A Desire for Growth? An Exploratory Study of Growth Aspirations Among Nascent Nonprofit Entrepreneurs

Introduction

This research note examines growth aspirations of nascent nonprofit entrepreneurs, here defined as individuals actively involved in a not-yet-up-and-running nonprofit organization. It also explores beliefs about growth. Specifically, it looks at nascent nonprofit entrepreneurs’ beliefs about the implications of growth for their emerging nonprofits. To date, nonprofit scholarship investigating growth has predominantly focused on the growth of the sector as a whole and/or its density in particular geographic regions (Pennerstorfer & Rutherford, 2019). However, the rising prominence of social entrepreneurship, a field of inquiry that has also come to include the actions and outcomes of nonprofits, has directed attention to an additional and different aspect of growth: the growth of the organizations created by social/nonprofit entrepreneurs (Dees et al., 2004).

In the social entrepreneurship literature, growth is repeatedly portrayed as a desirable, even ubiquitous, feat. As posited by Kickul and Lyons (2016), “[g]rowth is what is expected of social entrepreneurs. . . . The emerging paradigm for social ventures, be they nonprofit, for-profit, or hybrid, is that they will strive to expand” (p. 218). This fervent emphasis on new social venture growth is reflective of the business entrepreneurship roots of current social entrepreneurship scholarship. As observed by Kiviluoto (2013), “[n]ot only does firm growth attract incomparable attention in different entrepreneurial contexts, it is also considered a measure of firm success unlike any other . . .” (p. 570). Likewise, growth has become a proxy for success in the social entrepreneurship context. Because new nonprofits and social enterprises start out small in comparison to the often intractable problems they attempt to tackle, growth is seen as an essential mechanism to unlock and generate additional and more far-reaching social impact (Bradach, 2003; Foster & Fine, 2007). Ross (2014) notes that while introducing new innovative programs, services, and strategies is a core aspect of what nonprofit entrepreneurs do, it is not sufficient. The main barrier for these entrepreneurs to overcome is not how to implement new innovations or creating new nonprofits, but how to scale them.

Although many researchers and external stakeholders consider growth a cardinal goal there are surprisingly few studies investigating the growth aspirations, and beliefs regarding growth, among nonprofit entrepreneurs (Lecy et al., 2016). Yet, examining growth from the perspective of the nonprofit entrepreneur is important for at least two reasons. First, pro-growth intentions appear to be more or less taken for granted, that is, nonprofit entrepreneurs are believed to enter the startup process with an appetite for expansion. However, while growth might be “what is expected,” the ex-ante claim that most nonprofit entrepreneurs want to grow their new organizations is an assumption that can and should be tested. Thus, additional empirical research assessing the relative importance of different growth aspirations is needed to figure out how and why nonprofit entrepreneurs actually end up expanding their fledging organizations. Second, if stimulating growth is an important goal for funders, policymakers, and other stakeholders, knowing more about the beliefs nonprofit entrepreneurs hold toward growth can potentially be very useful information. Just as individuals can be swayed, the beliefs of nonprofit entrepreneurs are likely to be affected by the persuasive argumentation of others (Chaiken & Stangor, 1987). In other words, funders and policymakers could try to influence nonprofit entrepreneurs’ beliefs about growth via the dissemination of relevant information and knowledge. But, if stakeholders want to take actions aimed at promoting pro-growth behavior, then they must first know something about what beliefs nonprofit entrepreneurs actually have when it comes to growth.

Even though this research note argues that growth aspirations of nascent nonprofit entrepreneurs are key for comprehending nonprofit growth, it is vital to recognize there are multiple additional internal and external factors (e.g., access to/control over capital, managerial capacity, environmental munificence, formal institutions) that are also likely to influence the actual growth of a new and/or small nonprofit (Kim & Kim, 2018; Peachey et al., 2020).

This study examines a small sample (n = 57) of nascent nonprofit entrepreneurs asking: (a) to what extent they aspire to grow their emerging nonprofit and (b) what reason(s) do they report as to why, or why not, they aspire to grow their emerging nonprofit? The reason for examining nascent nonprofit entrepreneurs is that aspirations regarding a new nonprofit’s trajectory are likely to be formed and shaped during the early phases of the entrepreneurial process, that is, before the organization is formally launched.

What is Growth?

