Too Many Nonprofits? An Empirical Approach to Estimating Trends in Nonprofit Demand

Nonprofit Policy Forum, Forthcoming

17 Pages Posted: 7 Oct 2014

See all articles by Teresa D. Harrison

Teresa D. Harrison

Drexel University - Department of Economics & International Business

Jeremy P. Thornton

Samford University - Brock School of Business

Date Written: January 31, 2014

Abstract

We examine the claim that nonprofits markets have become more crowded over time. A naïve examination of the data indicates that the number of nonprofits has increased rapidly over the past two decades. However, this approach does not account for increases in population, income, or other demand factors that would alter a population’s ability to support additional nonprofits. Our findings indicate that normalized nonprofit density in 2005 is lower than it was in 1990. Furthermore, we find that it takes far more people to induce nonprofit entry in 2005 compared to 1990. It is likely that technological shifts in production and management techniques introduced since 1995 now allow firms to serve larger numbers of people. Consequently, nonprofits are able to operate more efficiency, by spreading out the fixed costs of fundraising and management expenses over larger output.

Keywords: nonprofit, density, market structure

JEL Classification: L1, L3

Suggested Citation

Harrison, Teresa D. and Thornton, Jeremy P., Too Many Nonprofits? An Empirical Approach to Estimating Trends in Nonprofit Demand (January 31, 2014). Nonprofit Policy Forum, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2506213

Teresa D. Harrison

Drexel University - Department of Economics & International Business ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

Jeremy P. Thornton (Contact Author)

Samford University - Brock School of Business ( email )

800 Lakeshore Drive
Birmingham, AL 35229
United States
2057262128 (Phone)

HOME PAGE: http://https://www.samford.edu/business/directory/Thornton-Jeremy

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