Characteristics and Organizational Capacity of Nonprofits in Rural, Persistently Poor, Southern Counties in the United States

Background: To accomplish their missions, nonprofits must have organizational capacity – elements used to meet their mission such as staffing and fundraising. Few empirical studies examine rural nonprofits, and recent evidence suggests these organizations may be experiencing organizational capacity challenges. The present study focuses on nonprofits located in rural, persistently poor counties in the South – an especially vulnerable area. With three key objectives, the investigation seeks to 1) describe characteristics of nonprofits serving this region; 2) establish knowledge of organizational capacity; and 3) identify organizational capacity domains in rural nonprofits.

Methods: To accomplish Objective 1, 2016 990 IRS forms were examined for 501(c)3 organizations in counties designated as persistently poor in the Southern U.S (N=3,530). Demographics such as age, expenses, and NTEE category were extracted, and descriptive analyses were conducted.

For Objective 2, surveys were emailed or mailed in Summer 2019 to all nonprofits in Objective 1. The surveys consisted of demographics and items mined from a local capacity builder’s organizational capacity assessment. Descriptive analyses provided reference points for strengths and challenges of organizational capacity (N=292).

Regarding Objective 3, an exploratory factor analysis (EFA) was performed with Mplus (8.0) to assess the dimensionality of the organizational capacity assessment (N=292). The estimator was WLSMV with goemin rotation and oblique as rotation type. First, scree plots (1 to 5 factors) were inspected. Then, model fit statistics were reviewed: chi-square; CFI (>.95); and RMSEA (<.05). Once the best fitting model was selected, item factor loadings were evaluated – loadings of 0.5 or greater were retained. Items with high cross-loadings – a difference of 0.2 or less – were removed. Internal consistency reliability using Cronbach’s alpha and correlations were analyzed.

Results: Mississippi, Kentucky, and Georgia had the most nonprofits while Virginia, Florida, West Virginia, and Tennessee had the fewest in the counties studied. The average nonprofit was 19.42 years old. Seventy-five percent had budgets less than $500,000. The human services category had the most nonprofits (39.3%). Financial management, strategic planning, collaboration, and program planning were strengths in organizational capacity. Personnel evaluation, succession planning, fundraising planning, training, and volunteers were challenges. In the EFA, a model emerged with four domains with 36 items representing organizational capacity: Organizational Identity, Fund Development, Volunteers, and Organizational Procedures.

Conclusions: Findings revealed many rural, persistently poor counties in the South with few nonprofits. More research is necessary to determine if service gaps exist, particularly with employment and nutrition. Findings indicated that rural nonprofits have many foundational capacity components (e.g., finance accountability). However, the Volunteers domain is a prominent concern. With many rural nonprofits being small, they may depend on efforts of volunteers. The domains identified in the EFA were aligned with those in other instruments, but additional research is needed to test the utility of the instrument with rural nonprofits with various budgets and age. This study provides a starting point for capacity builders to craft intentional training. Findings are also important as policy makers consider funding programs for persistently poor counties and using local nonprofits to implement them.