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.     

Staffing,retention, and government funding: A case study

This study analyzes the implications of government‐contract funding on the staffing pattern of a nonprofit agency, the Canadian Red Cross, Toronto Region. Furthermore, the study explains the implications of the staffing pattern on services and on the agency's organization. Staffing is one area that the literature on nonprofit organizations has not adequately addressed. The findings indicate that contract‐based funding leads to the hiring of temporary staff and affects the retention of employees. Although contract funding has some benefits, temporary staffing is detrimental to the agency's services. It affects not only employee recruitment and retention but also training. The results highlight how change in government funding from grants to contracts resulted in the agency's new staffing strategy and ultimately reduced the effectiveness of the services the agency provided to the community.     

Community as a factor in implementing interorganizational partnerships: Issues,constraints, and adaptations

This article reports findings from a community‐based study of collaboration among seven nonprofit human service agencies in a very low‐income urban neighborhood. The project, funded by a federal demonstration grant, was developed to prevent child abuse and neglect as an alternative to the existing public child welfare system. Findings suggest that privatization, funding uncertainties, and community‐level factors posed external stressors that constrained executives' ability to collaborate. The article identifies five key stressors, analyzes how each constrained the partnership, and then discusses specific adaptations made by executive leadership in political, technical, and interpersonal areas that facilitated strategic adjustment and realignment in a very complex interorganizational arrangement and set of relationships. Finally, implications are drawn for nonprofit managers, social policy, and nonprofit research.     

Reputation spillover effects from grant‐providing institutions

There is a broad academic discussion about the impact of funding grants from a foundation or a government department on individual support intentions toward the nonprofit organization receiving the grant. However, the role of the grant provider's reputation has frequently been overlooked. In this study, we experimentally tested whether there is a reputation spillover effect of a grant‐providing organization. Based on a real‐life example, we asked citizens to rate their willingness to donate to a nonprofit organization, and we experimentally manipulated the available information on funding sources. We test this for both a government department and a foundation as a grant provider. Our results suggest that not the act of receiving a grant, but the citizens' awareness about the funding organization—at least in the case of a foundation—has an impact on support intentions. In contrast, for a prominent government department as a grant provider, we did not find support for a reputation spillover effect.     

Factors Contributing to the Size of Nonprofit Sector: Tests of Government Failure,Interdependence, and Social Capital Theory

Based on the county-level longitudinal data in the USA, this study finds that racial diversity is positively associated with the nonprofit sector size. We further find that the share of children below poverty level is negatively associated with the size of nonprofit sectors. Our findings support the government failure theory. Random effects models also show that federal funding and local funding are positively associated with the size of nonprofit sectors, which confirms interdependence theory. Lastly, we do not find statistically significant relationship between social capital—measured by the number of associations—and the nonprofit sector size.     

KIDS OR CASH? EXPLORING CHARTER SCHOOL RESPONSES TO DECLINING GOVERNMENT REVENUES

While the literature is extensive on school districts' revenue sources, less research has been done on the impact of donations on school district funds. In this paper, we extend the theoretical literature on crowding out of private donations by government grants for one type of nonprofit firm, namely charter schools. The theoretical model leads us to focus on the key relationships among fundraising effort, enrollment (which is tied to federal and state funding) and donations. Using a dataset on Texas charter schools we adopt a two-stage approach to examine the empirical relationship between changes in nondonor revenues and the donations received by charter schools. Like the extensive empirical estimates of the effects of government grants on donations for other types of nonprofit firms, we find evidence of crowding-out with respect to our sample of charter schools. We also find a significant, positive effect of fundraising on donations with a $1 increase in fundraising associated to a $0.58 increase in donations, a pattern consistent with overinvestment in fundraising. Enrollments exhibit a robust inverse relationship to changes in nondonor revenues. (JEL H00, H32, H50)     

The devil is in the details: Implementing secular outcome measurement methods in faith‐based organizations

Faith‐based organizations (FBOs) are now being encouraged to seek federal funding for the purpose of supporting faith‐based delivery of social services in local communities (that is, the Compassionate Capital Fund). This shift in the federal perspective has resulted in increased attention to the effectiveness of the services provided by FBOs. Though rigorous demonstrations are needed to determine the relative effectiveness of FBO services, other available alternatives offer a viable avenue to aid FBOs in improving their programs and monitoring their success. One such alternative is the use of outcome measurement techniques, such as those that have been infusing the nonprofit sector in the United States since the mid‐1990s, particularly among United Way–funded programs. This chapter discusses how to adapt secular outcomes measurement approaches to faith‐based organizations and their programs and the likely pitfalls that FBOs will face.     

