Social Capital and the Growth of the Nonprofit Sector

Abstract

The extent to which nonprofit organizations are created by various forms of social capital is examined. Data are developed from the Social Capital Community Benchmark Survey, the Internal Revenue Service''s "charitable organization" Business Master Files, and other federal data sources. The number of nonprofit organizations founded in 284 U.S. counties in the year 2001 was analyzed, along six dimensions of social capital: "bridging" social ties, political engagement, giving and volunteering, civic engagement, informal socializing, and social trust.Two core dimensions - political engagement and bridging social ties - have a major impact on county-level nonprofit organization creation.A key element of social capital in the literature - the level of interpersonal trust - does not lead to an increase in development of new not-for-profit organizations. Findings reinforce the evidence of the strength of political contacts and bridging ties for the vitality of the community.The various dimensions of social capital do not have a uniform effect on nonprofit sector growth at the community level.The growth of a community''s not-for-profit sector is dependent on a mix of ecological and environmental factors that include pre-existing organizational density, median household income, unemployment, and levels of government spending.

Keywords: National Center for Charitable Statistics, Social Capital Community Benchmaking Survey, IRS Business Master Files, U.S. Bureau of the Census, Community organizations, Not-for-profit organizations, Social capital, Startups