The Effect of Revenue Diversification on Output Creation in Nonprofit Organizations: A Resource Dependence Perspective
Abstract
Nonprofits continue to be faced with financial challenges to fulfill their missions. Both the academic literature and nonprofit practitioners have explored revenue diversification and concentration strategies to meet these challenges. While these two strategies are essentially antagonistic, both have received support as being viable strategies to create better outcomes for the organization. This article examines whether revenue diversification or concentration strategies lead to greater mission outputs in a nonprofit context. Using resource dependence theory as a guiding framework, two opposing hypotheses are tested to gain more insight into the diversification versus concentration dilemma. A unique dataset is built and utilized to estimate a zero-inflated negative binomial regression model to assess the correlation between revenue diversification and mission outputs. Results indicate that revenue diversification (and not concentration) is associated with an increase in organizational outputs.
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High resource dependency on government funding is positively associated with organizational formalization and an increase in organizational outputs but negatively associated with fundraising and operational efficiencies.
“High resource dependency on government funding is also positively associated with organizational formalization (Seo, 2016) and an increase in organizational outputs (Berrett & Holliday, 2018) but negatively associated with fundraising and operational efficiencies (López de los Mozos, 2016).”
From Understanding Government-Nonprofit Funding Agreements in Human Service Organizations Using Resource Dependence Theory and Organizational Legitimacy (2026) · cites this paper as Berrett & Holliday, 2018
Material, moralistic, informational, and human resource categories have been treated as mutually exclusive in the past.
“Whereas these categories have been treated as mutually exclusive in the past (for example, Berrett & Holliday, 2018; Seo, 2016)”
From Understanding Government-Nonprofit Funding Agreements in Human Service Organizations Using Resource Dependence Theory and Organizational Legitimacy (2026) · cites this paper as Berrett & Holliday, 2018
Recent research has supported revenue diversification as a strategy for protecting organizational autonomy in nonprofits.
“Recent research has supported revenue diversification as a strategy for protecting organizational autonomy in nonprofits (Berrett & Holliday, 2018; Peng et al., 2020)”
From Understanding Government-Nonprofit Funding Agreements in Human Service Organizations Using Resource Dependence Theory and Organizational Legitimacy (2026) · cites this paper as Berrett & Holliday, 2018
Cites
Diversification of Revenue Strategies: Evolving Resource Dependence in Nonprofit Organizations
Froelich, K. A. (1999) · Nonprofit and Voluntary Sector Quarterly · doi:10.1177/0899764099283002 · Cited by 863 · see citing works
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Hung, C., Tsai, C.-C., & Wu, W.-N. (2024) · Public Performance & Management Review · doi:10.1080/15309576.2024.2382443 · Cited by 5 · see citing works
Turpin, A., & Shier, M. (2026) · Journal of Public and Nonprofit Affairs · doi:10.20899/jpna.far2t327
- Authors
- Berrett, J. L., & Holliday, B. S.
- Affiliations
- North Carolina State University (US)
- Corresponding author
- Holliday, Bradley S.
- Venue
- Voluntas: International Journal of Voluntary and Nonprofit Organizations
- Publisher
- Cambridge University Press (CUP)
- Published
- 2018-12
- Volume
- 29
- Issue
- 6
- Pages
- 1190-1201
- ISSN
- 0957-8765 (ISSN-L)
- 1573-7888
- OpenAlex
- W2900127236
- Cited by
- 49
- References
- 1
- Citations by year
- 2026: 8 · 2025: 10 · 2024: 5 · 2023: 6 · 2022: 4 · 2021: 8 · 2020: 6 · 2019: 2
- FWCI
- 9.10
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- VOLUNTAS International Journal of Voluntary and Nonprofit Organizations (publishedVersion)
- Topics
- Social Sciences › Sociology and Political Science › Nonprofit Sector and Volunteering
- Social Sciences › Economics, Econometrics and Finance › Finance › Community Development and Social Impact
- Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Social Responsibility Reporting
- Keywords
- income diversification, revenue concentration, nonprofit organizations, resource dependence theory, organizational performance
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