Transparency and Resource Allocation of Grassroots Nonprofits in China

Abstract

Organizational transparency has become a prominent concern for the nonprofit sector as it expands globally. Transparency is important to organizational accountability, which may be indicated by how nonprofits allocate their resources. In this study, we examine the relationship between nonprofits’ transparency and their resource allocation to programs, administration, and fundraising. Our study focuses on China, where a nascent nonprofit sector is playing increasingly significant roles in social development while facing public trust challenges. Based on Agency Theory and Resource Dependence Theory, we propose two hypothesized frameworks that link transparency to resource allocation, and use the 2013–2015 China Grassroots Organizations’ Transparency Survey data (n = 370) to test this relationship. Our results suggest that nonprofits with higher transparency allocate more resources to programs rather than administration, a possible result of the current public scrutiny of nonprofit accountability in China. Our findings provide implications for nonprofit practitioners and future research about the significance of organizational transparency, particularly in emerging nonprofit sectors.