Effects of Government Support of Nonprofit Institutions on Aggregate Private Philanthropy: Evidence from 40 Countries

This paper examines the effects of aggregate government payments to nonprofit organizations on aggregate private philanthropy. Four behavioral models of private philanthropic giving are proposed to formulate four hypotheses about those effects: no net effect (null hypothesis), crowding in (positive effect), crowding out (negative effect), and “philanthropic flight” or displacement (negative effect across different subsectors). These hypotheses were tested against the evidence from 40 countries collected as a part of a larger research project aimed to document the scale and finances of the nonprofit sector. The data show that, on the balance, government payments to nonprofit institutions (NPIs) have a positive effect on aggregate philanthropic donations to nonprofits, as stipulated by the crowding in hypothesis, but a field level analysis revealed evidence of “philanthropic flight” or displacement from “service” to “expressive” activities by government payments to “service” NPIs. Due to the limitations of the data, these results indicate empirical plausibility of the hypothesized effects rather than their incidence. The findings demonstrate the complexity of the relationship between government funding and philanthropic donations to nonprofits, which depends on the goals of the actors (donors and recipients) and institutional settings mediating the transaction costs of difference sources of nonprofit support.     

The Impact of Economic Crises on NGOs: The Case of Greece

The paper analyzes the impact of economic crises on organized civil society. A number of empirical studies have shown that a financial crisis can inflict a serious damage on the nonprofit sector—mainly through a sharp decline in revenues. However, the Greek case shows that a crisis can also have some positive effects on NGOs: many nonprofits introduced reforms that increased efficiency, the number of volunteers reached record levels, and there was a spectacular rise in funding by private philanthropic foundations. However, Greek NGOs continue to be dependent on external funding, unable to raise large sums from their members and the wider public. Organized Greek civil society continues to be turned upside down: dependency on EU and state funds is being replaced by dependency on private foundations.     

Resisting Hybridity in Community-Based Third Sector Organisations in Aotearoa New Zealand

The influence of the state policy agenda though a neo-liberal contracted funding environment is redefining the boundaries of the third sector through a process of hybridisation. Hybridised organisations adapt to possess characteristics and logics of multiple sectors (public, private or community). Increasing hybridity within the New Zealand community and voluntary sector has resulted in a perceived dichotomy separating organisations that adapt to these challenges from those that resist. In this paper, we apply a hybridity lens to seven community development organisations, who have predominantly resisted marketisation and alignment with the state policy agenda, to assess the extent of their hybridity and how this has impacted on their place in the community and voluntary sector and access to funding opportunities available from the state.     

Nonprofit sustainability during times of uncertainty

Nonprofit organizations in the United States depend on a diverse set of funding streams to sustain their operations. This study examines the ability of nonprofits to leverage funds from the private sector during the current economic downturn within four areas receiving federal funding for community and economic development. Both survey research and individual interviews were used to examine how nonprofits within these areas are incorporating their board members and community leaders to continue services during a time of resource scarcity.     

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.     

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.     

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.     

Financial Sustainability Within UK Charities: Community Sport Trusts and Corporate Social Responsibility Partnerships

The change in political leadership in the UK in 2010 has created financial uncertainty and instability for many third sector organisations. In a shifting funding landscape, it is clear that an over-reliance on Government funding is a risky strategy and that there is a need to diversify and seek out alternative sources of revenue. This article considers the impact of political change on the financial sustainability of community sports trusts associated with Premier League and Football League clubs in England. It explores sources of revenue through the analysis of financial statements, revealing that on average community sports trusts receive a significant proportion of income from grant funding whilst sponsorship income is relatively small. The article goes on to discuss the potential for community sports trusts to diversify revenue streams by developing social partnerships that address the corporate social responsibility (CSR) agendas of commercial organisations. It illustrates that although commercial sponsorship can provide benefits including the provision of additional funding that can enable financial stability, key issues include the balance of power, the impact on organisational flexibility, whether there is a need to restructure, and the development of long-term partnerships. Although the findings from this article are focused on a particular type of charity, given the importance of CSR partnership income for the charities sector they may also have broader implications for other charitable organisations.     

Nonprofit social services in Moscow: Leadership and administrative issues

This article presents the findings of a study of nonprofit human services organizations in Moscow, Russia, in the early stages of development of the nonprofit sector. It addresses the following issues of relevance to social welfare in particular and nonprofits in general. First, what is the legal status of nonprofits? Second, what leadership and governance mechanisms have evolved? Third, how are resources, both financial and human, obtained? And, finally, how can Western consultants be useful in addressing the unique and specific needs of nonprofits in Russia as they bring their expertise into this setting?     

Sustainability Assessment and Reporting for Nonprofit Organizations: Accountability “for the Public Good”

Nonprofit organizations serve the public good by offering services that benefit communities and the individuals who live in them. While many large for-profit companies and a few international nonprofits have begun voluntarily assessing and reporting their environmental, cultural, economic, and social sustainability performance in response to growing public awareness of sustainability issues, nonprofit organizations have generally been slow to adopt the practice. This paper makes the case that nonprofits have an obligation to assess and report sustainability performance to account for their positive and negative environmental, cultural, economic, and social impacts in the communities they serve precisely because of their promise to serve the public good; and that sustainability assessment and reporting are not only possible, but that they can actually offer several practical advantages for organizations that integrate the practice into their missions and models. Several sustainability reporting frameworks are reviewed. Two case examples are presented to illustrate the utility of sustainability assessments and reports for different types and sizes of nonprofit organizations. Challenges to the process of adoption and implementation of sustainability programs in the nonprofit sector are discussed.     

