Connecting founding and dissolution: A demographic study of the US nonprofit sector

Abstract

Despite a rich literature on nonprofit density, the founding and dissolution of nonprofit organizations remains poorly understood. This study explores the founding and dissolution in nonprofit populations including density dependence, resource concentration, government size, and hypothesizes that dissolution creates an entrepreneurial opportunity. The hypotheses are tested using county level data covering the continental US from 2010 to 2016 (N = 21,756). The results show government size, competition, and resource concentration are important for understanding founding and dissolution, and establishes strong support for a link between the events: a one standard deviation increase in the number of dissolutions in a county predicts an increase of 1.5% (CI: .72–2.31) in the nonprofit founding rate. The study highlights ways for public officials to support nonprofit entrepreneurship and calls for renewed interest in ecological applications in contemporary nonprofit populations.