Management Department - The Wharton School, U. of Pennsylvania, United States
Current research suggests that growth in the number of corporate headquarters (HQs) in a city leads to a growth in local welfare nonprofits, as HQs provide resources to these organizations. This relationship appears positive, however, whether HQ resources are distributed to nonprofits in cities that need them is unexplored. In this paper, I develop an integrated theory of nonprofit growth that considers the relative amount of resources that corporations provide a city (the supply side) matched to the relative need for welfare nonprofit resources in that city (the demand side). I argue that growth in HQs increases resource supply while decreasing the demand for welfare nonprofits, calling into question whether corporate resources are allocated to welfare nonprofits serving those most in need. The results of a series of city-year panel models from 2001 to 2018, including an instrumental variable approach and a quasi-exogenous shock to HQ growth, support these arguments. Forms of community social capital and political ideology are explored as moderators that may reduce the misallocation of resources to nonprofits. Additional city-year panel models, as well as abductive analysis of interviews and corporate foundation giving data help unveil mechanisms underlying the main relationship.
