Nonprofit Supply and Citizen Demand: A Spatial Analysis of the Market for Third Sector Services

Abstract

Much prior research explores the relationship between nonprofit location and various community and market characteristics to determine whether citizen demand drives nonprofit supply. As a widely used “policy tool” of government, nonprofits are expected to be responsive to the needs of the communities they serve. However, results are mixed and it remains unclear whether nonprofit markets are ideally distributed. This article builds oprevious scholarship by: first, improving the market characteristics under examination; second, introducing multidimensional constructs for modeling community need; third, applying methodologies that account for spatial dependencies; and fourth, replicating the sector-wide analysis in two nonprofit subsectors. Results indicate consistency across subsector and suggest greater nonprofit supply in areas with less even markets and greater population. Contrary to popular conception, findings indicate evidence of less nonprofit supply in areas with greater demand and some potential “crowding-in” where nonprofit supply rises coincident with for-profit supply.