Reforming Property Tax Exemption Policy in the Nonprofit Sector: Commercialism,Collective Goods,and the Donative Theory

This article develops, critiques, and tests the donative theory, which bases the tax treatment of nonprofits on their production of collective or public goods, through twelve variations for determining property-tax-exempt organizations in five nonprofit industry groups. Using a case study of Indianapolis nonprofits, the results reveal that a significant number of organizations in the nonprofit sector and most industry groups would experience the loss of their property tax exemption. The author calls for nonprofit managers and scholars to give greater future attention to property tax exemption policy in the nonprofit sector.     

Human capital inflow in nonprofits: Entry‐level employees’ sector shift

Although recruitment and retention of qualified employees are some of the biggest challenges in the nonprofit sector, nonprofit organizations must maintain human capital inflow due to its significant impacts on organizational success. Through person‐organization value fit, this paper explores the factors that influence labor shifts from the public or for‐profit sector into the nonprofit sector in the South Korean context. Specifically, the effects on the likelihood of employees switching to the nonprofit sector from the perspective of eight job satisfaction measures and three education–job match measures are investigated. Two groups of employees (those whose career started in the for‐profit sector and those starting in the public sector) are compared. Results indicate that there is substantial variation between the two groups. In particular, intrinsic job satisfaction has completely different effects on those working in the for‐profit sector than on those working in the public sector regarding their likelihood of having experienced an intersectoral shift into nonprofits. The more public employees are satisfied with intrinsic job rewards, especially job reputation, the more likely they are to move to nonprofits. These results suggest that when employees in the public sector are satisfied with intrinsic rewards they tend to pursue greater intrinsic satisfaction in the nonprofit sector. This paper also reports that education–job match is only significant for those whose first job was in the for‐profit sector.     

Nonprofit management practices and work processes to promote gender diversity

Nonprofit organizations have long provided an important space for women to establish roles in public life. Using establishment‐level data on for‐profit and nonprofit organizations, we show that the proportions of women in full‐time and mission‐critical positions are higher in nonprofits. In contrast, for‐profit businesses have more women in part‐time jobs and in jobs that are peripheral to the organizational purpose. We also demonstrate that the greater proportions of women in full‐time and mission‐critical positions in nonprofits are due to the use of inclusive work processes and transparent human resource management practices. Our findings provide evidence to pursue the aspects of nonprofit organizations that expand opportunities for working women.     

Corporate Volunteering: Benefits and Challenges for Nonprofits

In the frame of corporate social responsibility, corporate volunteering is almost exclusively studied from the point of view of companies, while the perspectives of nonprofit organizations are neglected. Hence, this article focuses on the perspective of managers of nonprofit organizations on volunteer partnership projects with for‐profit companies. In the center of this article lie nonprofit managers' strategy and motivation for participating in corporate volunteering, conception of corporate volunteer activities, and the often‐cited win‐win‐win aspect. Key findings suggest that a majority of the questioned nonprofits lack strategic behavior and management tools for undertaking volunteer partnership projects with companies. Nevertheless, corporate volunteering is widely perceived as an opportunity and a promising method of raising donations for nonprofit organizations. This article suggests that the key to successful future cooperation between nonprofits and profit‐oriented organizations lies in the processes of internal evaluation and subsequent strategy development.     

Past work experience and organizational assimilation in nonprofit organizations

This study compares seven dimensions of organizational assimilation (OA)—familiarity with coworkers, familiarity with supervisors, recognition, acculturation, involvement, job competency, and role negotiation—into nonprofit, for‐profit, and governmental organizations incorporating the role of similarity of past work experience (magnitude of transition [MoT]). An online survey of 294 employee newcomers (tenures of 3 months or less) revealed differences in OA between those entering nonprofits and those entering for‐profit, and governmental organizations. Compared to newcomers entering for‐profit and governmental organizations, nonprofit newcomers reported higher levels of job competency, involvement, acculturation, and role negotiation. Interactions between organization type and MoT from past work to current roles were examined for effects on OA. When MoT was low, nonprofit newcomers were higher on acculturation and involvement than for‐profit newcomers; governmental newcomers with high MoT were significantly higher on role negotiation than for‐profit newcomers. Theoretical and practical implications for nonprofit organizational management, trainers, and nonprofit newcomers are discussed.     

