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BY-NC-ND 3.0 license Open Access Published by De Gruyter December 1, 2018

Nonprofit Social Capital as an Indicator of a Healthy Nonprofit Sector

  • R. Patrick Bixler EMAIL logo and David W. Springer
From the journal Nonprofit Policy Forum


Nonprofit social capital refers to the trust, norms, and networks that can improve organizational performance to fulfill a mission. Research on social capital within organizations, and specifically with nonprofits, is relatively widespread; however, the notion that we can quantify, measure, and incentivize its growth across a sector is novel. Nonprofits actively work to solve some of society’s most complex challenges in diverse areas, such as public health, education, social inequality, and environment. Few would argue against the need for a robust and healthy nonprofit sector. Yet, there is little debate and even less agreement on the definition of “a healthy nonprofit sector” or how to measure it. We offer a policy brief on this topic in the form of an exploratory think piece, rather than a definitive empirical methodology or research paper, that connects nonprofit social capital to a framework of sector health. Solving many of the challenges facing society today will require trust, working together, and networks of resources and reciprocity. Because of this, nonprofit social capital – both cognitive and structural – is an important benchmark of nonprofit sector health and could supplement other metrics of an index offering a signal as to changes occurring in the sector.


Organizations in the nonprofit sector actively work to solve some of society’s most complex challenges in diverse areas such as public health, education, social inequality, and environment. In doing so, nonprofits serve the public good. Within and across the sector, organizations provide essential public services, advocate for public policy and social change, and help form and sustain the networks that strengthen the bonds of communities across the country. Few would argue against the need for a robust and healthy nonprofit sector. Yet, there is little debate and even less agreement on the definition of “a healthy nonprofit sector” or an index to measure how the nonprofit sector is faring. In this special issue alone, a variety of topics are suggested as important for nonprofit sector health, including: equity (Benenson 2018), culture (Pettijohn and Boris 2018), competencies (Castillo 2018), and capacity (Kushner 2018). Although many challenges exist to represent the entire nonprofit sector and track changes over time, doing so would enable policy-makers and the general public to engage on issues affecting nonprofit operations (Abramson, Grayson, and Moore 2018).

Across the entirety of the sector, it is unlikely that one measurement will be able to capture the heterogeneity of tasks, activities, constituencies, and mission statements of diverse nonprofits. Nonetheless, suggesting and debating the theoretical and conceptual basis for a healthy sector is a valuable exercise. We propose three interlinked dimensions of a healthy nonprofit sector: organizational capacity, social capital, and sector effectiveness. Conceptualized as layers in a hierarchical pyramid, similar to Maslow’s (1954), the framework demonstrates that organizational capacity must be met prior to focusing on social capital, and that nonprofit social capital is an important dimension of sector effectiveness and impact (see Figure 1).

Figure 1: A hierarchical framework of nonprofit sector health.
Figure 1:

A hierarchical framework of nonprofit sector health.

Jeremy Bentham, a British philosopher, in 1776 asserted that it is the greatest happiness of the greatest number that is the measure of right and wrong. Applying this axiom to measuring nonprofit sector health, we suggest, could guide the conceptualization of an effective sector. Indeed, members of the “effective altruism” movement and development economists use this axiom as a barometer for the health of a nonprofit organization (The Economist 2018). The Center for Effective Altruism, a think tank with offices in Oxford and Berkeley, has as its mission to grow and maintain the effective altruism movement. One of their core assumptions is the “long-term value hypothesis”, which posits that the most effective opportunities to do good are aimed at helping the long-term future ( by directing philanthropic dollars to the most important objectives. Although the effective altruism movement is focused on the philanthropic aspects of the sector, the guiding principles – commitment to others, scientific mindset, openness, integrity, and collaborative spirit – can serve as indicators for an effective sector that maximizes impact.

