With shrinking public funding and fierce competition for government grants, nonprofit organizations are forced to diversify their funding sources and rely more on charitable gifts from individual donors as well as grants from private and community foundations. Understanding individual charitable behavior and philanthropic institutions' fundraising and grant-making activities becomes critical to the survival and development of community-based nonprofit organizations. Empirical studies show that social capital contributes to a wide range of positive social, economic and political outcomes. This dissertation explores the impact of social capital—measured by social trust and social networks—on individual charitable behavior and on institutional philanthropy, mainly community foundation development.

Individuals' charitable giving includes religious and secular giving. Using the national sample of the 2000 Social Capital Community Benchmark Survey (SCCB), the study finds that social trust, bridging social network and civic engagement increase the amount of giving to both religious and secular causes. In contrast, organizational activism only affects secular giving, and informal social networks do not matter for either secular or religious giving. In addition, volunteering activity positively affects both religious and secular giving. Moreover, those who are homeowners, happy about their lives, married and religious, and those with children in the family give more to religious causes. These factors do not seem to make significant differences in secular giving.

Community foundations are grant-making public charities that serve defined geographic areas. Much of their donations comes from the communities they serve. Using the SCCB local sample and community foundation financial data, the study finds that community-level social trust but not social networks significantly increases gifts to community foundations. The number of years community foundations have established themselves in a region and the population density also increase the gifts received.

Case studies show that community foundations can help build social capital through educating the community about social capital, making social capital-oriented grants, fostering civic engagement and supporting grassroots nonprofit organizations. However, an empirical test using a simultaneous equation model fails to find the impact of community foundation fiscal capacity on social trust.