The crowding‐out effect within government funding: Implications for within‐source diversification

The benefits and risks of revenue diversification lead scholars to propose within‐source diversification as a possible compromise. Although this revenue strategy sounds promising, no scholarly attention has been devoted to empirically examining it. This study explores within‐source diversification across government funding, specifically whether nonprofit receipt of support from a major government funder affects support from other government funders. Using a panel dataset of U.S.‐based international development nonprofits from 1995 to 2014, we find that nonprofits with more funding from the major funder are associated with significantly less funding from other funders. This crowding‐out effect weakens as organization size grows. The findings imply that the within‐source diversification strategy might be more desirable for larger organizations with the capacity to manage multiple funding relationships.     

“We Actually Trust the Community:” Examining the Dynamics of a Nonprofit Funding Relationship in New Zealand

Funding relationships in nonprofit management are increasingly defined by a philosophy of rational management, characterized by measurement of outputs and benchmarking, which represents an audit culture system (Burnley, Matthews, & McKenzie, 2005). There is concern that these approaches are constantly undermining the mission of community service nonprofit organizations (Darcy, 2002). In this research, we analyzed the management of funding relationships by examining dynamics within a nonprofit funding relationship in New Zealand. Through focus groups we explored the relationship between 17 representatives from nonprofit organizations and four Board members of a funding Trust. The management of this funding relationship was characterized by an appreciation of the diverse nature of nonprofit organizations, a balance between trust and control, and communication. We suggest that elements of these dynamics could be incorporated into nonprofit funding relationships in order to challenge an over-reliance on audit culture systems, and to re-establish relationships characterized by interaction between nonprofit organizations and their funders. Finally, we call for future research in this area.     

“Put me in,Coach”: A pilot evaluation of executive coaching in the nonprofit sector

The use of executive coaching within the nonprofit sector has received increased attention over the past decade as a mechanism to build capacity and address issues of burnout and turnover among executives. This article presents the results of an evaluation of a pilot six‐month executive coaching program that was implemented in 2005 in an urban metropolitan area. The evaluation collected data through surveys and semistructured interviews with nine executive directors and five coaches who participated in the pilot and analyzed the data to assess the effectiveness of the delivery and usefulness of the experience. The coaching experience was rated as very helpful and supportive of the development of executive directors as nonprofit leaders.     

Funders as principals

This article examines the tensions that surfaced for three nonprofit funding intermediaries—tensions between their historic practices and the new practices required to use performance measurement to ensure greater accountability and results among their grantees—and analyzes these tensions in light of literature on philanthropic and accountability relationships. From this analysis, the article makes three points. First, philanthropic relationships are not equivalent to accountability relationships. Second, because of these differences funders that adopt performance measurement may encounter tensions as these new practices challenge the importance of other philanthropic concerns. Third, without a systematic way to attend to these concerns when adopting performance measurement, funders face an impoverished choice: reward measurable results or fall back on supporting good intentions.     

Government,funded nonprofits,and accountability

Internationally, nonprofit organizations are being held to account for how they spend public funds. This issue of accountability has emerged as a theme in nonprofit-state relationships. Exploring the state side of that relationship in Australia, the author suggests that significant constraints hinder the ability of state funding bodies to manage accountability processes for grant funds. The interviews summarized and reported here were conducted before the full impact of a contract regime was felt. The issues identified permit reflection on the possible mediating impact of different political systems on accountability processes, and on the limitations of principal-agent frameworks in building accountability processes and state-nonprofit relations.     

Devolution of Services to Children and Families: The Experience of NPOs in Nanaimo,British Columbia,Canada

This study focuses on the current experience of Nanaimos nonprofit family and child service organizations (N = 29) providing services on behalf of government and their adaptation to this devolution. The effects and consequences of contracting on organizational practices, accountability, and services were explored through interviews and focus groups with executive directors, board members, line staff, government representatives, and the United Way. Results show that a significant proportion of funding comes from provincial government contracts. The funding climate is uncertain, and there is considerable confusion, stress, and time involved with the contracting process. Accountability requirements are demanding and nonprofit organizations (NPOs) express concern about a shift to a business management model. Recommendations include a need for increased collaboration between NPOs, a body that speaks for the voluntary sector, and improved relationships between NPOs and government funders.     

