Relational Impacts on Social Service NPOs’ Financial Sustainability in China: A Resource Dependence and Embeddedness Framework

Abstract Ensuring financial sustainability is a critical challenge for nonprofits, yet little research examines how funder relationships shape financial sustainability in non-Western contexts. Drawing on Resource Dependence and Embeddedness theories, this study analyzed data from 615 Chinese social service nonprofit organizations (NPOs) from the 2019 China Social Work Longitudinal Study, using two-stage stratified sampling from official registration lists across 56 cities. Results showed that dominant funder reliance was associated with lower revenue generation and surplus retention, while revenue diversification was negatively associated with surplus retention. Governmental support was positively linked with assets, with marginal associations with higher revenue generation and lower surplus retention. Embeddedness also mattered differently: Party and corporate embeddedness were positively linked to revenue generation, whereas governmental embeddedness was negatively associated with it. These findings advance theoretical understanding of how NPOs navigate complex funder relationships and offer practical reflections for strategically managing these relationships to strengthen financial sustainability in nondemocratic contexts.