Welfare reform and the future of nonprofit organizations

This article discusses implications of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) for nonprofit social service organizations. We emphasize their role in the contemporary social safety net in relation to the public sector. Based on a study of ninety organizations operating in the Detroit metropolitan area, we adopted the supplementary, complementary, and adversarial framework from Young (1999) to assess the complex and evolving relationship between the nonprofit and public sectors in the post‐PRWORA era. The findings indicate a clear presence of all three perspectives; however, the continued shifting of responsibility for social services to private, nonprofit organizations suggests a growing dominance of the supplementary role. This raises concerns regarding future nonprofit capacity and other potential costs of nonprofit sector service provision.     

Public funding and institutional reorganization: Evidence from the early kindergarten movement

During the last quarter of the nineteenth century, nonprofit kindergartens exhibited many modern characteristics such as comprehensive services, community outreach, and developmentally appropriate practices. By the beginning of this century, most of those modern characteristics had been eliminated as kindergartens became integrated into the public school system. This article analyzes the institutional reorganization of nonprofit kindergartens under public control by applying and extending Thomas H. Jeavons's framework. The author argues that the observed institutional reorganization was caused by adaptation to the legitimizing principles of the public sector. It is important to understand this dynamic well to correctly assess the effects of public funding and ownership on nonprofit organizations. This article is especially relevant to those following policy arguments for public funding of preschool programs.     

Using Social Network Analysis to Enhance Nonprofit Organizational Research Capacity: A Case Study

As donor agencies become more specific in funding requirements, research that can demonstrate the collaborative efforts of a nonprofit agency with its organizational neighbors and how those efforts pay off in terms of capacity and provision of services is highly useful. Recognizing these benefits, a local funding agency in Virginia commissioned a study to look at the ways in which social network analysis (SNA) can enhance the data resources available to nonprofits for funding and grant requests. In this article, we present a case study of a network of 52 nonprofit organizations to illustrate the viability of SNA in terms of funding and research needs specific to nonprofit organizations. We discuss the outcomes of the case study in terms of how the visual and metric outputs of SNA can be used by nonprofits to enhance the accomplishment of their organizational missions and strengthen their grant requests.     

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.     

Nonprofit cash holdings and spending: The missing role of government funding

Charitable nonprofit organizations have long been under scrutiny with regard to how they manage excess funds, particularly cash holdings. Given previous empirical evidence, agency problems have been treated as an effective lens to explain the consequences of cash holdings among nonprofits. That is, nonprofit managers spend cash holdings for their own interests as opposed to the social interests of the organization. This study revisits the question of how charities manage extra cash and further examines the role of government funding in nonprofits' spending decisions. The results suggest that nonprofit managers make decisions on how to manage extra cash in accordance with the level of cash holdings; therefore, agency problems do not effectively explain how nonprofits manage extra cash. Furthermore, the results illustrate two contrasting roles of government funding in nonprofits' financial behavior: government funding may be used to monitor unscrupulous behaviors among managers, but it may also restrain nonprofits from investing in human capital.     

Factors Attracting Individuals to Nonprofit Management over Public and Private Sector Management

Little research has sought to identify the distinct advantages that nonprofits offer employees, particularly managers. Drawing upon Weisbrod's theory of managerial sorting (1988), we test a series of hypotheses about the differences among nonprofit, public, and for‐profit organizations that may explain the preference of managers to work in one sector over the other. We use pooled cross‐sectional data from the General Social Survey to test managerial sorting. We find many similarities in the perceptions of managers in the nonprofit and public sectors as compared to the for‐profit sector. However, when we examine the sorting of managers into nonprofit versus public sector jobs, we find differences in work environment. Compared to those working in the public sector, managers in nonprofits report greater freedom in deciding how to carry out their job functions, more control over their work schedules, and greater opportunities for pay increases. We conclude with a discussion of the implications of these findings for the practice of nonprofit management.     

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.     

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.     

Creating positive change in community organizations: A case for rediscovering Lewin

As nonprofits, especially those with a community mission, pursue developmental goals, they may benefit from various planning and analytical tools. This article explores an application of Kurt Lewin's planned change model to an assessment and revisioning process undertaken by a community‐based organization, indicating the ongoing usefulness of Lewin's work in the nonprofit sector. Using a case study approach, we examined the actions embarked on by the organization to address decreased funding and client losses. The Lewin model is overlaid to illustrate its value in structuring organizational decision making and development. The model is a three‐step process of unfreezing from old practices, moving and changing the organization into new directions based on formally identified needs, and refreezing into more effective organizational modes. When combined with other standard practices such as strategic planning, Lewin's model provides a practical and theoretically insightful tool for nonprofits wishing to refine their missions and programs and engage in successful organizational change.