Building and valuing global brands in the nonprofit sector

Global nonprofit brands are the world's new “super brands” (Wootliff and Deri, 2001). Nonprofit organizations command unprecedented levels of trust, and nonprofit brand valuations are on par with major international corporations. Leaders and managers of nonprofits face new challenges in the stewardship of their brands. Based on current thinking in nonprofit management and detailed interviews with close to one hundred executives of ten international nonprofit organizations, this article draws strategic lessons on brand building and brand valuation activities of international nonprofits. The multiple roles and stakeholders that global nonprofit brands must address make nonprofit brand building complex and challenging. In particular, differences between advocacy and relief organizations must be explained. Despite the complexity, international nonprofit organizations may have an advantage over for‐profits in leveraging public trust and brand communication. Advocacy organizations in particular successfully link brand and cause to good effect. The valuation of nonprofit brands is a new strategic challenge with significant appeal, but also significant concerns for international nonprofits. In addition to providing nonprofit leaders and managers with a better understanding of brandbuilding activities, imperatives, and best practices in the field, this article outlines the opportunities and threats associated with the valuation of nonprofit brands.     

To profit or not to profit: Women entrepreneurs in India

Entrepreneurial activity attracts certain kinds of individuals, whether it is to promote a social cause in the nonprofit sector or profit in the for‐profit sector. This article looks at the behavior of women entrepreneurs in India in both the for‐profit and nonprofit sectors to test for potential differences and similarities. We chose two groups of entrepreneurial women who founded and led relatively similar‐size organizations in the same city and who provided services primarily to women and children. Our findings show that while all nonprofit entrepreneurs receive a high payoff from promoting social causes, there is no single unifying payoff for for‐profit entrepreneurs. Family background and support, however, play an important role for both sets of entrepreneurs. We find that experience in the sector, social class, caste, and education in?uence entrepreneurial behavior and that this in?uence differs by sector.     

Unintended? The effects of adoption of the Sarbanes‐Oxley Act on nonprofit organizations

This article investigates the benefits and costs to nonprofit organizations emanating from the adoption of the Sarbanes‐Oxley Act (2002). The act was intended to stem financial malfeasance in the for‐profit sector; nevertheless the article finds that about half the surveyed nonprofits adopted provisions of the act and experienced effects in proportion to the level of adoption. About one in four of the nonprofits attributed benefits of better financial controls and reduced risk of accounting fraud to the adoption of the Sarbanes‐Oxley Act. More than one‐third of the nonprofit organizations reported increased fees for external audit, and about 15 percent cited “reallocation of resources from program to administrative expenses.” This article discusses the unintended positive and negative effects of public policy on nonprofit organizations.     

Uncharted Waters: Exploring the Relationship between Strategy Processes and Management Control Systems in the Nonprofit Sector

The way in which strategy and management control combine has been the subject of much research attention, but rarely, within a nonprofit context. This is surprising, not only because of the considerable social and economic impact of this sector, but also in view of the apparent trend toward sectoral convergence in many structural and processual respects, including strategic behaviors and approaches to control. In this article, we explore the extent to which the relationship between management control and strategy, as found in for‐profit organizations, may prevail within a nonprofit context. Based on questionnaire responses from 182 Australian nonprofit organizations, we find that this relationship in nonprofit organizations is similar to that in for‐profit organizations, thereby lending support to the “convergence” argument. We reflect on the reasons for these similarities and advance an agenda for further research in this area.     

Human resource management,employee engagement,and nonprofit hospital performance

Human resource management (HRM) has been shown to impact organizational performance, but more research is needed on particular human resource (HR) practices in nonprofits and their effect on performance. In this article, we explore one HRM practice argued to influence performance, employee engagement in decision‐making, examining whether involving staff at different levels of a nonprofit affects nonprofit organizational performance. Drawing on data from a 2011 study of nonprofit hospitals, we find employee engagement has a positive influence on managerial and stakeholder perceptions of organizational performance. Employee engagement in decision‐making is also related to objective nonprofit performance measures, although the effects are less consistent. We conclude by discussing the implications of these findings for nonprofit research and practice.     

