Advancing nonprofit organizational effectiveness research and theory: Nine theses

Drawing on the general literature on organizational effectiveness, the specialized literature on nonprofit organizational effectiveness, and recent research in the field, this article advances nine theses, or conclusions, about the effectiveness of public benefit charitable, nonprofit organizations (NPOs). NPO effectiveness is (1) always comparative, (2) multidimensional, (3) related to board effectiveness (but how is not clear), (4) related to the use of correct management practices but not in any simple “best practices” way, and (5) a social construction. Furthermore, (6) it is unlikely that there are any universally applicable best practices that can be prescribed for all NPO boards and management, (7) organizational responsiveness is a useful organizational‐level effectiveness measure, (8) distinguishing among types of NPOs is important and useful, and (9) level of analysis makes a difference in researching and understanding effectiveness. The article concludes by considering implications for organizational practice, boards and governance practices, program evaluation, including program outcomes assessment, and capacity building and capacity builders.     

Board practices and board effectiveness in local nonprofit organizations

This study of sixty-four locally governed nonprofit charitable organizations used a social constructionist perspective to investigate the relationship between the extent to which nonprofit boards use prescribed board practices and stakeholder judgments of the effectiveness of those boards. A social constructionist perspective implies that different stakeholders use and evaluate different kinds of information in making judgments about board effectiveness. The results suggest that there is wide variation in the use of the prescribed board practices, that judgments of board effectiveness often differ substantially, and that chief executives' judgments of the effectiveness of their boards is moderately related to the extent of use of recommended board practices.     

Managing stakeholder relationships and nonprofit organization effectiveness

This research examined how nonprofit organizations manage their relationships with stakeholders and how these practices relate to perceived organization effectiveness. We conducted semistructured, open‐ended interviews with executive directors of nonprofit organizations (NPOs) to discover whom they see as their stakeholders, the types of expectations they encounter from stakeholders, and the practices they use in managing stakeholder relationships. The two nonprofits that were evaluated as most effective used a consistent, thematic rationale in dealing with stakeholder issues: one organization discussed its actions in terms of its mission and core values, the other based its actions in terms of building relationships and networks. Our study suggests that organizations that ground their external relations in issues that are recognized as good nonprofit management, and do so consistently across stakeholder groups, will tend to be rated as more effective by multiple, external evaluators.     

Non-profit organizations bridging the communication divide in a complex South Africa

Purpose

South Africa's post-apartheid governments have made remarkable progress in consolidating the nation's peaceful transition to democracy, but many South Africans still view themselves and each other according to stigmatizing categories. As the country's remarkable and peaceful transition to democracy unfolds, millions, both urban and rural, are still confronted with having to survive unemployment, homelessness, lack of basic services, HIV/Aids, food insecurity and unacceptable levels of crime and violence. Confronted by the complexity of our development challenges, one of our biggest failures is a lack of communication, trust, common purpose, collaborative leadership and sustainable relationships between the various sectors and stakeholders in development. Transforming South Africa's society to remove the legacy of marginalization will be a long-term process requiring the sustained commitment of the leaders and people of the nation's diverse groups. So the question remains: how can non-profit organizations (NPOs) establish themselves as development providers within the uncertain political arena, of which South Africa is characteristic, in order to represent all the masses who cannot speak for themselves and more than often find themselves in a marginalized and stigmatized position?

Principle results

Some Non-profit organizations recognize that their relationships with stakeholders is of great importance for their survival, various forms of communication take place without the necessary planning and without clear objectives for the development of these relationships. NPOs need a positive image and reputation due to financial implications where they do not have sufficient funds to support or market themselves effectively. In this climate of polarization NPOs play a pivotal role in providing a voice to the poor, mobilizing a motion of change and creating a platform for relationships, credibility and trust. Within the theoretical framework of relationship management theory, the interests of all stakeholders are balanced through the management of the stakeholder relationships.

Major conclusions

Non-profit organizations need to ensure that they protect their stakeholders (especially those who are in desperate need of the services rendered by these organizations), deliver better services and although not operating for the purpose of making a profit, manage themselves so that they do generate profit which will enable them to support themselves especially when funding is something that is becoming a rare phenomenon. Although NPOs find themselves in difficult financial times they need to renovate and almost reinvent themselves, in order to be fully capable to address many social problems in SA and to indicate to those who support them (especially financially) that they are to be trusted, committed to make a difference, that they deliver on their promises and to ensure open communication channels with all their stakeholders. NPOs need to manage their reputations which are built on their corporate identities because it is the organization's reputation that often creates a lifeline in uncertain times. If the NPOs succeed in managing their identities effectively, it may serve as the foundation for developing and maintaining relationships with their respective stakeholders which in turn could change the face of South Africa's society. These organizations might go about creating a platform for dialog in an attempt to build sustainable productive relationships that can go about uplifting and empowering those who would otherwise not have such an opportunity.     

