Survival of Nonprofit Human Service Organizations in Poor Neighborhoods

Background and Purpose:Nonprofit organizations grew continuously since the 1940s as critical human service providers. What is often overshadowed by the growth of nonprofit human service organizations (NHSOs), however, is that many NHSOs struggle and do not survive. NHSOs, like companies or other types of organizations, stop operation if they fail navigating the market or managing resources. This study aims to examine the survival of NHSOs, taking both organizational and neighborhood factors into consideration.

Methods:  This study uses a dataset based on the Capital Region of New York. The dataset was created by cross-referencing three online datasets and one paper directory that carry information on local NHSOs. A total of 636 organizations were identified and geocoded using the ArcGIS software. The geocoding identified the census tracts in which each organization is located. Ordinary least squares regression and spatial analyses were used to examine the factors related to the survival of NHSOs. The organizational-level variables include revenues, previous address change, and availability of webpage. Neighborhood-level variables include urban/suburban (i.e. inner city or outside the city boundary), median household income, and percentage of African American, which were measured using the American Community Survey 2008-2013 5 year-survey. The spatial analyses provide descriptive presentations of the location of organizations in relation to various neighborhood characteristics.

Findings: When considering the age of organizations as the indicator for survival, the revenue, location, and moving history of the organization as well as neighborhood income level were statistically significant. Higher revenues were positively associated with the age of organizations. However, very poor neighborhoods and the neighborhoods outskirt the city seem to host younger organizations. When considering the failure of organization as the indicator for survival, similar but somewhat different results were yielded. Lower neighborhood income level and higher percentage of African American showed a lower likelihood of survival. Availability of website contributed to survival of organizations.  

Conclusions and Implications: The findings first imply that high-poverty areas may suffer from a short cycle of birth and death of NHSOs, which potentially lead to a lack of sustainable support or services from nonprofit organizations. In this regard, the emergence of new organizations itself would not be a sufficient measure to evaluate the effectiveness of those organizations until they show sustainable capacity to survive. Secondly, this study contributes to the discussion of what kind of factors matter for NHSOs to thrive or fail. While confirming that the financial resource is a critical factor, this study also suggests that other factors such as marketing, technical capacity, or location change can be as equally, if not more, important factors for the survival of nonprofit organizations. For practice, this study suggests that NHSOs in marginalized neighborhoods need support for adaptive strategies to sustain their operations. Marginalized neighborhoods may attract many new programs and services, but without strategies for sustaining them, the programs and services end up short-lived and lost.