Innovation by nonprofit organizations: Policy and research issues

It is often claimed that a main reason public authorities and others use nonprofit organizations is that nonprofit organizations are innovative. But very little research has been conducted into innovative behavior by nonprofit organizations. How, then, does a funder formulate a policy with which to select innovative organizations? This article develops a classification matrix for types of innovations, sets out the elements of an innovation policy for a funder, and uses a review of the main theories of the spurs and inhibitions to innovation to consider how this ordering can be used in the construction of an innovation policy and as a framework for research.     

The double-edged sword of social service contracting: public accountability versus nonprofit autonomy

The increased role of government contracts in the funding of nonprofits has heightened tensions as governments seek accountability and nonprofits seek to preserve autonomy. Considering both sides of the contract market this article suggests that the threat of government funding is exaggerated. Nonprofits are attractive contractor options because of their experience and trustworthiness. Governments should recognize that excessive intrusions limit the advantages of the nonprofit sector. At the same time, nonprofits should be conscious of the implications of public funding, just as they must be of other sources of funding.     

The use of performance measurement in South Carolina nonprofits

Performance measurement is touted by nonprofits as the newest method of ensuring accountability. Knowing the value of the process while having an appreciation for the downside with regard to volume of work can help organizations make more educated decisions about how deeply they want to get involved with performance or outcome measurement. This article provides background information on performance measurement and examples of how it is being used in nonprofit organizations. Next, it presents methods of an exploratory study conducted in South Carolina. Finally, a discussion of results focuses on the effect of outcome measurement on management and funding as well as the need for more in‐depth research.     

What Nonprofit Executives Want and What They Get from Board Members

In theory, nonprofit boards of directors exist to perform mission‐setting and oversight functions that help to ensure organizational accountability. Yet there is evidence that board behavior often falls short of this ideal. Using survey data from a sample of 241 executive directors of nonprofit agencies, we investigated whether nonprofit boards are meeting executive directors’ expectations, and if not, what factors explain this? We find that although board behavior tends to align closely with executive directors’ preferences for involvement in administration and management tasks, there is a greater disconnect between board behavior and executive directors’ preferences for involvement in mission‐setting and oversight duties. Factors that mitigate this gap include organizational professionalization and stability, whereas more extensive reliance on government funding exacerbates it. Female executive directors experience a greater disconnect in their preferences for board involvement and actual board involvement than male executive directors. We conclude by discussing the implications of our findings for both theory and practice.     

How nonprofit human service organizations manage their funding sources: key findings and policy implications

Major findings and policy implications on how nonprofit social service organizations manage their funding relations are summarized. Data from in-depth case studies of six medium-sized social service organizations with distinctive funding profiles yielded findings on the major contingencies associated with controlling fees, the volatility of donations, and the driving force of public funding relationships for funders (public and private), nonprofit managers, and the role of nonprofit organizations.     

Testing Faith

Abstract

The U.S. federal government, through Charitable Choice, has opened public funding for the delivery of social services to faith-based organizations (FBOs) more than ever before. This increased access to governmental funding at all levels has led to a closer examination of the evidence base on the effectiveness of the services provided by FBOs, and the capacity of FBOs to respond to data needs for accountability and program improvement efforts. This paper discusses the current status of evaluation research on FBO services and the emerging data needs among faith-based providers. Promising avenues for enhancing the current understanding of outcomes of FBO services are explored such as (1) adopting outcome measurement practices in use within the current nonprofit sector, and (2) developing more rigorous research designs tailored to the special contexts of faith-based services. The paper suggests an agenda in which FBO operators, funders, and evaluators work together to move forward in improving the evidence base on faith-based services.     

How the State Shaped the Nonprofit Sector: Public Funding in British Columbia

This article examines how the state has used its spending power to shape the nonprofit sector in British Columbia since the 1960s. The province's thriving nonprofit sector and its polarized political culture provide an ideal case study for exploring the relationship between the state and nongovernmental organizations. The following study documents changes in state policy, the trajectory of funding, funding patterns, and organizations that have received state funding. Although public funding for nonprofits in Canada has been pervasive for decades, there is little empirical evidence on the nature and scope of this funding. This article is based on an innovative new database that provides a comprehensive list of grants from the provincial government to nonprofit organizations between 1960 and 2014. Despite concerns regarding cuts to public funding in recent years, this study finds that there has been an overall increase in funding. However, there has also been a significant shift in funding from women's issues to Aboriginal peoples since the early 2000s.     

