Measuring Growth of the Nonprofit Sector: The Choice of Indicator Matters

Abstract

Interestingly, although many authors consent that nonprofit organizations and the nonprofit sector have grown in many countries, there is little discussion of how to best measure this growth. Looking at the broad universe of nonprofit organizations, there is no single measure that is relevant for the whole sector and captures changes adequately. This article gives an overview of commonly-used growth measures in the existing nonprofit literature and discusses the informative value of the various measures. Using Austrian and Scottish time-series data, we present an empirical example of how the growth story of the nonprofit sector can change depending on the measures used. The correlations between measures such as the number of organizations, income/expenditures, and assets are particularly small. We recommend that researchers measuring the growth of the nonprofit sector should be clear about the properties of their selected measure, and where possible should present alternative measures in their analysis.