The Third Way Reconfigured: How and Why Nonprofit Organizations are Shifting Their Human Resource Management

Nonprofit organizations (NPOs) are facing increasing demands to become more efficient and effective, especially given increasing financial cutbacks, the rising demand for services and the push toward performance-related management. Human resource management (HRM) is claimed to play an important role in coping with these challenges. Yet, within the field of nonprofit management, little is known about the configuration of HR architectures in NPOs, let alone their impact on performance. To bridge this gap, we conduct an exploratory multiple case study in ten health and social services NPOs. The case study data indicates a shift toward a dominant strategic orientation in the configuration of HRM. Our article makes a central contribution by uncovering a third way in which NPOs seek a specific configuration of HRM to confront the challenges they face in their internal and external environments.     

Does Nonprofit Marketization Facilitate or Inhibit the Development of Civil Society? A Comparative Study of China and the USA

With the rise of the global associational revolution and the expansion of neoliberalism across the world, nonprofit organizations (NPOs) have increasingly tended to adopt market values and approaches in many countries. A recent debate has concerned the impacts of nonprofit marketization on the civil society sector. A primary concern among Western scholars is the potential harm that marketization may cause to the traditional roles of NPOs, especially in their ability to create and maintain a strong civil society. This article joins the debate by engaging in a comparative analysis of China and the USA to answer the following question: Are the same concerns in the West applicable to non-Western countries, particularly those gradually liberalizing but still highly controlled authoritarian countries? By exploring the variations in objectives, models, and effects associated with the marketization taking place under different political–social systems, we find that unlike the nonprofit marketization in the USA, the similar yet distinct process in China is facilitating rather than inhibiting the development of civil society. On the other hand, our findings also provide nonprofit practitioners with a contextual guideline to help them devise more effective service strategies tailored to fit diverse sociocultural settings.     

What is Old is New Again: Achieving Effectiveness with Volunteer Programs in Kazakhstan

Abstact This study based on Kazakhstan nonprofit organizations (NPOs) is the first to address the important issue of the relationship between volunteer management and volunteer program effectiveness in an international setting. Our inquiry is informed by findings of US scholars that show that the adoption of a recommended set of volunteer management practices is related to the level of effectiveness achieved with volunteer involvement in NPOs. The paper advances a path model to explain volunteer program effectiveness, with volunteer management practices the crucial intermediate variable. Based on data collected in a survey of Almaty (Kazakhstan) NPOs in 2004, the empirical analysis yields considerable support for a path model that focuses on both the adoption of these practices and the attainment of program effectiveness. Given the heterogeneity of NPOs, not every organization can be expected to benefit from the adoption of the recommended practices. Nevertheless, results suggest that they offer one workable means for successfully integrating volunteers.     

A holistic approach to stakeholder management: A rhetorical foundation

The day-to-day concerns of managing stakeholders are a critical matter for public relations practitioners and scholars alike. “Stakeholder theory” subsumes the knowledge base about stakeholders, who are individuals and groups who affect or are affected by an organization's actions. This article argues that a holistic view of stakeholder management rests on rhetorical grounds and concerns answering three fundamental questions: (1) How are stakeholders created? (2) How can relationships with stakeholders be maintained? and (3) How can relationships with stakeholders be improved? Example cases are used to demonstrate how retrospective analysis reveals the effectiveness of stakeholder management approaches. Ultimately and most important, the combination of theory and case analyses are synthesized into a prospective approach to stakeholder management that organizations may use during strategic planning.     

Organizational Antecedents of Pay-for-Performance Systems in Nonprofit Organizations

The applicability of pay-for-performance systems (PfP-systems) in nonprofit organizations (NPOs) is discussed controversially both in literature and in practice. Existing theoretical models emphasize the importance of the employee’s motivation and output control for the effectiveness of PfP-systems. However, empirical evidence on which factors influence PfP-system’s introduction in NPOs is still lacking. Based on an exploratory study of nine Austrian NPOs, this paper develops hypotheses on what organizational factors distinguish NPOs that rely on PfP-systems for managing employees’ performance differences from those that use alternative approaches (e.g., job enrichment, NPO-spirit). Findings suggest that decisions on the application of PfP-systems are influenced by five determinants: perceived degree of competitiveness regarding funding and service provision; degree of strategic freedom; clarity of strategic objectives; existence of management instruments; and organizational culture.     

