Nonprofit Market Structure and Its Consequences

This dissertation is comprised of three papers related to nonprofit market structure and its consequences. I begin with an essay that examines how the recent boom of nonprofit organizations affects giving using the context of the Combined Federal Campaign (CFC). I find that the nonprofit boom has not increased donations to nonprofit organizations. Since a fixed amount of charitable resources is split among more organizations, the average nonprofit receives less funding as the number of organizations grows. The second paper proposes a new definition of nonprofit markets based on individual-level donor behavior and donor-nonprofit network ties. Notably, the new market definition predicts donor substitution among organizations 58% more accurately than the standard nonprofit market definition based on an organization’s subsector and geographic location. The CFC data and this donor-based market definition are also used to examine an important nonprofit policy issue—the relationship between market concentration and nonprofit spending on overhead. In the final essay, I study one of the processes by which competition in the CFC has increased over time—changes in the structure of government contracts. I examine whether fewer, but larger, contracts change performance. I find that contract consolidation does not significantly improve performance. Furthermore, I find no evidence that economies of scale exist in workplace giving.