Agency Problems between Managers and Employees in Nonprofit Organizations: A Discrete Choice Experiment

Most principal–agent literature of nonprofit organizations has focused on the relationship between board members and managers. However, in addition to the role as an agent of the board, the manager also performs a role as principal with respect to the nonprofit employees. By using a discrete choice experiment, we identify the objectives of managers and employees in nonprofit organizations and assess the presence of agency problems in this relationship. Our sample consists of 76 headmasters, 161 teachers, and 39 administrative employees in 74 secondary nonprofit schools in Belgium. We find that the six objectives set out in the experiment play an important role for both headmasters and subordinate staff. However, the results also indicate that some of these objectives are significantly more important for the headmasters. In sum, our results suggest that agency theory and stewardship theory are not necessarily in conflict with each other but can be combined into a more general governance framework for nonprofit organizations. Consequently, we argue that incentive structures that incorporate different types of objectives can facilitate the recruitment and retention of employees in nonprofit organizations.     

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.     

Cause-related marketing,fundraising, and environmental nonprofit organizations

This article provides policy guidance to environmental nonprofit organizations, and, secondarily, to other nonprofits, that are considering entering into a cause-related marketing (CRM) alliance. Toward that end, insights into establishing CRM committees, sponsorship development, and regulatory awareness are offered to environmental nonprofit managers. The author argues that strong consumer support for local environmental concerns translates into strategic fundraising opportunities for regional, state, and local environmental organizations that have underutilized CRM in the past.     

Structure and adequacy of human service facilities: challenges for nonprofit managers

Findings from a statewide survey of nonprofit human service organizations in Illinois show great diversity in access to and use of facilities. Large proportions have facility-related problems that will require substantial investments beyond the financial capacity of the organizations themselves. The findings also point to major shortcomings in attention to or knowledge about facility-related problems among managers of these organizations. The findings have important policy implications for nonprofit managers, as well as for public and private funders and policy makers.     

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.     

Corporate funding of the arts in a turbulent environment

Focusing on funding in culture and the arts, the author identifies a distinctive logic of company support for nonprofit organizations. Business giving is increasingly disciplined around company objectives, giving levels are driven by pretax earnings, and giving decisions are the province of managers who draw advice less from the arts community or public agencies than from other companies. At best, turbulence in government funding has modest effect on corporate support. In turn, change in corporate support has little impact on public backing. The separate logics of corporate and government support imply separate and distinctive long-term development strategies for nonprofit organizations.     

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.     

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.     

A Model of Strategic Nonprofit Human Resource Management

This article presents a model of strategic nonprofit human resource management (SNHRM) that draws from resource-based view and resource dependence theory, to explain the determinants of strategic human resources management (SHRM) in nonprofit organizations. Three guiding principles, strategy types and propositions are presented to explain the complex interactions and processes in the SNHRM system. The article lays a foundation for future research and offers managers a framework for SHRM planning and implementation in nonprofit organizations.     

Toward More Targeted Capacity Building: Diagnosing Capacity Needs Across Organizational Life Stages

Investments to build nonprofit organizational capacity have increased rapidly in recent years as both funders and nonprofits seek ways to improve performance. Yet, while research has elucidated the variety of capacity areas organizations generally depend on, we do not yet have a clear empirical understanding of which capacity areas are important to focus on developing or how these capacity needs vary across organizations. Using a life-cycle perspective and extensive data on 71 human service organizations, we examine the relative strength of ten capacity areas at different stages of the nonprofit life-cycle. Findings contribute greater empirical grounding for research on organizational capacity development and have implications for researchers, managers, and funders interested in nonprofit capacity building.     

The Crafting of Community: Recoupling Discourses of Management and Womanhood

The construction of organizations around images of masculinity makes the position of ‘women managers’ a problematic one which calls for ‘remedial work’ (Gherardi 1995). Women managers have sought to reconcile their dualistic positions by deploying various individual and collective coping strategies typically articulated within the boundaries of their organizations. In contrast, we research a group of senior women from a British city in the Midlands who attempt to renegotiate their conflicting identities as ‘female’ and ‘senior managers’ by creating a collective forum outside their organizations. Through the construction of a ‘learning set’, they created a space where members could explore their terms of participation, as women and as managers, in their respective work organizations and in the local community. This space was articulated implicitly and explicitly around values typically associated with ‘community’ (e.g. sharing, support, trust, loyalty), a controversial concept in feminist politics. The article documents the (fragile and contested) processes by which these women mobilize the imagery of community in order to create a safe space where ‘remedial work’ could be performed. The conclusion stresses the ambivalent effects of the learning set in both reproducing and transgressing gendered positions.     

Managing Change in Nonprofit Organizations: Insights from the UK Charity Retail Sector

Moves toward increased professionalism are now an almost taken-for-granted aspect of change across the nonprofit sector both in the United States and in the United Kingdom. This paper uses the case of UK charity retail to explore the impacts of this move to professionalism, on managers at the local level. In doing so it seeks to develop appropriate techniques for managing change both in charity retail and more broadly, in nonprofit organizations per se. The professionalization of charities' trading activities has resulted in a series of changes at the local level; these include the introduction of new forms of staff, changes to policies regarding the sourcing, pricing, and presentation of stock, and an increased emphasis on sales targets, league tables, and incentive schemes designed to motivate managers to increase sales. These policies set at head office level have had significant impact on the day-to-day working experiences of branch managers. This paper explores managers' reactions to these changes and examines the extent to which such policies could be said to be successful. To conclude, recommendations are made as to the most appropriate approaches to professionalizing charity retail operations. These conclusions are broadened to offer insights into appropriate techniques for managing change in nonprofit organizations.     