In her seminal work on organizational growth, Penrose (1959) offers two main lenses for comprehending the meaning of growth. The first view simply denotes the increase in the amount of something, as in the growth of new programs, growth in the number of beneficiaries served, or growth in revenue. The second view focuses on changes in size, complexity, and/or quality as a consequence of an evolutionary process. An example of the latter approach is found in the nonprofit organizational life cycle literature (e.g., Stevens, 2001), where new nonprofits develop via an interacting series of internal changes leading to an increase in size and sophistication.

In the social entrepreneurship literature, researchers have primarily emphasized differences in the amount of growth, commonly referred to as scaling up (e.g., Bradach, 2003; Dees et al., 2004). As observed by André and Pache (2016), the process of scaling up is “. . . often considered to be at the heart of social entrepreneurship. . . . When entering this phase, the social entrepreneur turns from personal attention to beneficiaries toward quantitative growth” (p. 660). Although scholars have proposed other forms of scaling, such as scaling deep (Moore et al., 2015), the notion of scaling up represented the most recognized growth pattern in social entrepreneurship (André & Pache, 2016).

Growth Aspirations

The role of aspiration for subsequent behavior has been recognized and corroborated in the psychology literature (Locke, 1991). Aspiration serves as marker of

. . . how hard people are willing to try, of how much of an effort they are planning to exert in order to perform the behaviour. As a general rule, the stronger the intention to engage in a behaviour, the more likely should be its performance. (Ajzen, 1991, p. 181)

In the business entrepreneurship literature, researchers have long utilized this psychological perspective to connect growth aspirations to actual firm growth (Kolvereid & Bullvåg, 1996). The basic argument for the importance of this link is that growth implies a considerable transformation of the current organization, which can run counter to the idea and/or goals of the initiating entrepreneur(s). Thus, absent any growth aspirations it is unlikely for an organization to enter a growth phase. Nonprofit scholars have certainly noted that nonprofit organizational growth is far from automated (e.g., Balduck et al., 2015). Also, the notion that growth can significantly alter, and challenge, current practices in nonprofits has also been demonstrated (Reid & Turbide, 2012). Still, this author knows of only one empirical study (Lecy et al., 2016) explicitly asking nonprofit entrepreneurs about their growth aspirations. The study, which is based on survey answers from over 800 nonprofit entrepreneurs, finds nearly six in 10 nonprofit entrepreneurs wanting to “grow steadily,” one in 10 wants to “grow aggressively,” and three in 10 indicating not wanting to grow at all. It is important to note that the purpose of Lecy et al’s research was not to solely examine growth aspirations or attitudes toward growth, but to provide baseline data on a wide variety of dimensions of nonprofit entrepreneurship. Moreover, they also note their sample does not include small (or nascent) nonprofits, implying the growth aspirations among smaller nonprofits are likely to be different.

Method

The data for this project was collected, using a paper survey, from 57 individuals partaking in a “Planning a New Nonprofit” program offered by the Midwest Center for Nonprofit Leadership in Kansas City, MO from July 2015 to March 2016. The program is intended for any individual showing intent to start new nonprofit organization, that is, nascent nonprofit entrepreneurs. To capture growth aspirations, an adapted item from the business entrepreneurship literature was used (Manolova et al., 2012): which of the following two statements best describes your preference for the future size of your emerging nonprofit: (a) I want the nonprofit to be as large as possible or (b) I want a size I can manage myself or with a few key employees or volunteers. A third, “I do not know,” option was added with space for comments from the respondents. Next, the nascent nonprofit entrepreneurs were asked to envision, no matter their stated growth aspiration, that their new nonprofit would grow significantly in the coming 5 years—attracting significant resources from funders; employing a large staff, serving significantly more beneficiaries—and provide any reason(s) as to why they would consider such a development positive or negative. The open-ended answers consisted of brief phrases to elaborate sentences. To provide a more succinct description of the different reasons, the author coded each answer into groups that will be described in more detail in the “Findings” section. The initial survey also included demographic questions (e.g., age, gender, and level of education).

Using email addresses provided on the initial paper survey, an online questionnaire was also distributed in late December 2016 to examine how many of the 57 nascent nonprofit entrepreneurs had successfully launched, and was currently operating, a new nonprofit organization. The follow-up inquiry revealed that 11 of the program participants had successfully launched a new nonprofit and five were still in the process of getting started. In early 2019, using the same email addresses, these 16 individuals were sent a request asking if they would agree to a brief 15-min phone conversation answering a few questions about their nonprofit organization. Ten individuals responded, of which two declined to participate. The first respondent declining indicated she was still in the process of creating her new nonprofit, and the second respondent declining one said he had closed his nonprofit. Eight agreed to a brief conversation and were contacted via phone during the first 2 weeks of February 2019. The phone exchange included open-ended questions asking the eight respondents about the actual growth of the new nonprofit and their current growth aspirations. The phone calls were not recorded and lasted approximately 10 to 15 min.