A framework for understanding how nonprofits shape our physical environment: Identifying allies in making spaces

Research exists on the role of nonprofits directly shaping open spaces and preserving elements of the built environment, but the larger landscape of nonprofits that directly and indirectly shape the larger physical environment is less well understood. Although legislation exists to help protect and preserve natural spaces, nonprofits play a crucial role in carrying out work to protect and shape the natural and built components of the physical environment. Furthermore, nonprofit work that shapes public spaces is, by default, an attempt to reshape social environments and values through interventions in the physical environment. This is particularly important as the relationship between the physical environment and societal outcomes related to public health, human behavior, and sustainability is clear. Using past research by the authors, a review of related literature, and a localized case study, we refine a theoretical framework to better describe and understand the breadth of nonprofits that are shaping the physical environment. In doing so, we create a tool to help nonprofit managers identify and better engage allied stakeholders.     

Do Nonprofits Treat Their Employees Differently? Incentive Pay and Health Benefits

We examine how nonprofit, public, and for‐profit establishments vary in the provision of health benefits and insurance and performance‐based incentives using the 2002 National Organization Survey of establishments in the United States. We found that in comparison to for‐profit firms, both nonprofit and public organizations are less likely to use performance‐based incentives, although they provide their employees with better health benefits and insurance. Sectoral differences in the provision of health benefits and insurance and use of performance‐based incentives persist after controlling for correlates of sector that predict these outcomes, including establishment size, independence of establishment, market competition, establishment age, and unionization. We also found trade‐offs between the provision of health benefits and insurance and use of performance‐based incentives. Our results are generally consistent with the prediction from agency theory and also consistent with a view that public and nonprofit organizations are more concerned with the well‐being of their employees.     

Co‐located Nonprofit Centers

Nonprofit centers are organized to house individual nonprofits “under one roof” to enhance their efficiency and effectiveness and to offer shared services to diminish administrative load. This post‐occupancy tenant satisfaction survey of three such US centers represents the first empirical analysis of such organizations. We find that nonprofit tenants (N = 118) initially co‐located due to the leasing price and the new physical environment (free parking and safety). Nearly all nonprofit tenants wished to remain at their nonprofit centers, largely for the same reasons that brought them there. The article then discusses strategies to achieve the high response rates attained in this study. It concludes with some implications for nonprofit centers, communities, and nonprofit staff—now and in the future, including lower occupancy costs and enhanced quality of nonprofits’ workspace.     

Interorganizational network portfolios of nonprofit organizations: Implications for collaboration management

Increasingly, nonprofit organizations engage in interorganizational collaboration to address large‐scale social problems. Scholarship typically focuses on the characteristics of both within‐sector and cross‐sector partnerships of two collaborating organizations or all partnering organizations involved in a collaboration, but we know little about the patterns of interorganizational relationships that single nonprofit organizations maintain. This research draws upon surveys from 452 nonprofits and introduces nonprofit network portfolios, which we define as the number, integration, intensity, and duration of relationships that nonprofits purposefully develop with other organizations. Using 12 network measures, Ward cluster analysis revealed three distinct network portfolios: restricted within‐sector (n = 319, 70.58%), which included limited collaboration and prioritized within‐sector partnerships; robust within‐sector (n = 80, 17.70%), which included more nonprofit partnerships than restricted within‐sector portfolios; and cross‐sector (n = 53, 11.72%), which had a rich assemblage of integrative partnerships with nonprofits, businesses, and government agencies. Further, nonprofits that maintained each type of portfolio differed in their revenue and social mission, suggesting these factors are related to the types of collaboration that nonprofits maintain. This study makes contributions to existing research on interorganizational networks and cross‐sector collaboration and suggests practical and policy implications for nonprofit network management.     

Charity Watchdogs and the Limits of Information-Based Regulation

Transparency concerns and the concomitant accountability challenges have motivated policy and legal scholars to explore information-based regulatory approaches. We examine their usefulness in the context of the nonprofit sector which tends to show signs of governance failure. Although nonprofits are required by law to disclose information on fund use, nonprofit donors face difficulties in accessing and interpreting information about how nonprofits are deploying resources. Charity watchdogs make this information available to donors in a convenient format. In theory, this should allow donors to reward nonprofits that devote resources to service delivery and to punish those that are less careful about controlling overheads. To test the relationship between charity ratings and donations, we examine 90 nonprofits in the state of Washington for the period 2004–2007. Drawing on ratings data provided by Charity Navigator, we find that changes in charity ratings tend not to affect donor support to these nonprofits. We explore this statistical finding via interviews with 10 charities located in Washington State. Supporting the statistical results, we find that charities believe that donors tend not to systematically embed ratings in their donation decisions. Instead, they believe that donors assess nonprofits’ effectiveness and trustworthiness via other means such as familiarity, word-of-mouth, or the visibility of the nonprofit in their community. In sum, the policy challenge is to provide information which users desire such as organizational effectiveness as opposed to basic fund allocation in the case of non-profits. What matters for policy efficacy is not how much information is provided but of what type.     

