How organizational characteristics affect the adaptive tactics used by human service nonprofit managers confronting financial uncertainty

The way that nonprofits respond to funding uncertainty is crucial to their ability to meet goals and position themselves for future success. This article investigates how structural, managerial, and financial characteristics affect the adaptive tactics used by human service nonprofits during times of financial stress. These tactics include adding new programs, reducing programs or staff, expanding or starting joint programs, pursuing earned income, and expanding advocacy involvement. Using longitudinal data on human service nonprofits collected on either side of the 2002–2003 economic downtown, we find that larger size provides organizations with a unique ability to choose among different adaptive tactics, as larger size was significantly predictive of adding new programs, reducing programs, expanding advocacy, and pursuing earned income. Strategic planning was positively associated with innovative tactics such as starting joint programs or pursuing earned income. Financial stress or declines in an organization's major funding source led to cutbacks, as expected, but managers who foresaw these challenges were able to respond proactively by adding programs or starting joint programs. However, managers with more training did not respond much differently than did other managers, and organizational age and use of performance management tools had no effect in guiding organizational responses to financial uncertainty.     

Organizational capacity building: addressing a research and practice gap

The purpose of this article is to address the gap between evaluation research, and the practice of capacity building with nonprofits. This study describes a 5-year capacity building initiative with grassroots organizations including a longitudinal evaluation of the implementation and outcomes achieved. Formative processes yielded many lessons that were used to improve the capacity building model of services. The results show that the majority of groups met a priori expectations for participation success. Organizational staff valued technology, consultants, and program funding the most. Increases were found in board membership and perceptions of visibility of the organization were enhanced. Executive directors reported greater awareness of needs and improved management knowledge. These small organizations fill many unmet needs and more capacity building evaluation studies are needed to understand the mechanisms that support their efforts and the impact on their sustainability.     

“To be a business and to keep our humanity”

In recent years, the political nature of nonprofit funding has been well established, with research focusing on increased demands for accountability (Eikenberry and Kluver, 2004), difficulties in selecting accountability measures (Reed, Jones, and Irvine, 2005), and the shift from organizational mission that can occur while trying to adhere to funding requirements (Adcroft and Willis, 2005; Parsons and Broadbridge, 2004). This article examines the dynamics between a funder and the nonprofit organizations it funds within an evolving accountability process. Specifically, we use qualitative methods to examine the negotiations between the funder and the nonprofits. Both sides in the funding relationship face tensions as they attempt to work within the constraints of this specific funding regime while trying to maintain their focus on social justice outcomes.     

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.     

How Pervasive Are Abuses in Fundraising Among Nonprofits?

This article explores selected fundraising information for charitable nonprofits, asking whether widespread abuses might exist in this sector. After examining the pervasiveness of fundraising and its relation to mission, we show that a few nonprofits raise a majority of sector charitable revenues, and we present the ratio of funds raised to funds spent on fundraising by mission categories. We find that 72 percent of charitable nonprofits do not report direct fundraising expenditures, 5 percent of the active fundraising nonprofits obtain 90 percent of total funds raised, mission is related to a nonprofit's ability to raise funds, the median nonprofit spends about 9.6 percent of total raised funds for fundraising, and only one in five nonprofits hires a professional fundraiser. At least in terms of the measures used in this report, widespread abuses are not obvious.     

Construction of organizational identity claim and understanding in nonprofits: Evidence from Pakistan's voluntary organizations

There is a substantial research literature on nonprofits identity claim and identity understanding but much less on how these identities are constructed in the first place. This article explores how identity claim and identity understanding are constructed in the nonprofits and reasons for such constructions. Exploratory multiple case study analysis was conducted with two voluntary organizations. The results showed that three factors play a significant role in construction of identity claim; founders, funding, and power of stakeholders. The construction of identity understanding is influenced by the claim and is often in sync until the funding source changes leading to a dissimilar identity understanding. The members, however, showed reluctance to embrace the new identity due to the power of stakeholders and fear of mission drift. The unsynchronized claim and understanding caused confusions among the members as they juggled between adopting the new identity understanding and keeping a dissimilar claim. This confusion hinders the nonprofits growth and they struggle to answer what they want to be in future.     