Findings

Of the 57 nascent nonprofit entrepreneurs, 56.1% were women, the average age was 37.75 years (s.d. 13.29), and 52.6% had a college degree. About 19.3% indicated they had previous startup experience, and nearly six in 10 respondents (57.9%) indicated have some sort of nonprofit management and/or nonprofit board experience. Table 1 displays the growth aspirations of the full sample of nascent nonprofit entrepreneurs as well as for those with previous startup experience, and for those with previous management/board experience.

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Table 1.

Growth Aspirations.

Preference for future size of emerging nonprofit	All respondents (n = 57) (%)	Previous startup experience (n = 11) (%)	Previous management experience (n = 33) (%)
I want the nonprofit to be as large as possible.	21.1	27.3	18.2
I want a size I can manage myself or with a few key employees or volunteers.	38.6	45.5	48.5
I do not know.	40.4	27.3	33.3

Table 1 clearly shows there is a group of nascent nonprofit entrepreneurs with explicit and considerable growth aspirations. However, the survey results also show this group is a minority. A second group, consisting of nearly 40% of the nascent nonprofit entrepreneurs, show very modest appetite for growth, and about the same number of nascent nonprofit entrepreneurs do not even have a clear sense of whether they want to grow or not. A closer look at the written comments provided by the nascent nonprofit entrepreneurs in this third group reveal two frequently held perspectives. The first perspective is that that growth is not an essential matter to the purpose of the emerging nonprofit. The comments indicate the emerging nonprofit is predominantly a “side-activity” “small-scale project” or “hobby,” and that the idea of growing the project is “simply not on the radar.” The second perspective recognizes growth as a possibility, but not as a current or highly prioritized issue. Instead, the option of growth is conditioned based on the occurrence/development in other areas of the startup process.

These findings bring nuance to the recurrent and heavy emphasis on growth for new social ventures discussed in the social entrepreneurship literature. Only two of 10 nascent nonprofit entrepreneurs display any major growth aspirations, and four of 10 view the issue of future growth as a low-priority issues or simply not essential to the activities of the emerging nonprofit. These observations, illuminates a need to better understand the growth views and aspirations held by those actually seeking to create new social ventures. An obvious question emerging is why nascent nonprofit entrepreneurs display such moderate appetite for growth? To find some initial answers we turn to investigate the responses to the open-ended question asking the nascent nonprofit entrepreneurs to envision that their new nonprofit would grow significantly in the coming 5 years.

The reactions to this invented scenario were mixed. A majority of respondents (n = 34) perceived there could be both positive and negative implications emanating from growth. Fifteen respondents only listed negative implications and eight listed only positive implications. Given the exploratory nature of this article, and rather than listing the over 100 responses in a table, a decision was made by the author to categorize the different answers. Categorization is a process that involves identifying and labeling a piece of data, in this case the perceived positive or negative implication of growth, as exemplifying or belonging to a more general category. The categories were then further organized into a smaller number of growth implication perceptions presented in Table 2.

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Table 2.

Perceptions of Growth.

Positive	Negative
1. Decreased vulnerability	1. Increased vulnerability
2. Improved fund generation ability	2. Demanding workload
3. Greater impact	3. Loss of control
4. Enhanced reputation	4. Loss of autonomy
	5. Diminished quality

Comments belonging to the first of the four positive categories reflected a view that growth and greater size would serve as protection against the liabilities associated with smallness. As one respondent put it: “I’d rather be big than small.” Others noted having a larger nonprofit would be a stress reliever, not having to “worry” so much about how to “simply staying afloat.” Respondents in the second category perceived growth as an enabler that would augment the fundraising capacity of the new nonprofit. One respondent pointed out that “[i]t takes funds to make more funds. . . . we could devote more time to fundraising if we had more people.” This comment speaks to the type of opportunity cost calculations small nonprofits frequently must consider. When you are small, time and labor are scarce resources, thus, nascent nonprofit entrepreneurs need to make choices in terms of what areas to prioritize and how to allocate their scarce resources. The third category housed the greatest number of positive comments, and linked growth to the ability to generate greater impact. Following the rationale found in the social entrepreneurship literature, growth is given a direct and substantial role in contributing to greater short- and long-term impact. Comments included: “the more members we have, the better situated we are to make a difference,” “bigger nonprofits can serve more people and meet their needs,” and “I want to address the root cause, not just be another nonprofit that ‘helps’ the homeless.” A final positive growth perception category, focused on growth as a sign of success that increases either the image or legitimacy to the nonprofit. One respondent commented that institutional donors are more likely to notice and fund nonprofit that have “proven themselves” by growing. Another respondent suggested that the ability to build and maintain a larger nonprofit sends “obvious signals that this is a serious nonprofit.”