The State of Nonprofit Finance Research across Disciplines

The single largest determinant of nonprofit organization success is financial sustainability. Yet the study of nonprofit finance spans multiple disciplines, creating barriers for new researchers to the field. To address this challenge, this study addresses three primary questions across disciplines: How much nonprofit finance research has been conducted, what is the content of this research, and what is the impact of this research? This systematic literature search revealed 619 nonprofit finance research articles in twenty‐seven journals published in the disciplines of nonprofit management, public administration, accounting, and economics and finance between 1970 and 2014. The vast majority (415 of the 619 identified articles) were published in nonprofit management journals (either Nonprofit and Voluntary Sector Quarterly or Nonprofit Management & Leadership ). Across disciplines, there is an emphasis on determinants of giving, but we note some variation; for example, there is more emphasis on government funding in journals outside of nonprofit management. The impact of this research is significant, with more than 32,630 citations, or an average of 52.71 times per article. The resulting bibliography may be helpful to researchers seeking to discern the status of extant nonprofit finance research across multiple disciplines.     

What Accounts for the Variations in Nonprofit Growth? A Cross-National Panel Study

Previous studies of nonprofit growth have lamented the lack of cross-national longitudinal data measuring the size of the nonprofit sector across countries, which has made it difficult to assess the current state of knowledge about the nonprofit sector beyond national boundaries. Recent progress in measuring nonprofit growth using panel studies or cross-national data has compensated for the limitations of the existing research, but even the recent data are either country specific or cross sectional in nature. This study takes on the challenge of supplementing the current research by measuring nonprofit growth using internationally comparable longitudinal data. Specifically, this study focuses on whether certain key indicators of the overall state of the economy can be used to predict and explain the size of nonprofit sectors cross-nationally. The overall state of the economy has considerable relevance for nonprofit growth, as it influences the levels of government funding and private philanthropy that benefit the nonprofit sector. The results indicate that the existing theories about the nonprofit sector account for variations in nonprofit growth but are limited in their explanations of the underlying dynamics of such variations beyond national boundaries. Social origins theory is a useful addition that helps to explain cross-national variations in nonprofit growth. Importantly, the interplay among the government, private philanthropy, and the nonprofit sector is dynamic, and its effect on economic indicators varies across nonprofit regime types when sociodemographic variables are controlled.     

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.     

Which Nonprofit Gets More Government Funding?

Government represents one of the most important funding sources for nonprofit organizations. However, the literature has not yet provided a systematic understanding of nonprofits’ organizational factors that are associated with their receipts of government funding. This study combines interorganizational relationships and organizational institutionalism literature to examine the determinants of nonprofits’ obtainment of government funding. Based on a survey of human service nonprofits in Maryland, this research finds that nonprofits with higher bureaucratic orientation, stronger domain consensus with government, and longer government funding history are more likely to receive government contracts and grants. Nonprofits’ revenue diversification, professionalization, and board co‐optation might have very limited impacts.     

The Impact of Board Diversity and Expertise on Nonprofit Performance

This study examined the impact of board of director characteristics on nonprofit performance. Using data collected through a survey of nonprofit colleges and universities, the author provides evidence that specific board member characteristics are vital in shaping the financial and nonfinancial success of nonprofit institutions of higher education. Results indicate that both board member diversity and expertise are associated with better‐performing organizations. This work makes important initial forays into the relationships between board of director qualities and nonprofit performance. Although limited by the relatively small sample of colleges and universities, this study is unique in its ability to analyze nonprofit boards and both financial and nonfinancial performance measures.     

Does Talk Lead to Action? An Examination of the Relationship between Debate and Funding for NGOs in Canada

All organizations, including nongovernmental organizations (NGOs), need funding to survive and fulfill their mandates. What is the best strategy for securing that funding? Should groups work to attract government attention and be a focus of government debate or should they avoid this type of scrutiny? This article uses innovative data to systematically examine how being the subject of debate in parliament is related to NGO funding for Indigenous, women, and environmental groups. We also examine if the relationship between debate and funding is dependent on the political party in power. We use data collected from Canadian Public Accounts, which lists all grants to groups by the federal government, and the index of Hansard, a full record of parliamentary debates at the federal level in Canada. Our findings demonstrate that the relationship between debate and funding is dependent on the issue area. While debate is positively associated with funding in all areas, it is a stronger predictor of funding for environmental and Indigenous groups than for organizations focusing on women. In addition, the party in power is critical for shaping how debate is related to funding. Debate has a much stronger effect on environmental funding when Liberals are in power than it does when Conservatives control the Prime Minister's office. This research shows that NGOs must be strategic when garnering attention to their cause as more debate does not necessarily lead to more funding across issue areas and contexts.     

What Helped Nonprofits Weather the Great Recession?