Two of the five guiding principles for effective altruism are particularly salient for nonprofit social capital: integrity and collaborative spirit. Integrity captures the notion that trust and evidence-based information is essential to doing good. Collaborative spirit reflects a commitment to cooperation and collaboration. Trust and networks are two primary indicators of social capital, as reflected in the Philanthropic Accountability Model (Kraeger and Robichau 2017). We incorporate this model as a dimension in our healthy nonprofit sector pyramid to emphasize that nonprofits and philanthropic foundations can maximize their place as contributors to society through encouraging social capital, trust, and giving. Healthy partnerships built on meaningful and effective collaborative relationships foster social capital. Extending this argument, indicators of social connectedness, trust, and working collaboratively can serve as metrics of a healthy nonprofit sector and as necessary precursors to sector effectiveness.

Finally, the ability of a nonprofit to work collaboratively by building networks and fostering trust necessitates having its basic needs met. Measures of a nonprofit’s organizational capacity – financial strength, operational strategy, board governance, etc. (see Pynter and Berner 2014) – are building blocks towards nonprofit social capital and overall sector effectiveness.

We recognize the need to further theorize the relationship between these three dimensions so that an aggregate definition and measurement of nonprofit sector health is more precise. Nonetheless, we believe all of these dimensions to be salient, interlinked and informative to defining and measuring nonprofit sector health. In the following, we take a deep dive into measuring nonprofit social capital as an exciting frontier as it relates to nonprofit sector health. By doing so, we acknowledge that organizational capacity, such as financial health, is the primary basis for the development of other types of capacities (Potluka, Spacek, and von Schnurbein 2017). Ultimately, we’d like to operationalize and measure a nonlinear aggregation of organizational capacity, social capital, and sector effectiveness to reflect sector health. For now, we hope to stimulate dialogue on this topic and offer conceptual and empirical suggestions in this policy brief, rather than a definitive methodology. As one indicator of sector health, social capital could supplement other metrics and provide a signal as to where and when to allocate resources.

This paper will proceed as follows. First, the theoretical foundations of social capital will be discussed, including two related but distinct perspectives: that social capital is the trust, norms, and involvement in associations that constitute a broad indicator of civic health (cognitive social capital); and, that social capital is the resources (such as information, ideas, support) procured by virtue of relationships and networks with others (structural social capital). The following section pivots the conversation to consider how the theories of social capital apply to the nonprofit sector. Next, we present two empirical examples that demonstrate the relationship between measures of social capital and nonprofit sector health. We conclude with our general thoughts on metrics of social capital as part of a broader measure of nonprofit sector health and policy implications.

What Is Social Capital?

Social capital has become one of the more salient and popular concepts in the social sciences and one of the more popular exports from sociological theory to everyday language (Portes 1998). While similar in nature, various definitions from prominent scholars exist:

  1. Putnam (1995) defines social capital as the “networks, norms, and trust that enable participants to act together more effectively to pursue shared objectives” (pgs. 664–665).

  2. Coleman (1990) defines social capital by its function. “It is not a single entity, but a variety of entities having two characteristics in common: They all consist of some aspect of social structure, and they facilitate certain actions of individuals who are within the structure” (pg. 302).

  3. Bourdieu (1983/1985) defines the concept as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition” (pg. 248).

  4. Fukuyama (2002) writes that social capital is the “shared norms or values that promote social cooperation, instantiated in actual social relationships” (pg. 27).

  5. Lin (2001) defines social capital as “investment in social relations with expected returns in the marketplace” (pg. 19). Importantly, this marketplace is not necessarily economic but refers to political, community, or organizational marketplaces.

Although not an exhaustive set of definitions, all included definitions purport the value of relationships, or a network, to an individual actor. Despite this common overture, the literature on social capital is a bit chaotic as it seeks to explain a broad range of phenomenon using networks, trust, and norms as key variables. Nonetheless, within the different research traditions have emerged two prominent clusters of social capital theory and measurement: structural and cognitive.

