foundings in 284 U.S. counties in the year 2001. Results. We find that two core dimensions of social capital—political engagement and “bridging” social ties—have a significant impact on county‐level nonprofit foundings. Surprisingly, a key element of social capital in the literature, the level of interpersonal trust, does not lead to an increase in foundings of new not‐for‐profit organizations. Conclusions. This study provides further evidence of the strength of political engagement and bridging ties for the vitality of the community. It also shows that the different dimensions of social capital do not manifest a uniform effect on nonprofit sector growth. These results further demonstrate that the growth of a community's not‐for‐profit sector is dependent on a mix of ecological and environmental factors, especially preexisting organizational density, median household income, unemployment, and levels of governmental spending. Overall, social capital can usefully be seen as another key “environmental” factor in explanations of organizational foundings.

The Relationship Between Social Capital and Individualism–Collectivism in Europe

“…Given the research findings that social capital is a multifaceted phenomenon, and that the different dimensions of social capital do not manifest a uniform relationship with the same phenomena (Guillen et al, 2011;Halman & Luijkx, 2006;Kaasa, 2009;Saxton & Benson, 2005), it is possible that the relationship between individualism-collectivism and participation in civic society, for instance, is different to the associations revealed by the present study. Unfortunately, the data from the ESS Round 6 (2012) do not allow us to estimate the strength and the scope of formal social networks.…”

“…However, it may even be more complex than this -social capital has been shown to have different dimensions that do not manifest a uniform effect on the same phenomena, be they innovation (Kaasa, 2009) or nonprofit sector growth (Saxton & Benson, 2005), for example. Earlier research has also shown that the relationship between the different dimensions of social capital and other social phenomena may vary across social groups (Kroll, 2011).…”

Entry Barriers and Nonprofit Founding Rates: An Examination of the Milwaukee Voucher School Population

“…(e. g., Young 1980;Schiff 1986;Bilodeau and Slivinski 1998;Cordes, Steuerle, and Twombly 2004;Steinberg 2006). In addition, one can find plenty of empirical literature looking into various aspects of nonprofit market entry (e. g., Corbin 1999;Saxton and Benson 2005;Harrison and Thornton 2014), yet relatively few Entry Barriers and Nonprofit Founding Rates inquiries have explicitly examined the relation between formal institutions and nonprofit entrepreneurship. One exception is Twombly (2003), who investigated the relation between the implementation of a federal welfare reform (the AFDC waiver program) and new nonprofit entry.…”

The Effect of Social Capital on the Choice to Use Sustainable Agricultural Practices

“…An extensive literature studies environmental awareness at the aggregate level (Saxton and Benson, 2005), especially in the form of crosscountry comparisons (Duroy, 2005;Grafton and Knowles, 2004). Aggregate social capital, via the mechanism of collective action, plays an important role in these discussions (Pargal, Huq, and Gilligan, 1999;Pretty and Ward, 2001;Varughese and Ostrom, 2001).…”