Among the negatively oriented growth perceptions, many comments overlapped multiple categories showcasing the multidimensional nature of the problems associated with nonprofit growth. It is interesting to note how the first negative category is a mirror image of what some considered a positive feature of growth. Rather than seeing an increase in size as a buffer for problems associated with smallness, growing big was viewed as a development that could seriously undermine the financial viability of the nonprofit. In particular, respondents voiced fears that they would be “unable” or “lack the competence” to provide the financial leadership necessary for a large nonprofit. Others worried about the pressure to consistently raise the amount of funds necessary to support/subsidize a bigger set of programs, when such funds will come from foundations and individual donors. A key takeaway from this dual view of growth as it pertains to financial vulnerability is that risk, or perception of risk, appears to play a vital role for the growth aspirations of nascent nonprofit entrepreneurs. Future research would therefore benefit from assessing both risk perceptions and growth appetite among nonprofit entrepreneurs. The respondents in the second category viewed growth as a detriment, not because of higher associated financial risks, but because of the increase work demand. The vast majority of respondents mentioning this particular negative aspect were individuals saying they wanted a nonprofit they could manage themselves. Comments included: “this organization will never be my full-time priority,” and “I would not have the time to operate a large nonprofit.”

The remaining three categories all emphasize how growth would weaken, or stand in the way, of important priorities set up by the nascent nonprofit entrepreneurs. One such priority is the ability to maintain control of the different steps or processes associated with the new nonprofit. As a nonprofit grows it becomes more difficult, as one respondent put it, “to be in charge” and to keep up with all the things going on in the organization. The second priority is the need for autonomy, and multiple respondents indicated having a greater number of internal and external stakeholders would curb the sense of independence associated with being a nonprofit entrepreneur. A final priority is the desire to provide high-value services, and some of the nascent nonprofit entrepreneurs indicated that growth would temper with this commitment. Put differently, there is perceived trade-off between quality and quantity as the nonprofit grows in size. Some illustrative comments include: “If I wanted to be a manager, I would go work for an existing nonprofit. . . . the goal here is for me to be the boss and do whatever it is I want to do,” “this [growth] will make us dependent on others,” and “we’re not McDonalds, I want to provide the best service possible, not just trying to serve as many people as possible.”

Taken together, the above results indicate nascent nonprofit entrepreneurs have much more nuanced and convoluted aspirations and perceptions of growth compared with the view of growth frequently portrayed in the social entrepreneurship literature. Still, this is a group that has yet to launch an operational new nonprofit organization. As mentioned earlier, many in the “I do not know” group saw growth as a possibility, albeit not a current issue. In other words, their growth aspirations may shift once the new nonprofit is up and running. To explore this possibility a follow-up study was conducted, which is presented next.

Conclusion

Departing from a dominant perspective found in the social entrepreneurship literature positing growth as a desirable and important feat for new social ventures, this study finds that only about 20% of nascent nonprofit entrepreneurs aspire to grow. Furthermore, many nascent nonprofit entrepreneurs report they do not consider growth a matter of great or current concern. Thus, an incongruence exist that this author’s beliefs warrants more discussion and research.

An important starting point for future discussion is to recognize that the positive take on growth, and bent to equate growth with success, often has a macro-orientation. That is, growth of new nonprofits (and other social ventures) is believed to contribute to a specific set of value creating social and economic outcomes, for example, new employment creation, expansion of services to underserved areas, and dissemination of effective practices. From a public/community and external stakeholders’ perspective these are indeed highly sought after outcomes. However, nascent nonprofit entrepreneurs adopt a much more restrained perspective. Many are fully aware that growth can have both positive/desirable and negative/undesirable consequences. Thus, at the microlevel, growth is somewhat of a dilemma. Positive macro outcomes are just one of many possible consequences of growth from the perspective of the nonprofit entrepreneur. In fact, this study finds that negative expectations were found somewhat more frequent or pronounced than positive ones. As a consequence, we need to make a clearer distinction between growth as a macrophenomenon and growth as a microphenomenon.