Casa de esperanza

Many nonprofit organizations struggle with the challenges of staying true to their mission in light of increasing reliance on public revenue streams. Casa de Esperanza, a mid‐size nonprofit in St. Paul, Minnesota, faces these tensions. Although it was founded to support Latinas who experience domestic violence, public funding streams mandated a different approach. This case explores the trade‐offs the organizational leaders must consider at a critical juncture in their development. Copyright © 2004 Jodi Sandfort.     

Resource-Based Accountability: A Case Study on Multiple Accountability Relations in an Economic Development Nonprofit

In economic development nonprofits, the disparity between the nonprofit’s, its donor’s and the poor’s expectations concerning poverty alleviation has been identified as the main reason for ineffective aid delivery. The study at hand contributes to this discussion by following this question: How do the nonprofit, its donors, the supported SMEs, and the poor refer to the nonprofit’s mission of poverty alleviation when negotiating accountability? To answer this question, the study follows the literature on accountability and resource dependency and presents results of an empirical case study on multiple accountability relations between a donor, a development aid nonprofit, its supported SMEs, and the poor living in the environment of the supported SMEs. The results show a pattern we call “resource-based accountability.” This pattern is constituted by the observation that most of the stakeholders tried to meet the expectations of the resource owners with respect to the resource owner’s understanding of successful poverty alleviation. Finally, the paper introduces a hypothesis for further studies.     

Nonprofit organizations' use of the internet: A content analysis of communication trends on the internet sites of the philanthropy 400

To evaluate the current status of communication and fundraising strategies on the Internet, a stratified random sample of the Chronicle of Philanthropy's Philanthropy 400 was content‐analyzed in mid‐January 2005. Web sites were coded on variables identified in practitioner and scholarly literature on issues of accountability, fundraising practices, and interactive communication strategies. Chi‐square analysis found that the top nonprofit organizations included copies of their annual reports, organizational goals, and mission statements, while second‐tier organizations were more likely to use a sales approach by using e‐commerce technology and terminology to process online donations.     

Crowding‐Out and Fundraising Efforts

The crowding‐out of private donations by government grants is an integral element in designing an efficient method of financing nonprofit activity. This article looks at elements of crowd‐out, both the direct impact on donors and the indirect impact caused by the response of nonprofits. We include both theoretical and empirical analyses of the reactions by donors and nonprofits to an increase in government funding based on data from the League of American Orchestras’ annual reports from 2004 to 2007. To combat indirect crowd‐out, renewed emphasis should be placed on grant design; for direct crowd‐out, theories of collective action are appropriate.     

Funder‐initiated integration

The active role of funders in organizational restructuring and consolidation is becoming a more common area of study, because more funders—private and government funders alike—are moving in the direction of encouraging funded agencies to explore new strategies such as mergers and integrations. This research focuses on funder‐initiated nonprofit integration and explores the challenges and strategies demonstrated by a government grantor and nine funded agencies as they planned and developed a management service organization. This was an action research study, whereby all parties participated as co‐researchers to examine the integration challenges and the partnership strategies used to move the integration process forward.     

“The advancing of management”: Cross‐sector agents and rationalization of nonprofits in Eastern China

This study examines and extends former theoretical argument of nonprofit rationalization in the Chinese context. Based on a survey study of 179 nonprofit organizations across Zhejiang province of Eastern China, we find that nonprofits led by individuals with prior business experience and with more extensive business networking are more likely to adopt rationalized rules and practices. Moreover, the results indicate support for the mediation effect of business networking on the relationship between prior experience and rationalization. We also find the moderation effects of management training on the direct effect of prior business experience and on business networking, as well as the indirect effect of prior business experience on rationalization via business networking. Our findings contribute to explaining the formation of rationalization in the Chinese nonprofit sector and provide implications for future research, practice, and policy.     

Exploring the link between government funding and efficiency in nonprofit colleges

Previous literature has suggested that federal funding can hinder the efficiency of nonprofit organizations, but this has yet not been empirically tested. This study used a two‐stage data envelopment analysis (DEA) model to measure the efficiency of a set of private nonprofit teaching‐oriented colleges, then estimate the impact of federal and state funding on organizational efficiency. The findings indicate that, on average, increases in neither state nor federal funding effect efficiency of nonprofit colleges. Increasing state funding negatively impacted the efficiency of public colleges (N = 799). This study suggests that the challenges for nonprofits that accompany government funding may not rise to a quantifiable negative effect on efficiency.