Structural Social Capital

Structural, or network, social capital measures properties of an individual’s position in a network and typically assesses an individual’s access and use of resources embedded in social networks to advance their position (Lin 2001). This perspective, associated with sociologists Burt (1992), Lin (2001), and Portes (1998), refers to the resources (such as information, ideas, support) that individuals are able to procure by virtue of their relationships with other people. These resources (“capital”) are “social” in that they are only accessible in and through these relationships. To possess social capital, an actor must be related to others, and it is those others who are the actual source of the advantage. Connections are instrumental in furthering an actor’s goals. There are multiple mechanisms that explain the value of these networks as articulated by Lin (2001): 1) flow of information is facilitated that can reduce transaction costs; 2) social ties can exert influence and exercise power due to strategic locations and positions; 3) social ties provide social credentials that reflect the ability to access resources through social networks and relations; and, 4) social relations reinforce identity and recognition. These four elements – information, influence, social credentials, and reinforcement – bring attention to how nonmonetary forms of capital can be translated into collective outcomes.

Coleman views social capital as an aspect of social structure that facilitates certain actions of individual actors within the structure (1988, 1990), whereas Bourdieu (1984) sees social capital as a collective good made up of social obligations or connections that is produced through repeated exchanges of the group’s members. A structural perspective suggests that the structure of social networks themselves can be measured and analyzed with reference to the social capital of the network. Network measures such as density and network closure are a distinct advantage of social capital because it is closure that maintains resources, enhances trust, norms, authority, sanctions, and so on (Bourdieu 1984; Coleman 1988).

Cognitive Social Capital

The cognitive perspective, by contrast, highlights aspects of generalized trust and propensity to work together as highlighted by the work of Putman (1995, 2000) and Fukuyama (1995). These theorists conceive of social capital as cognitive in that it measures attributes such as norms (specifically, norms of reciprocity and cooperation), social integration, and trust. Putnam (1993, 1995) argues that participation in social associations promotes and enhances collective norms and trust thus, indicating the extent of social capital in society. For these perspectives, social capital is a collective-good and a dense or a closed network is the mechanism that maintains and reproduces social capital.

Bonding Social Capital

The distinction between bonding and bridging social capital is also useful and can be applied to both structural and cognitive aspects of social capital. Bonding social capital is focused on internal linkages and structure and the cohesive characteristics of those relations to pursue collective goals. Frequently characterized by dense and closed networks, bonding social capital is emphasized by homophily rather than diversity. Homophily, a network characteristic where similar actors are attracted to one another and thus choose to interact with each other, is a well-documented occurrence in social networks (McPherson, Smith-Lovin, and Cook 2001) and is beneficial for communication of tacit, complex information but also potentially problematic given the homogeneity of views, opinions, and capacities. Homophily tendencies shape aversion and attraction to nonprofit networks as actors may be more likely to trust information produced by those who are similar to themselves, or actors may be less likely to trust information produced by those who are dissimilar to themselves. Characteristics of bonding social capital include trust, solidarity, reciprocity, and cohesiveness.

Bridging Social Capital

Bridging capital connects actors from diverse backgrounds and sectors of society. For instrumental actions, such as searching and obtaining resources not currently possessed, accessing and extending bridging capital is useful. Bridging capital allows access outside of the immediate circle of strong ties (Granovetter 1973) to advantageous positions and resources by bridging structural holes (Burt 1992). Bridging social capital has been used to explain the differential success of actors, whereby direct and indirect links to other actors in social networks influence outcomes. Characteristics of bridging social capital include information advantages and access to power.

