Mission-Embeddedness and Financial Independence in Dance Nonprofits

Abstract

Governments are increasingly reducing funding for (arts) nonprofits or attaching conditions to access public support. Consequently, arts nonprofits seek to advance their artistic and social missions while increasing financial independence. The literature is divided on whether these objectives complement or substitute for each other. We analyse this relationship using an earned revenue embeddedness framework that assesses earned income activities based on their connection to an organisation’s core mission. Using data from 100 financial statements of 24 Dutch dance nonprofits, we examine the relationship between earned revenue embeddedness and financial independence from government grants. We find that the level of earned revenue embeddedness matters: higher levels of embeddedness have a positive impact on financial independence, implying that mission and money are mutually reinforcing. Commercial activities embedded within the mission strengthen both organisations’ missions and financial independence. We introduce three real-world indicators of financial independence that capture subtle distinctions of commonly used measures.