Lessons for successful nonprofit governance

Boards of nonprofit organizations malfunction as often as they function effectively. As the best-managed nonprofit organizations demonstrate, both the board and the executive are essential to the proper functioning of a nonprofit organization. These administrative organs must work as equal members of a team rather than one subordinate to the other. Moreover, the work of the executive and the board does not divide neatly into policy-making versus execution of policy. Boards and executives must be involved in both functions and must coordinate their work accordingly. In a well-functioning nonprofit organization, the executive will take responsibility for assuring that the governance function is properly organized and maintained.     

Employers' knowledge and attitudes regarding organizational policy toward workers caring for aging family members

The study examined employers' knowledge of and attitudes toward working carers who care for aging family members. The study was based on the ecological model. One hundred employers were interviewed using structured questionnaires and 13 employers by additional in-depth interviews. Both research instruments included areas of disruption to the organization, existing policies, and feasibility as to developing appropriate policies to support working carers. Results show that caregiving caused a disruption in workers' functioning mainly by being absent, leaving work early, and coming to work late. Usually, there was "no policy," and half of the employers did not support introducing such a policy. Women managers in public organizations, who had less seniority and less previous experience with working-carers, tended to be more positive about supportive policies. Recommendations are included.     

Contextual Factors and Negotiating Spaces: Exploring the Emergence of Nonprofit and Hybrid Voluntary Organizations

The emergence of nonprofit organizations has largely been explained by the prevalent “three failures” theory. However, evidence suggests that such theories fail to capture a variety of contextual nuances that may influence nonprofit formation. In particular, these theories have remained relatively silent about the emergence of hybrid voluntary organizations. This article posits the notion that some nonprofit organizations (for example, hybrid voluntary organizations) emerge through cross‐sector negotiations, amid a number of social, policy, and political contextual complexities. We contend that any theory purporting to explain the emergence of nonprofit organizations should not neglect to account for the role contextual factors play in defining their emergence and their subsequent character and function.     

Board development practices and competent board members: Implications for performance

This study explores underlying assumptions about board development practices in nonprofit governance. Specifically, a model was developed to determine if using recommended recruitment, board member orientation, and evaluation practices resulted in more competent board members and if the presence of these board members led to better board performance. The sample consisted of 1,051 survey responses from CEOs and board chairs representing 713 credit unions. As member‐benefit nonprofit organizations, credit unions rely almost exclusively on voluntary board members in an oversight capacity. Results support the contention that board development practices lead to more capable board members, and the presence of these board members tends to explain board performance. The study advances the understanding of nonprofit board development practices by further defining the concept and proposing an empirically tested assessment strategy. Furthermore, the findings support using specific recruitment practices that should strengthen nonprofit boards.     

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.     

Cooperative Membership and Community Engagement: Findings From a Latin American Survey

Cooperatives as organization have mainly been explored in the field of business and management due to their operation in the business sector, and studies of nonprofit organizations have given little attention to them. Consequently, cooperatives studies have tended to examine economic outcomes, such as productivity and job security, comparing them to conventional business firms. Nevertheless, cooperatives are membership associations and have organizational characteristics in common with other types of voluntary associations. Furthermore, one explicit organizational principle of cooperatives is concern for community, and their contributions to the community have been covered frequently by media. Therefore, it is imperative to examine cooperative members’ community engagement, and compare it to other types of association members. Using a national sample of Venezuelans, the relationships between association memberships and community involvement were compared across different types of associations. The results showed that cooperative members had a higher likelihood of being involved in community matters than those from other types of associations. Although the Venezuelan cooperatives have received vast support from the Chavez government for community development, this result can have an implication on the cooperatives’ organizational identity as those who provide members with resources necessary for civic engagement beyond the organizations.     

Building and valuing global brands in the nonprofit sector

Global nonprofit brands are the world's new “super brands” (Wootliff and Deri, 2001). Nonprofit organizations command unprecedented levels of trust, and nonprofit brand valuations are on par with major international corporations. Leaders and managers of nonprofits face new challenges in the stewardship of their brands. Based on current thinking in nonprofit management and detailed interviews with close to one hundred executives of ten international nonprofit organizations, this article draws strategic lessons on brand building and brand valuation activities of international nonprofits. The multiple roles and stakeholders that global nonprofit brands must address make nonprofit brand building complex and challenging. In particular, differences between advocacy and relief organizations must be explained. Despite the complexity, international nonprofit organizations may have an advantage over for‐profits in leveraging public trust and brand communication. Advocacy organizations in particular successfully link brand and cause to good effect. The valuation of nonprofit brands is a new strategic challenge with significant appeal, but also significant concerns for international nonprofits. In addition to providing nonprofit leaders and managers with a better understanding of brandbuilding activities, imperatives, and best practices in the field, this article outlines the opportunities and threats associated with the valuation of nonprofit brands.     

The Effects of Individual Risk Propensity on Volunteering

Serving as a volunteer is gratifying and rewarding, but by nature it is also considered a risky decision. Volunteering risk may come from the lack of sufficient training, asymmetric information between volunteers and managers, and the lack of support and protection from nonprofit organizations. Abundant studies discuss volunteering behaviors based on demographics. However, people's decisions are mainly determined by their own preferences rather than demographic differences. Accordingly, this study hypothesizes that individual risk propensity is an important predictor for volunteering behaviors. Using a nationally representative data set, this study finds that risk‐accepting individuals are more likely to volunteer than their risk‐averse peers. Also, the former tend to volunteer more frequently than the latter once they decide to be part of the volunteer labor force. Several managerial implications and volunteer recruitment strategies for nonprofit organizations are discussed.