Nonprofit Social Capital

Social capital is increasingly viewed as an important area of research in the nonprofit sector (Brown, Andersson, and Jo 2016; Fredette and Bradshaw 2012; Jaskyte 2018; King 2004; Schneider 2009; Paik and Navaree-Jackson 2011). As it relates to our conceptual framework of a healthy nonprofit sector, we define nonprofit social capital as the trust, norms, and networks that can improve performance to fulfill a mission. Research supports this view that nonprofits employ social capital to enhance organizational performance. For example, Brown, Andersson, and Jo (2016) consider social capital as a fundamental resource feature in nonprofits along with human capital, financial capital, and physical capital. They also find that “external relationships with other nonprofits, government, and communities … are vital to securing resources … and improve organizational performance” (Brown, Andersson, and Jo 2016, pg. 2902). This research highlights the importance of both external-bridging (King 2004) and internal-bonding (Roberts and Dowling 2002) social capital but doesn’t distinguish between structural and cognitive forms of social capital.

Cognitive social capital operationalized as propensity to share information, share a vision, and trust others has a substantial impact on nonprofit boards’ capacity to provide oversight, strategic planning, and leadership (Fredette and Bradshaw 2012). Recent research by Jaskyte (2018) links board social capital to board effectiveness and innovation. The results of their study demonstrate a significant positive relationship between cognitive social capital and board innovation. Elsewhere, Passey and Lyons (2006) demonstrate the ability for nonprofits to reproduce social capital among membership and volunteers. They find that the capacity to (re)produce social capital varies by context and sector. Producing social capital is nuanced, and a sequenced approach that focuses on bonding capital to increase representational diversity followed by mission-relevant interactions among diverse members to create bridging social capital is suggested (Weisinger and Salipante 2005).

Despite the scholarly interest of social capital and nonprofits, several gaps exist. First, Schneider notes that the “theoretical understanding of the role of social capital in nonprofits as organizations remains in its infancy” (2009, pg. 643). She notes that theoretical perspectives and definitions vary widely across the nonprofit literature and that many of the studies examine how nonprofits develop social capital for organization members, not the role of social capital for organizations themselves. In an attempt to clarify the concept of social capital as it applies to nonprofits, she defines organizational social capital as “established, trust-based networks among organizations or communities supporting a particular nonprofit, that an organization can use to further its goals” (Schneider 2009, pg. 644). This perspective is important as it defines social capital at the level of a nonprofit organization.

However, even this definition fails to account for nonprofit social capital in the aggregate. That is, can we say something about nonprofit social capital across the sector? The next section presents a framework that distinguishes across the various dimensions of nonprofit social capital and moves from measurement at an individual nonprofit to the sector.

Nonprofit Social Capital as an Indicator for a Healthy Sector

Figure 2 presents a conceptual model that distinguishes between the different dimensions of nonprofit social capital. The lower half of the figure (dimensions 5, 6, 7, 8) identify different dimensions of social capital at an organizational level. This includes a cognitive-bridging dimension operationalized as a willingness and ability of organizations to work with a diverse set of partners to define collective goals and follow-up with collective action (see research by Leana and Van Buren 1999; Weisinger and Salipante 2005) (dimension 5). Indicators that characterize a cognitive-bonding perspective include trust, adherence to norms, and the strength of norms of reciprocity within a nonprofit organization (dimension 6). Fredette and Bradshaw (2012) apply a cognitive-bonding conceptualization. A structural-bonding perspective considers the structure of interactions between nonprofit executives, staff, board members, volunteers and other internal personnel. This structural-bonding approach represented in dimension 7 was employed by Jaskyte (2018). And a structural-bridging perspective considers the network of relationships a nonprofit has with other nonprofits. This is the perspective employed by King (2004).

Figure 2: An eight-dimensional framework of nonprofit social capital.
Figure 2:

An eight-dimensional framework of nonprofit social capital.

