Environmental and Organizational Antecedents of Revenue Diversification: Evidence from US Arts and Cultural Nonprofits

Compared to the extensive literature on the outcomes of revenue diversification in nonprofit organizations, less research has focused on its antecedents. This study investigates the environmental and organizational factors influencing the extent to which nonprofits diversify their revenue sources. Using a panel dataset of 10,214 US arts and cultural nonprofits from 2005 to 2017 (N = 54,877) and employing hierarchical linear modeling, the study finds that nonprofits in counties with higher resource competition and those with larger boards of directors tend to have more diversified revenue portfolios. Conversely, nonprofits in more resourceful counties are less likely to diversify their revenue mixes. These findings advance the nonprofit finance literature and offer insights into how nonprofits can design their revenue strategies under varying conditions.