This study examined the effectiveness of several financial strategies for nonprofit organizations in fighting the Great Recession. Using data from human services and community improvement organizations in the state of New Jersey, we tested hypotheses about the relationships between three measures of financial sustainability and various fundraising efforts and financial indicators. We found that (1) except for strong external funding relationships, funding efforts were generally not effective in enhancing financial sustainability during the crisis; (2) higher operating margin and equity ratio improved an organization's ability to generate revenue and maintain expense levels, but higher debt ratio and administrative cost ratio were generally harmful; and (3) revenue diversification might aggravate fiscal stress and cause more expense cuts in a severe crisis. These findings improve our understanding of the mechanics of nonprofit management during times of harsh fiscal conditions and suggest useful ways for nonprofit organizations to navigate future financial crises.     

Net impact of government funding on nonprofit fiscal health: burden or benefit?

This study examines the impact of federal grant awards on the financial health of recipient nonprofits. Although a modest body of research finds that government grants are beneficial to nonprofit fiscal health, a large Urban Institute study (2010, 2013, 2015) found that nonprofit managers receiving government grants consistently report fiscal harm due to awards that do not cover all program costs, late payments, and significant administrative burden. Those findings raise the question of whether government funding leads to net benefits or net harm for organizations given the administrative and fiscal burdens identified. This study tests that question using a large panel of federal grants to estimate the impact of government awards on three measures of nonprofit financial health. We find that government grants promote an increase in nonprofit size, improve operating margins, and increase financial reserves for recipient organizations. These benefits endure after the receipt of the award.     

Community Foundations: A Growing Resource for Community Development

Like many nonprofit organizations, community development corporations (CDCs) rely on various sources of funding and support for their activities in poor and distressed neighborhoods. Funders often include the federal government, state and local government agencies, financial institutions, and philanthropic organizations. The author explains how community foundations are different from other philanthropic organizations and describes the various mechanisms that community foundations use to support community development. She suggests that there is a natural fit between the purpose of community foundations and the philosophy of community development, concluding that it is important for CDCs, as well as other nonprofit organizations, to understand how community foundations are different from other philanthropic organizations so that they may better position themselves to take advantage of the many resources that community foundations bring to their communities.     

Commitment and performance of nonprofit board members

Boards of nonprofit organizations are entrusted to oversee and ensure that the organization remains true to its mission, functions within the confines of state and federal laws, and operates in a financially responsible manner. This critically important oversight is carried out by volunteers. This study examined the relationships between board member commitment and individual performance. Commitment was assessed using Meyer and Allen's Three‐Component Model of Commitment: Affective, Continuance, and Normative (1991). The population in this study was volunteer board members of midsized, social service nonprofit organizations in the Orange County, California, area. The strongest findings were between affective commitment and performance in board roles. Committed board members reported more involvement and are perceived by the executive to be more engaged and valuable. Analysis revealed that executive judgments of participation are based on both board member behavior and Affective commitment expressed by the board member.     

Nonprofit Advocacy Tactics: Thinking Inside The Box?

As part of a social change agenda, nonprofit organisations engage in activities that contribute to debate and influence the development of public policy. This article presents the initial findings from a study investigating whether nonprofit organisations do participate in advocacy activities and if they do, how are they advocating and engaging in public debate without risking their current and future sources of funding. The key findings from the research have identified that the extent of advocacy by the nonprofit organisations studied has not diminished. A model, built on the findings from the literature on how nonprofit organisations approach advocacy, is applied to explain the advocacy activities by the case study organisations. These nonprofit organisations are identifying what they see to be the appropriate advocacy strategies to fit their organisational objectives, policies, funding sources and resources.     

The Philanthropic Consequence of Government Grants to Nonprofit Organizations

Do government grants displace or leverage private donations to nonprofit organizations? Although research on this topic is flourishing, the findings remain extremely contradictory, creating difficulty in developing a cumulative knowledge available to scholars and practitioners. This study employs a meta‐analysis to systematically synthesize the competing findings from the existing literature. Using a sample of sixty original studies with 637 effect sizes, this study finds government grants have almost no correlation with private donations. In addition, this study demonstrates, through meta‐regression, that nonprofit subsector variation, organizational age as a control, longitudinal data structure, and endogeneity correction help explain the effect size heterogeneity within and across original studies. Nonprofits should be more concerned about the capacity of competing for different funding sources rather than the tradeoff among them.     

Critical Experiential Pedagogy: Sociology and the Crisis in Higher Education

Higher education is in crisis, especially in the public sector. Over the past few years, tuition at state universities across the country has increased dramatically, their budgets have been slashed and federal funding for need-based financial aid has been reduced. The results are increased class sizes, fewer course offerings, more adjunct faculty and fewer working-class students at public colleges and universities. In Massachusetts, where we teach, these trends are particularly pronounced. In this paper, we describe “Crisis in Higher Education,” a critical experiential course we offered to raise student awareness about the crisis and to encourage them to work for change on our campus. This course is an example of critical experiential education because it integrates classroom learning with political activism. This article describes the context and rationale for teaching the course, reports on students’ responses to its form and content, and discusses what we learned from this experience.