Social Capital and Financial Performance in Nonprofits

Nonprofits provide services for the common good and are having an increasing influence on the economy over time. There is consensus among prior studies in for-profit settings that social capital positively influences corporate financial performance. In contrast, this study analyzes the association between social capital and nonprofit organizations' financial performance. Nonprofits headquartered in high social capital regions are expected to have better oversight from the community participants and better networking opportunities for the community participants. Thus, we expect and provide evidence that social capital is positively associated with nonprofits' financial performance.