Challenges and boundaries in implementing social return on investment: An inquiry into its situational appropriateness

Nonprofit organizations (NPOs) and social enterprises are increasingly under pressure to justify their use of resources and report their impact on society. Frameworks that monetize social value such as social return on investment (SROI) have emerged as a response. The existing literature highlights many benefits and technical challenges of SROI, but largely ignores strategic and organizational learning aspects. This paper explores the use of SROI in an NPO conducting cultural heritage preservation. By analyzing the challenges managers face in agreeing on a reliable (“correct”) computation of SROI and in assessing the validity and relevance (“appropriateness”) of SROI, we seek to understand the challenges and boundaries of SROI. Challenges with a reliable computation of SROI are identifying stakeholders, the choice of proxies, the time horizons, and deadweight factors. Challenges with an appropriate SROI calculation are comparability, subjectivity, legitimacy, and resource utility. We argue that SROI calculations might not be reliable or appropriate in organizations with fuzzy purposes, broad value creation goals, broad target groups, very individual or subjective proxies, strongly lagged outcomes, complex or unobservable causality, and with lack of legitimacy among stakeholders. Organizations should not trustingly adopt SROI without being aware of these limitations.     

Du Pont and Greenpeace: The Dynamics of Conflict Between Corporations and Activist Groups

Public relations makes organizations more effective by building relationships with stakeholders in the environment that have the potential to constrain or enhance the mission of the organization. When stakeholders become activist groups, they become particularly troublesome to organizations because they appeal to the media, government, and other stakeholders to force the organization to change when the organization's response does not satisfy them. Few public relations practitioners have found successful strategies for dealing with activists, but this research on the conflict between Greenpeace and Du Pont suggests that Axelrod's (1984) concept of "Tit for Tat" games from game theory may be effective. Conflicts are resolved most efficiently when the participants develop compatible ground rules. In our case history, however, Du Pont and Greenpeace used incompatible approaches to dispute resolution, dictated by their constituencies. As a result, there was little hope that the two sides could agree on ground rules for discussing the conflict, much less for resolving the issues. Although Du Pont used a "Tit for Tat" strategy in the conflict, Greenpeace followed a pure zero-sum model that hampered its effectiveness in fostering change. We conclude that both parties may have met their objectives by not resolving the conflict in the end.     

Impact of the EU Structural Funds on Financial Capacities of Non-profit Organizations

To fulfil their role, non-profit organizations (NPOs) need sufficient capacities. These include, first and foremost, financial capacity. EU Cohesion Policy commands financial resources of 351.8 bn. EUR. The EU is also willing to support NPOs from this source. With such considerable funding, the research questions arise: How much money have NPOs received? What are the effects of such assistance on the financial capacities of NPOs? On a sample of 2715 non-profit organizations in the Czech Republic, we have found that EU subsidies have a positive impact on financial capacities, measured as real assets. It is caused by using EU funds for investment. We have not proved an effect on short-term financial capacities measured on revenues. Moreover, the distribution of financial support among PBOs is unequal as 4% of NPOs collected 80% of subsidies due to differences in skills among NPOs’ managers.     

Outcome assessment: suggestions for agency practice

Managed care proponents emphasize outcome research to determine the cost-effectiveness of interventions, suggesting the use of multimeasurement procedures that will assess both specific and general effects of interventions. Although most agencies can perform outcome assessment and outcome management, they have difficulty conducting meaningful outcome research. This articles provides an introduction to outcome research; discusses the concepts of statistical significance, effect size, and the meaningfulness of effects; and emphasizes the need for client value-based judgments regarding the effectiveness of interventions. To encourage agencies to use client-completed outcome assessment procedures, the steps needs to effectively do so are outlined.     

Mapping the Level of Development of Grassroots NPOs in China

Grassroots NPOs have emerged in China in large numbers. Although knowledge about the Chinese nonprofit sector, especially its relationship with the government is accumulating, knowledge regarding the operations of the grassroots NPOs is lacking. This study reviewed the level of development of 78 South China grassroots NPOs involving in rural education. By collecting organizational information on the NPOs’ products, structure and management, governance, human resources, finance and marketing, we developed a framework to assess their capacity. Based on organizations’ performance in the six domains, they were categorized into four different groups: the amateur do-gooders, the start-up charities, the grassroots in transition, and the aspiring young NPOs. We described the key characteristics of each group, and discussed how government policy and organizational leaders’ attitudes influenced organizations’ behavior and development. The assessment tool can be used to guide organizational capacity building in the future.     

