Ethics and Efficacy: The Influence of Social Capital and Governance on Key Financial Metrics in Nonprofit Organizations

Abstract

This study explores the influence of community-level social capital on human behavior and its reflection on the practices and performance of nonprofit organizations. Drawing from social norms theory and utilizing a dataset of 327,020 nonprofit filings from 2011 to 2017, our findings reveal a positive and significant relationship between social capital and nonprofit performance metrics, specifically return on assets and program ratio. Further analysis examines the moderating role of nonprofit governance on these dynamics. This study adds to the extant body of literature by delineating the impact of community-level social capital on nonprofits across critical financial indicators, offering nuanced insights into the interplay between social capital, governance, and organizational financial health.