Legitimacy,Board Involvement,and Resource Competitiveness: Drivers of NGO Revenue Diversification

Revenue diversification, which generates resources from different streams and an increased number of sources, has been highly recommended as an active strategy to maintain revenue stability. To help NGOs to strategically improve or maintain revenue diversification, we identified managerial and environmental drivers of revenue diversification. Using a national sample of 429 Chinese grassroots NGOs, we investigated the extent to which organizational legitimacy, board involvement, and resource competitiveness influence organizational revenue diversification. Our findings reveal that managerial factors, including organizational legitimacy and board involvement, could increase organizational revenue diversification in terms of the organizational revenue diversification index (HHI) and the number of revenue sources. Regarding environmental factors, regional organizational density may exert a negative influence, whereas revenue diversification could improve with increasing regional GDP.