Government funding and nonprofit performance in service delivery and policy engagement: exploring the mediating roles of private donations, volunteers, and network quality

Although concerns have been raised about the potential negative impact of government funding on nonprofit organizations, the prevailing literature suggests a generally positive association between government funding and nonprofit performance. However, much of the existing research has focused on Western contexts, with limited understanding of the mechanisms and the relationship between government funding and nonprofit performance in non-Western settings. Drawing on a unique dataset of central government funding to nonprofits in China, this study employs a mixed-methods approach to examine the mediating roles of private donations, volunteers, and network quality in the relationship between government funding and nonprofit performance. Our findings reveal that private donations mediate the positive relationship between government funding and nonprofit performance in both service delivery and policy engagement. In contrast, the number of volunteers mediate only the relationship between government funding and nonprofit service delivery, while network quality mediates the relationship between government funding and nonprofit policy engagement. These results highlight the multifaceted ways in which government funding leverages diverse resources to influence nonprofit performance and adaptation within local contexts.