This framework guides the connection between theoretical understandings and conceptualization of social capital in nonprofits as organizations. Yet, considerations and conversations that consider aggregate measures to “say something about the sector” remain undertheorized. Our argument asserts that nonprofit social capital as an organizational asset can be aggregated and considered a collective good of the sector. At the sector-wide level, structural social capital represents an aggregation of the networks of relationships between nonprofits as they intersect in ways that constitute a structure of the sector (structural). A structural-bridging perspective found in dimension 1 emphasizes access to novel ideas and new resources by bridging structural holes (Burt 1992; Granovetter 1973).

A structural-bonding perspective speaks to the value of sector-wide cohesion for expressive actions such as preserving, maintaining, and enhancing resources (dimension 2). In network terms this measures network closure, where resources are preserved or reproduced (Bourdieu 1984). Closure can be measured around shared economic, political, or cultural outcomes of interest. This measure is scalable so that, with appropriate data, closure can be measured for a sector or subsector at a particular locale, region, or at a national level as an aggregation of organizational interactions. Example three below is suggestive of measuring this dimension.

From a cognitive-bonding perspective, measuring generalized trust and social cohesion provides a general assessment of the culture of working together across the sector (dimension 3). Cooperation between nonprofits is based on the perception that working together can achieve more than working alone and these beliefs are embedded perceptions of solidarity across an entire sector (whether local, regional, or national) and can be extended to consider a willingness to work with a diversity of partners (dimension 4).

Empirical Examples of Social Capital Measures

Service Enterprise Nonprofits

The Service Enterprise Initiative ( is a nation-wide effort led by Points of Light and supported by Algorhythm and the RGK Center for Philanthropy and Community Service at The University of Texas at Austin. The goal of the Service Enterprise Initiative is to strengthen the capacity of nonprofits to leverage volunteers and their skills to address community needs. As part of the Service Enterprise certification process, organizations are required to take a diagnostic survey, known as the Service Enterprise Diagnostic. The instrument contains 191 programmatic questions distributed across the categories of Board & Advisory Leadership, Organizational Culture, Program Accountability, Financial Management, Staffing & Development, Marketing & Communication, Infrastructure, Service Learning, Community Collaboration, and Volunteer Administration. A 5-point response scale ranging from “exactly like my program” to “not at all like my program” allowed for subscale scores to be compared with total possible scores. The analysis below includes data from 222 nonprofits that have self-selected for service enterprise certification.

Given the wide range of survey items an index of social capital was constructed (Cronbach alpha = 0.81). The social capital index included three items that can be operationalized under the structural-bonding dimension:

  1. Our organization is regularly approached to participate in community problem solving.

  2. Our organization retains its partnerships with other organizations over time.

  3. Our organization has partnerships that involve shared resource commitments.

Next, a Pearson’s correlation between the social capital index and an overall Service Enterprise score was tested that found a positive correlation (r = 0.437, p = < 0.001) between this index of social capital and “the capacity of nonprofits to leverage volunteers and their skills to address community needs.” With this data, it is possible to point to a metric of social capital for this population of nonprofits. An average social capital score in this sample of nonprofits is: 4.04 (on a scale of 5). Longitudinal resampling would provide signals of improvement or decline over time.

Northwest Nonprofit Capacity Report

A second empirical example comes from the fourth annual survey of nonprofit organizations in the Pacific Northwest, “Northwest Nonprofit Capacity Report” (Wolf et al. 2016). The survey reached 1,623 nonprofits in Alaska, Idaho, Montana, Washington and Oregon and asked a variety of questions regarding opportunities and challenges being faced by nonprofits in the region. In particular, one survey item captured a dimension of bonding social capital: “The community engages with us and actively supports us in our cause.” Another item in the survey asks, “How effective is your organization related to accomplishing its mission or meeting its core purpose.” A Pearson’s correlation found a positive correlation between these two variables (r = 0.396, p = < 0.001). An average social capital score for this population of nonprofits in the Pacific Northwest is: 6.75 (on a scale of 10). Similar to the Service Enterprise example, longitudinal resampling would provide signals of improvement or decline over time.

