To consider the capacity of nonprofits and communities that respond to public policy initiatives, the authors use a comprehensive database of Indiana nonprofits to examine two indicators of nonprofit formalization: tax-exempt registration under Section 501(c) of the IRS code and formal incorporation with the Indiana Secretary of State. The authors find that only 23% of the 54,108 nonprofits in the statewide database meet both criteria for formalization. The authors test whether more formalized nonprofits (appearing on both lists) are larger, older, and active in more institutionalized fields than those on only one or neither of the two lists. The findings generally confirm these expectations. The authors also hypothesize that larger, growing, and more institutionally developed communities will have a more formalized nonprofit sector (greater list overlap). However, few community-level variables relate meaningfully to the measure of sector formalization. Other factors that may be relevant for such an analysis are considered.
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