Volume 9, Issue 3 -

Government monitors, regulates, and funds nonprofit organizations, making it is a key player in the health of the nonprofit sector in the United States. However, not all states treat nonprofits similarly. Prior work identified three types of state nonprofit culture (Pettijohn, S. L., and E. T. Boris. 2017. State Nonprofit Culture: Assessing the Impact of State Regulation on the Government-Nonprofit Relationship . Grand Rapids, MI: ARNOVA Presentation.), or a unique set of attitudes and beliefs that shape the operating norms between state government and nonprofits. This article analyzes whether differences among state nonprofit culture are measureable in the government-nonprofit relationship. Using data from the Urban Institute’s 2013 Nonprofit-Government Contracting and Grants survey, we find there are significant differences in the government-nonprofit funding relationships, which means nonprofits operating in certain state nonprofit cultures face different types and degrees of risk to their organization’s overall health.

Nonprofit social capital refers to the trust, norms, and networks that can improve organizational performance to fulfill a mission. Research on social capital within organizations, and specifically with nonprofits, is relatively widespread; however, the notion that we can quantify, measure, and incentivize its growth across a sector is novel. Nonprofits actively work to solve some of society’s most complex challenges in diverse areas, such as public health, education, social inequality, and environment. Few would argue against the need for a robust and healthy nonprofit sector. Yet, there is little debate and even less agreement on the definition of “a healthy nonprofit sector” or how to measure it. We offer a policy brief on this topic in the form of an exploratory think piece, rather than a definitive empirical methodology or research paper, that connects nonprofit social capital to a framework of sector health. Solving many of the challenges facing society today will require trust, working together, and networks of resources and reciprocity. Because of this, nonprofit social capital – both cognitive and structural – is an important benchmark of nonprofit sector health and could supplement other metrics of an index offering a signal as to changes occurring in the sector.

Metrics are essential for assessing performance and guiding course corrections. However, selecting the wrong metrics can damage organizations and communities by promoting resource investment in activities that don’t lead to envisioned impacts. Therefore, it is essential to reflect on what qualities an effective set of metrics should possess before insisting on quantification. This concept paper articulates design principles for developing an index of the nonprofit sector. Drawing from complexity theory and axiology (philosophy of values), the paper explains fundamental questions and values considerations to assist index developers in creating effective measures. It argues for the use of a capabilities approach, operationalized as multiple capitals, as the design architecture. It suggests the social accounting framework of Integrated Reporting as a way to track these capitals over multiple levels and time horizons.

This paper examines possible ways to reduce and synthesize information regarding the health of the U.S. nonprofit sector, exploring how a national “Nonprofit Health Index” might inform policymakers and the public by illuminating key indications of the continuing sustainability of the sector. The paper draws on the experiences of producing the National Arts Index. The paper examines the overall construct of nonprofit health, suggests an impact model based on the Balanced Scorecard, and explores the appropriate level of analysis. The challenges in resolving the nature of the nonprofit health construct make a national index impractical, but policy indexes targeted at locales and industries are more likely to benefit policymakers and inform the public.