Toward a Measure of Nonprofit Sector Health that Includes Social Capital

Despite limitations in the examples provided, they indicate a mutual positive relationship between a broad measurement of social capital and nonprofit performance. Although more theoretical and empirical work is necessary, we hope that our conceptual policy brief is suggestive of what could be done to employ social capital as an indicator of sector health within a broader framework of organizational capacity and sector effectiveness. The broader policy impacts of nonprofit social capital as an indicator of sector health are threefold.

First, social capital generates positive externalities and complementarities that at least partially justify government policies and actions that grow or sustain social capital (Productivity Commission 2003). All levels of government, from local to national, can benefit from reduced transaction costs between nonprofits and between the nonprofit and public sector agencies that result from high levels of generalized trust and adherence to pro-social norms (cognitive-bonding social capital). Moreover, nonprofit social capital can be viewed as a public good because of the access to resources that being a part of a network offers (structural-bridging social capital), even without active development or participation in those relationships (Inkpen and Tsang 2005). From a nonprofit policy perspective, governments should consider coordinating investment in social capital because of the positive externalities and complementarities that exist when nonprofits make efforts to network together (see Glaeser 2001). A nonprofit social capital indicator would make it possible to evaluate public investment in building social capital in the sector.

Second, philanthropic funding opportunities can be specifically shaped around the intent of increasing social capital among nonprofits. One example of this that is emerging is donor pooled “catalyst funds.” Catalyst funds, or collaboration funds, have emerged in major metropolitan areas across the country (including New York, Los Angeles, Boston, and Dallas among others) and provide awards to nonprofits to explore, plan, or implement a collaboration or merger. In many cases, these funds have emerged as an effort to close the need-funding gap and deliver deeper impact. In practice, these funds have the potential to reshape the landscape of nonprofit activity and funding where they are successful. A nonprofit social capital indicator would be a valuable metric for tracking the aggregate impact of philanthropy in growing social capital.

Finally, policies that encourage and direct funding to the development of second-level organizations, those that explicitly act as an umbrella for nonprofits working in similar locations or sectors, can serve as a multiplier of the benefits of structural social capital. Ultimately, the nonprofit sector needs to be understood conceptually as multi-level. Second-level organizations connect local and grassroots organizations through bridging horizontal connections to other organizations and vertical network connections to public officials and funders at higher levels in the sector. Investments in social capital that encourage the development of and equitable access to umbrella organizations can have ripple effects for enhancing the benefits of both cognitive and structural social capital.

Several caveats and questions arise when thinking through nonprofit social capital as a measure of a health sector. First, is measuring social capital realistic? The examples offered used a survey method to collection data from a population of nonprofits. Although a survey approach has been established as valid and reliable (Grootaert et al. 2004; Grootaert and van Bastelaer 2002), as Abramson, Grayson, and Moore (2018) note, surveys in this context are expensive to undertake and unrepresentative of the entire U.S. nonprofit sector. Alternatives to survey data collection exist, but they rely on compiling information from secondary data sources that may not be available in many cases. Ideally, the IRS Form 990 would capture social capital information in some form or alternatively online platforms such as Guidestar or Charity Navigator could include a set of questions that collect information about an orgnaizations partnerships, networks and trust as a part of their data platform.

Second, if we agree that social capital is important and can be measured, how exactly is policy implemented to grow social capital? The preconditions for the emergence of nonprofit social capital and the benefits generated by increases to building nonprofit social capital may vary from place to place. This means that a “one-size-fits all” policy for social capital may be ineffective. However, evidence suggests that investments can be made just as investments are made in physical and human capital. If so, how can this be done and by whom – the state, the private sector, civil society, individual philanthropists? Additional theorizing, operationalizing and research is necessary to first develop robust measures of nonprofit social capital and empirically link those measures to nonprofit sector health. Although only partial, we believe this is a novel contribution and an important next step in this process.


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Published Online: 2018-12-01

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