The Relationship between Provision of Membership Benefits and Fulfillment of Representational Roles in Nonprofit Advocacy Membership Organizations

This article explores the ways nonprofit advocacy membership organizations can manage their resource dependence on members and fulfill the organizations' representational roles, focusing on the provision of membership benefits. Membership organizations rely on financial or other resources from members and thus are constrained by them. For a nonprofit that aims to primarily speak for members, constraints by members may help to focus organizational attention on members' interests. Contrarily, for a nonprofit that aims to mainly represent broader constituents, members' constraints may hamper an organization's ability to advocate for broader constituents because members do not necessarily share the same policy goals with broader constituents. The provision of membership benefits can be a useful strategy for organizations to fulfill their representational roles and to satisfy and engage members, because people often join an organization to enjoy certain membership benefits. For an empirical analysis, this study collected a large‐scale data set through web and mail surveys of nonprofit advocacy organizations across the United States. The mixed‐mode surveys achieved a 57.5 percent response rate (729 responses). The survey and regression analysis results show that member‐serving nonprofits providing members with opportunities to participate in advocacy work are more likely to represent members' interests directly. Although broader constituency‐serving nonprofits tend to prioritize members' opinions, these organizations are more likely to adhere to the mandates of broader constituents when providing selective material membership benefits. However, when providing purposive membership benefits, these nonprofits are more likely to represent members' opinions.     

Joining forces,fortunes, and futures: Restructuring and adaptation in nonprofit hospice organizations

Nonprofit organizations operate in tumultuous times characterized by constrained funding, increased competition, and greater demand for social services. Existing bases of intangible and tangible assets often are insufficient to fulfill service missions. These organizations appear to be responding by joining forces and restructuring to better accommodate diminished resources. Relatively little is known about the reorganization strategies being employed. The study described in this chapter examined the phenomenon of organizational restructuring among nonprofit hospice organizations. In particular, it identified the factors that propel nonprofits to pursue restructuring as a strategic solution, the elements that impede such restructuring efforts, and how organizations that pursue and implement restructuring differ from those that do not. The study found that an organization's relative placement along a continuum of political and economic strength is determinative in the outcome of its restructuring efforts. Those that take affirmative steps operate from a position of economic strength and exhibit independence in governance and decision making; those that do not are impeded by internal political factors.     

Common Agency in Nonprofit Advocacy Organizations

Most theories of nonprofit organizations and nonprofit leadership recognize the multitude of stakeholders—including board members, donors and volunteers, funders, the media, and policy makers—that organizational leaders must contend with in doing their work. For nonprofits engaged in advocacy, demands from stakeholders may be even more challenging to meet. Although stakeholder theory recognizes the effect of various groups on an organization, it does not explain how leaders manage the preferences of their often‐competing stakeholders while they make choices for the organization. This study develops a common agency framework, evaluating the roles of three groups crucial to nonprofit advocacy organizations: the organization's board of directors, elected officials, and donors/members. The common agency framework is then illustrated with interviews with leaders of nonprofit advocacy organizations in California. Findings suggest that the leaders of these groups have a significant amount of discretion in guiding their organizations’ activities and operations.     

Responsibilities and roles of boards in nonprofit organizations: The Israeli case

In this study, nine roles and responsibilities of boards of directors in nonprofit organizations in Israel are examined and perceptions of these roles and responsibilities by chairpersons of the boards and the executive directors are compared. Four groupings of board roles were found: senior human resource management, maintenance of relationships with the task environment, policymaking, and fiscal management and fundraising. The findings show that in most organizations boards fulfill all these roles and play a significant role in decision making. A significant consensus exists between chairpersons and executive directors in respect to most of the boards' roles, whereas significant differences in perceptions were found in respect to financial matters and maintenance of relationships with the task environment.     

Examining the influence of organizational characteristics on nonprofit commercialization

A growing body of literature discusses the (dis)advantages of nonprofit organizations becoming commercial by engaging in the sale of organizational services and products. However, when explaining this phenomenon, scholars tend to focus on resource uncertainty, thereby disregarding the organizational ability to commercialize. Complementing resource dependency theory with insights from contingency theory, this study presents arguments drawn from a comparative case study of six sociocultural nonprofits in Belgium. We find that, when resource uncertainty is similar, organizational differences in terms of commercial income can be explained by differences in (a) organizational origins, (b) professional capacity, and (c) types of tasks. We conclude that organizational characteristics can either enable or disable the ability of nonprofits to commercialize and consequently their ability to self‐sustain in an increasing challenging resource environment.     