Hospice of the Red River Valley: A nonprofit's response to for‐profit competition

Research of nonprofit versus for‐profit competition points to potential quality and access advantages of the nonprofit, tied to shared community values leading to enhanced social capital and legitimacy, whereas the for‐profit is known for cost and scale advantages. However, the prevailing mode of thinking in mixed‐form competitive contexts urges nonprofits to become “more businesslike” and imitate for‐profit attributes. This qualitative study of a nonprofit organization facing new for‐profit competition illustrates that while it is possible and advisable to learn from for‐profit competitors, it is not necessary or even desirable for the nonprofit to abandon its own unique advantages. Although nonprofits should be increasingly sensitive to cost and scale advantages, they do not have to imitate for‐profit attributes and play the low‐cost game. A competitive response to for‐profit challenges that is carefully crafted and executed based on the unique advantages of the nonprofit organization can truly win the day.     

The economics of performance management in nonprofit organizations

This article analyzes whether and how private‐sector notions of performance management apply to nonprofit organizations. To this end the author shows that each concept of performance management used in the private sector is based on a specific economic theory of the firm and its environment. Before transferring concepts and tools derived from a certain model of the firm and its environment to nonprofit organizations, one must determine whether the assumptions underlying this model are also adequate for nonprofit organizations. Otherwise, one must first adjust those assumptions and analyze whether the derived concepts and tools are still meaningful in the new context; if not, one must determine how to modify them accordingly. The analysis elaborates on the differences between for‐profit and nonprofit organizations that are important for applying performance management concepts. Moreover, the author discusses the practical implications for the use of balanced scorecards in nonprofits.     

Running on Empty: The Operating Reserves of U.S. Nonprofit Organizations

Operating reserves allow nonprofit organizations to smooth out imbalances between revenues and expenses, helping to maintain program output in the presence of fiscal shocks. We know surprisingly little about why nonprofits might save operating reserves and what factors explain variation between organizations' savings behavior. Findings suggest that operating reserves are reduced in the presence of concentrated public funds, access to debt, fixed assets, and endowment. However, size is not an important predictor, indicating that the lack of reserves is not limited to small nonprofit organizations but is instead a sectorwide issue. Significant numbers of nonprofits maintain no operating reserves at all. One potential explanation is that organizations discount the benefits of reserves because they are evaluated on spending, focusing instead on the “benefits of costs.” This preference for spending over reserving may also help explain the general lack of liquidity in the sector beyond operating reserves alone.     

Ethical Climate in Nonprofit Organizations: Propositions and Implications

The authors discuss a number of variables that may influence the perception of ethical climate in the nonprofit sector, including individual, organizational, and significant other (peers, coworkers, and superiors) variables. The basis of this discussion is the model developed by Agarwal and Malloy (1999) identifying a framework for nonprofits that is distinct from the for‐profit orientation. The authors provide ten propositions and discuss their implications.     

Accounting for Social Value in Nonprofits and For‐Profits

The authors argue that social value can serve as a bridge between the nonprofit and for‐profit sectors. They further propose that social value is not simply an abstract concept but can be measured by applying social accounting methods. The authors argue that nonprofits are founded on a social mission but that traditional accounting approaches do not properly assess their social products. They illustrate the centrality of social value, both to nonprofits and for‐profits, in two ways: (1) a discussion of for‐profit firms that behave much like nonprofits and (2) an application of the social accounting model. The authors discuss two types of firms: (1) for‐profits whose shares are held in a trust and therefore operate much like corporations without shareholdersor like nonprofits and (2) for‐profits whose owners do not exercise the rights associated with their property. They then apply a social accounting model to nonprofit employment training programs to illustrate how the inclusion of social variables changes the assessment of an organization's value. They conclude with a discussion of a social accountability framework that embraces both nonprofits and for‐profits.