The DIRECTIONS nonprofit resource assessment model: A tool for small nonprofit organizations

Rapid growth in the number of nonprofits has created a shortage of trained staff and experienced volunteer leadership for nonprofit organizations. The Nonprofit Education Initiative (NEI) in South Carolina developed the DIRECTIONS nonprofit resource assessment model to provide tools to help nonprofits better meet the challenges facing our communities—tools that will help nonprofits develop effective plans, integrate resources, diversify revenue, communicate effective messages, and motivate constituents. These tools are also inexpensive and available close to home. The research and development process was a cooperative effort between the Department of Parks, Recreation, and Tourism Management and Clemson University Cooperative Extension Service, with funding from the W. K. Kellogg Foundation. Cooperative Extension is a component of the land grant university system, the largest educational delivery system in the world. Cooperative Extension's role is to plan, execute, deliver, and evaluate learning programs consistent with locally identified needs. It helps people acquire the understanding, capabilities, attitudes, and skills essential to solving farm, home, and community problems. This article gives a background of the challenges facing nonprofit organizations in South Carolina, the steps taken to develop this new assessment model, and results of research conducted throughout the development process.     

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.     

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.     

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.     

U.S. nonprofit organizations' demand for temporary foreign professionals

This article examines the demand by nonprofits in the United States for foreign professionals to fill a variety of specialized and managerial positions on a temporary basis. Our study contributes to understanding the demand side of the trend toward a more contingent workforce. We test predictors of nonprofit employers' pursuit of foreign labor for professional expertise and show an association between strategy to insource foreign labor and organizational resource level, mission, occupational need, and wage offer. Our findings suggest that government visa policies and practices affect labor pools for nonprofit organizations. Given that our study reveals varied interest by nonprofits in pursuing temporary foreign professionals, we end with a brief review and discussion of how the use of temporary and foreign professionals may influence the dynamics of nonprofit organizations and suggest additional research questions.     

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.     

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.     

Foundations and innovation in the nonprofit sector

Using a sample of 17 foundations that are at the forefront of encouraging innovation this study explored foundations' motivations behind funding innovation, their perceived ability to impact the levels of innovation in nonprofit organizations, and strategies that foundations are using or can use to encourage innovation in nonprofit organizations. The results showed that among the major motives behind funding innovation were leveraging the capital, honoring the foundations' core identity (mission and values), and desiring to encourage innovation in nonprofit organizations. Five strategies/mechanisms that foundations are using/can use to encourage innovation in nonprofit organizations were identified: (a) offering innovation awards/grants as catalysts for innovation, (b) providing risk capital and supporting early stage idea development, (c) educating other foundations on the value of innovation and serving in a convener role, (d) serving as thought leaders, and (e) increasing nonprofit organizations' capacity for innovation. Implications for practice are discussed along with recommendations for future research.     

Understanding nonprofit missions as dynamic and interpretative conceptions

Missions are central to all nonprofit organizations, and establish their purposes. However, formal mission statements can fail to provide a true picture of a nonprofit’s mission. This article draws on prior scholarship on missions, including the role of interpretation and change, to propose two new concepts: personal and dominant mission conceptions that introduce a dynamic, socially‐constructed understanding of nonprofit mission. Personal mission conceptions are the interpretations that individuals within a nonprofit hold of the mission, while the dominant mission conception is the collective interpretation guiding a nonprofit during a specific time. Examples from two specific nonprofits are provided to demonstrate the conceptions, along with some guidance for how mission conceptions can inform future research and practice.     

Information Technology,Adaptation and Innovation in Nonprofit Human Service Organizations

This report examines how two measures of performance—adaptation and innovation—can be predicted by the use of digital communication. It suggests that information technology in nonprofits offers strong leverage for adaptation but not for innovation. This suggests that (a) the two measures are dissimilar in both their nature and their relevance to organizational performance in nonprofit settings, (b) that service organizations are more likely to use information technology for adapting to change, and (c) it is probable that large and well-founded organizations will use IT for establishing innovations.     

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.     

Starting from scratch: Building of meaningful endowments by public charities

Most nonprofits lack a true endowment and endowment wealth is concentrated in a relatively small number of organizations and subsectors. This study supports an operational definition of material endowment, equal to or greater than annual expenses, and investigates how common it is for a nonprofit to establish a meaningful endowment over time. Specifically, we address whether the sector's enthusiasm over the potential of endowment building is reflected in charitable organizations' experiences. Using financial data, we find that building a meaningful permanent endowment is a rare achievement among public charities over a period of two decades. Meaningful endowment creation, achieved by less than 2% of the sample, is more common for organizations with donor attachments, the need for subsidization of mission services, those with more fundraising costs, and those with more donative revenue portfolios.