A first step toward more micro-oriented scholarship about nonprofit organizational growth is to conceptualize growth as a process. Arguably, Penrose’s (1959) seminal work could serve as a basis for such process-based inquiry. Penrose saw growth as a change process where the explanatory variables tended to shift and evolve substantially during this process. Thus, before we have a better understanding of the growth process it is difficult to say what else changes beyond size as a nonprofit grows. Put differently, while we can figure out how particular variables (e.g., different revenue models or types of nonprofit capacities) correlate with nonprofit growth, we still can add much more to our comprehension of the underlying processes that causes these factors to affect growth.

Some initial elements for a better understanding of nonprofit organizational growth as a process involve time and range. A major limitation of this research note is the use of a simple dichotomous growth indictor captured at one moment in time (for the major portion of the analysis). This type of arms-length quantitative studies, using cross-sectional data and a single indictor, will not put much flesh on the bone to understanding nonprofit growth from a micro-perspective. When nonprofit growth is conceived of as a process it will be beneficial/preferable to include and cover multiple growth indicators, and these indicators need to be assessed at several different points in time. Longitudinal research designs aiming to capture the growth process from the very early stages of nonprofit organizational life are also important from a methodological standpoint. For example, longitudinal studies will position us to better explain nonprofit organizational growth since inference of causality can only be made when there is a temporal ordering of events. Moreover, having the first time-observation taking place as early as possible in a nonprofit’s organizational life cycle minimizes the need for retrospective reconstructions of the growth process that are often subject to selection and hindsight bias problems.

Furthermore, nonprofit entrepreneurship scholars must begin to explore new and more diverse types of issues related to nonprofit growth. As noted previously, many growth studies have focused on “how much” questions and/or the aggregate effects of growth. To be clear, such inquiries are by no means irrelevant. For example, if one considers larger nonprofits as something positive, perhaps even superior to smaller nonprofits, then asking the question how do nonprofits “get really big” (Foster & Fine, 2007) is certainly warranted. Likewise, if one believes that a lack of scale is a major predicament to solving chronic social problems, then asking how nonprofits can expand their impact via replication (Bradach, 2003) is understandable and necessary. However, as this research note has sought to communicate, nonprofit growth is a multifaceted phenomenon that involves much more beyond just answering how much and how to. Indeed, there are examples of emerging research efforts seeking to advance our understanding of nonprofit growth by (see, for example, Moore et al., 2015; Peachey et al., 2019; Tykkyläinen, 2019), yet more conceptual and empirical scholarship is needed to begin accumulating generalizable knowledge.

This author believes that a useful point of departure for nonprofit scholars wanting to build further insights about growth in new and young nonprofit ventures is to look to the small business and entrepreneurship literature, which has accumulated a rich body of conceptual and empirical research over the past decades (Davidsson et al., 2010). Especially during inception, nonprofit and business entrepreneurs are likely to share similar concerns and challenges that can influence the future trajectory (including growth) of the new venture, for example, how to acquire and marshal startup resources. Still, nonprofits and firms are not the same. For example, whereas growth is often perceived as having a significant positive impact on revenue and profit in a new firm (Kiviluoto, 2013), this is not necessarily the case for a new nonprofit. A nonprofit can certainly grow by adding new programs and services, but this does not mean that its revenue will grow. In many nonprofits the beneficiaries do not pay for the services they receive, instead, the services must be subsidized from other sources of funding. Hence, questions such as when is it beneficial to grow and when is it preferable to stay small or the same size, or what is the goal of growth for the new venture may have different answers in a nonprofit versus firm setting. Another aspect to consider is the motivation and intention of the new venture. It seems feasible that growth aspirations, and growth decisions, will look different if the goal is to create a new venture that makes a lot of money, or as a way of self-employment, compared with creating a new venture as a hobby or side-project. Finally, the question of control and ownership are different in business versus nonprofit ventures, which raises important questions as to where, when and how various external stakeholders (e.g., regulators, donors, investors, or collaborators) are making a difference in the growth process?

In summary, the social entrepreneurship literature has spearheaded a call for more research about nonprofit organizational growth. This is certainly a welcome and important call to action. However, this author is equally convinced that the advancement in nonprofit growth research will depend on broadening the focus to also consider growth as a process, a domain that remains sorely understudied in the nonprofit literature.