Latino Faces,Corporate Ties: Latino Advocacy Organizations and Their Board Membership

Although they have increased exponentially since the 1960s, social scientists know little about ethnic advocacy organizations. These nonprofits are important bridges between underresourced communities and mainstream funding organizations and their directors are established ethnic leaders. Sociologists study interlocking directorates—or shared board membership—to understand how organizations fit together within broader social networks. Network concepts, particularly the theory of institutional isomorphism, suggest that organizations are likely to be similar to the extent they are connected and operate within a common organizational field. We apply this logic to Latino advocacy organizations to examine the underlying source of cohesion across this ethnic field. We ask whether the organizations are tied by interlocking directorates of ethnic elites who sit on their boards of directors or if board members' common affiliation with other elite institutions creates the structural conditions that facilitate potential ideological or behavioral similarity. A social network analysis of five prominent Latino advocacy organizations reveals support for both hypotheses: Latino board members are both embedded in ethnic‐based networks and entrenched within elite organizational webs. This suggests that ethnic elites who sit on the boards of Latino advocacy organizations are also corporate elites, selected for the social capital they bring to these nonprofits.     

Female leaders and board performance in member‐serving nonprofit organizations

Despite an active stream of “good governance” research, there is not yet much nonprofit scholarship examining how the gender composition of a board or its leadership relates to board performance. This article helps to fill this gap, focusing on the governance practices of US‐based nonprofits serving a domestic or international membership. A structural equation model finds that the presence of female leaders relates to the performance of nonprofit boards both directly and indirectly through these leaders' presumed influence on board characteristics and operation. This research advances the field by empirically testing a longstanding theory that board performance is both multidimensional and contingent on the market and labor environment, organizational capacity and other characteristics—in this case, gender dynamics. We find there are some positive relationships between female board leadership and clearly defined measures of board performance. These findings also suggest that a strategy to balance a board's gender may serve many nonprofits, but gender representation works in tandem with other board characteristics.     

Inclusive Governance Practices in Nonprofit Organizations and Implications for Practice

An inclusive board seeks information from multiple sources, demonstrates an awareness of the community and constituents that benefit from and contribute to the organization's services, and establishes policies and structures to foster stakeholder contributions. This research investigated the prevalence of inclusive governance practices and its relationship to board composition, diversity attitudes, and recruitment practices. Fifty‐six executive directors and forty‐three board members representing sixty‐two nonprofit organizations returned a mailed survey (29 percent response rate). The study profiled two organizations that represented different styles of inclusive governance. The survey, part of a larger study, contained questions about inclusive practices, board composition, attitudes toward diversity, and recruitment practices. Most organizations indicated that they operate with inclusive governance practices. The organizational profiles provide a picture of boards that used different strategies to accomplish the goal of inclusivity. Boards that use more inclusive practices were not necessarily heterogeneous in board member composition. Inclusive boards were more inclined to be sensitive to diversity issues and used recommended board recruitment practices. The existence of a task force or committee on diversity was also significantly associated with a more inclusive board. Nonprofit organizations must consider their philosophy on stakeholder involvement, recognizing that different strategies lead to different levels of stakeholder involvement.     

The Decision-Making Context and Its Impact on Local Human Service Nonprofits

One significant factor affecting an organization's functioning is the decisions made by other organizations that are important to it. We examine decision-making in three local human service delivery nonprofits, focusing on the level (local versus national) of the actors making decisions as well as the degree of horizontal or vertical coordination among decision makers. The findings show that the decision-making context affects nonprofit structure and operations and suggest that providers may have to make significant trade-offs as they seek to restructure in response to policy changes such as devolution.     

Engaging stakeholders through social networking: How nonprofit organizations are using Facebook

Since social networking sites, such as MySpace and Facebook, began allowing organizations to create profiles and become active members, organizations have started incorporating these strategies into their public relations programming. For-profit organizations have used these sites to help launch products and strengthen their existing brands; however, little is known about how nonprofit organizations are taking advantage of the social networking popularity. Through a content analysis of 275 nonprofit organization profiles on Facebook, this study examines how these new social networking sites are being used by the organizations to advance their organization's mission and programs. Solely having a profile will not in itself increase awareness or trigger an influx of participation. Instead careful planning and research will greatly benefit nonprofits as they attempt to develop social networking relationships with their stakeholders.     

Risk and diversification of nonprofit revenue portfolios: Applying modern portfolio theory to nonprofit revenue management

This study uses modern portfolio theory (MPT) to estimate the risk of nonprofit revenue portfolios and examines to what degree the revenue concentration measure based on Herfindahl–Hirschman Index is associated with the portfolio risk measure based on MPT. The findings suggest that nonprofits with greater revenue concentration have lower revenue portfolio risk in the whole sample analysis. However, it is plausible that this result is dominated by organizations reliant on commercial income, which comprise over half of the sample. In fact, when examined separately, the relationship varies by an organization's primary funding structure. While higher revenue concentration is positively associated with portfolio risk for organizations relying on donations or those without a consistent primary funding source, it appears to associate with a lower portfolio risk for commercial organizations and those relying on government grants. This study reflects on the concept of diversification derived from portfolio theory and calls attention to a more nuanced approach to nonprofit revenue strategy.     