Should NPOs Follow International Standards for Financial Reporting? A Multinational Study of Views

Financial reporting is an important aspect of not-for-profit organisations’ (NPOs’) accountability. Globally, numerous and varying regimes exist by which jurisdictions regulate NPO financial reporting. This article explores whether NPOs should be required or expected to follow sector-specific international financial reporting standards. We investigate stakeholder perceptions on the nature and scope of any such developed standards, interpreting our findings through the lens of moral legitimacy. Using an international online survey of stakeholders involved in NPO financial reporting, we analyse 605 responses from 179 countries. Based on our findings, we argue that diverse stakeholder groups, especially those who are involved with NPO financial reporting in developing countries, are likely to grant moral legitimacy to developed NPO international accounting standards if the consequences are to enhance NPO accounting and accountability information, subject to agreement as to whether all or only NPOs of a certain size should comply and whether any such standards should be mandatory.     

Volunteers for NPOs in Welfare Services in Iceland: A Diminishing Resource?

The question of declining membership of non-profit organizations (NPOs) has been central in academic discussion and research has indicated changes in the way people volunteer. Less emphasis has been on the functions of volunteers as a resource for NPOs and how changes such as increased reliance on professionals in their operations can influence the volume and type of volunteering. This paper examines the value of volunteers as a resource for Icelandic NPOs in the field of welfare services. It is based on a study of the majority of active Icelandic NPOs in the welfare field, as well as an analysis of their respective websites. The findings show that volunteer contributions do not constitute a significant part of the activities of most Icelandic NPOs in welfare services. Apart from membership of boards, volunteers seem to be used primarily as a means of supplementing other resources, such as temporary fundraising efforts. However, the level of volunteering varies according to the size and operational type of organization.     

Managing Development for Results: A Role for Results‐oriented Public Expenditure Management

Can results‐oriented approaches to public expenditure management function in low‐income countries? Do they have a role in securing the implementation of poverty reduction strategies? And can they assist donors in ‘managing aid for results’? Findings from seven countries suggest that they can work in environments with mediocre discipline in budget and public finance management and a degree of uncertainty caused by macroeconomic instability, but not when there is excessive ‘informality’ and instability. With political will and a strong finance ministry, they have proved valuable tools in ensuring the coherent expansion of pro‐poor programmes and their delivery through autonomous local governments. However, they have yet to become effective in improving public administrations' accountability to parliament and to non‐governmental stakeholders.     

Social Media Management

Do foundations effectively use social media to engage stakeholders? Do usage and engagement vary by foundation type? This article has been written to stimulate discussion and research about social media use and user engagement by foundations beyond measuring social media presence. We analyzed Facebook usage and stakeholder engagement for three types of foundations: community, corporate, and independent grant‐making foundations. We found that although community foundations are more likely to have a social media presence, corporate and independent foundations are more likely to use Facebook and to effectively engage stakeholders. Findings illuminate the need to understand social media usage and engagement in addition to presence. We discuss potential benefits of social media use and provide practical communication management recommendations for nonprofit practitioners.     

Nonprofit organizations in between the nonprofit and market spheres: Shifting goals,governance and management?

In spite of the belief instilled by the New Public Management reforms that nonprofit organizations (NPOs) can benefit from more management, more measurement and more market practices, systematic knowledge on the organizational effects of NPOs incorporating business practices in their day‐to‐day functioning remains absent to date. This research note addresses this limitation by reviewing 49 research articles. The focus lies on the redefinition of nonprofits' mission and income streams, changing governance arrangements and shifting management practices. We find that, despite numerous detrimental effects cited in the literature, (a) generating commercial income can contribute to the financial stability of NPOs, and (b) hybridization towards the market domain can strengthen the organizational legitimacy of NPOs, suggesting that imitating for‐profit enterprises might contribute to nonprofit functioning in perception, rather than in practice.     

The Evaluation of a Stress Management Program for Middle School Adolescents

A pretest posttest control group design was employed to determine the effectiveness of a ten-week stress management program for middle school adolescents. Thirty-six adolescents participated in the experimental groups and 18 served as controls. The experimental subjects, in contrast to controls, reported a significant increase in the use of cognitive control coping strategies, in the effectiveness of adaptive coping strategies, and in the ratio of the use of adaptive relative to maladaptive coping strategies. The adolescents in the experimental group reported a significantly lower degree of stress than those in the control group. A 67.5 percent reduction in muscle tension following the use of relaxation procedures was reported by the experimental group members. The program appears to have been successful in developing stress management skills in two major areas emphasized in the intervention, cognitive control coping strategies and relaxation methods.