The impact of funding sources and board representation on consumer control of service delivery in organizations serving low-income communities

This article examines the influence of funding sources and board members on the degree to which an organization enhances consumer control of the organization or limits access to services for some groups of clients. Based on a study of decision making in organizations serving three low-income communities, a limited degree of board influence on an organization's choice of service strategies can be traced to both the power of donors to demand service strategies that reflect their interests and the efforts of staff members to limit the ability of the board to engage in policy-making. The high degree of dependence of low-income communities on external funding restricts the development of boards as decision-making bodies that effectively reflect community interests.     

A Coalition Perspective on Nonprofit Governance Quality: Analyzing Dimensions of Influence in an Exploratory Comparative Case Analysis

We answer the call that governance research should focus more on processes outside the boundaries of boards, especially for nonprofit organizations. In particular, we suggest and elaborate concrete steps with respect to the advantages of a leadership coalition perspective to focus more on the behavioral and informal aspects of governance. Through a comparative case analysis of five nonprofit organizations, we explore contingencies between characteristics of nonprofit leadership coalitions and governance quality. We identify two dimensions to classify leadership coalitions: centralized versus diffused influence and specific versus holistic influence. These dimensions are subsequently related with observed governance quality. We frame our finding in the existing literature on group faultlines, which are socially constructed dividing lines within groups, and we discuss the importance of establishing a balanced coalition between a weak or nonexisting and a strong dominant coalition to ensure high governance quality. We also present propositions on how governance quality and its various sub-dimensions can be studied as a complex, nonlinear intermediate concept between coalitional aspects of leadership groups and nonprofit organizational performance. Finally, we discuss concrete avenues for further testing and verification of our theoretical interpretation.     

The economic value of volunteers to nonprofit organizations

This article applies microeconomic theory to the problem of calculating the economic value of volunteers to nonprofit organizations. It finds weaknesses in two popular valuation metrics: replacement cost and demand price. It argues for a method that measures the economic value of volunteer time by the impact it has on an organization's revenue, through either fundraising or producing goods and services. An Australian case study illustrates the method, and a survey of U.S. nonprofits tests the generality of the assumptions. The concluding section offers suggestions for management practice and further research.     

Called to order: A board president in trouble

This is a fictionalized case based on real events. It is intended as a teaching tool to stimulate discussion about procedural issues in nonprofit governance; board roles and responsibilities; communications; and relationships between boards, chairs, and executives, particularly in the context of smaller organizations. It is meant to support sessions on nonprofit boards and governance in introductory courses on nonprofit management or for use in workshops with new or less experienced executives and board members. Set in an organization engaged in cultural exchange, the case can be used in introductions to nonprofit management, arts administration, or international nongovernmental management.     

Exploring structure-effectiveness relationships in nonprofit arts organizations

The authors examined nineteen nonprofit performing arts organizations, investigating the distribution of influence among organizational members, the grouping of volunteers and staff in organizational structures, and the effectiveness of the organizations. The organizations' effectiveness was assessed using multiple performance indicators. The analysis revealed five groupings or configurations of influence, which correlated to the organizations exhibiting the highest and lowest levels of organizational effectiveness. The authors conclude that a variety of structures are associated with good performance but structural dysfunctions are associated with organizational failure, and that members' commitment to an organization's structure is an important element of success.     

Public reporting: A neglected aspect of nonprofit accountability

Nonprofit organizations have a compulsory external accountability (largely involving financial reporting) to government agencies such as the Internal Revenue Service and state regulators. They also have a pragmatic “must‐do” accountability to their funders, clients, and other obvious stakeholders. But are nonprofits also accountable to the public at large? If so, how can such accountability be implemented, given the diffuseness and breadth of the public as an audience? This article suggests that nonprofits should consider the citizenry as a stakeholder, if only due to the substantial taxpayer subsidy of the sector. The theory of public reporting that emerged in public administration literature beginning in the 1920s and 1930s can be helpful. Using principles, templates, and examples from public administration, nonprofit organizations can pursue more vigorous public reporting as one method to increase citizen confidence in their activities and in the sector as a whole.     

Nonprofit versus corporate governance: An economic approach

This article proposes a new theoretical concept of nonprofit governance using transaction cost economics and the economic theory of contracts. After a short review of economic approaches to corporate governance, I clarify the specific nature of the governance problem in nonprofit organizations. Based on this analysis, I derive criteria for selecting an organization's relevant stakeholders. If stakeholders provide valuable specific resources without the protection of a comprehensive contract that details exactly how the organization is to use these resources, then such stakeholders seek decision and control rights in order to direct the use of the resources they have provided. I argue that the core problem of governance is how to enhance valuable specific contributions of the relevant stakeholders while keeping the costs of bargaining between stakeholders and the costs of collective decision making low. The theory developed is then applied in a discussion of practically relevant governance mechanisms, and the concept of governance is used to contribute to the discussion on the strengths and weaknesses of the nonprofit character of organizations from a governance perspective.