Business Leaders and Nonprofits

How do nonprofits figure into the lives of business leaders? And how do business leaders figure into the lives of nonprofits? The intersections exist but there is relatively little systematic research to document empirically this piece of the nonprofit picture. This article aims to help fill that void by presenting research results regarding the who, when, where, why, how, and so what of the involvement of businesspeople in the nonprofit sector, particularly as board members.     

Elements of Capacity in Youth Development Nonprofits: An Exploratory Study of Urban Sport for Development and Peace Organizations

Organizational capacity is often discussed among nonprofit practitioners and scholars. Yet, empirical research employing a multidimensional capacity framework remains scarce in the nonprofit literature (Andersson et al. in VOLUNTAS Int J Volunt Nonprofit Organ 27(6):2860–2888, 2016). Using a qualitative research approach, we explored capacity in a specific segment of youth development nonprofits—sport for development and peace (SDP). We were guided by three research questions: (1) what are critical capacity elements of SDP nonprofits? (2) how do these capacity elements influence the ability of SDP nonprofits to achieve their desired goals and objectives? and (3) what are the capacity needs of SDP nonprofits in the USA? Findings from in-depth interviews with leaders of 29 organizations contribute to the development of theory on nonprofit capacity by providing a more nuanced understanding of capacity strengths and challenges related to broader nonprofit goal achievement. For example, paid staff, revenue generation, and internal infrastructure emerged as critically more important for capacity in this context. Practical and theoretical implications are further discussed.     

Organizational Culture in Civic Associations in Russia

The organizational culture of nonprofit organizations is affected by the context in which they are embedded. Based on a qualitative study of local civic associations in Novosibirsk, Russia, this article illustrates how nonprofit organizational culture has been shaped by historical and contemporary social and cultural conditions. The fluid situation for civil society in Russia has generated varied organizational culture across nonprofits. Interview data reveal different value orientations, distinct group identities, and different images of the ideal civic association: as a social establishment, as an outlet for self-expression, as a network of experts, or as a social startup. This resulting diversity of organizational culture has implications for the potential for partnerships among nonprofits, between nonprofits and government, between nonprofits and businesses, and also for the organizational survival of nonprofits in this setting.     

What Influences the Location of Nonprofit Organizations? A Spatial Analysis in Brazil

What are the local characteristics influencing where new nonprofits will be established? How important are community needs, available resources, or the existence of similar organizations for nonprofits’ location? This paper analyzes how the characteristics of 5562 Brazilian municipalities in the year 2000 help explain the location of nonprofits formed between 2001 and 2010. Based on geographically weighted regressions, results indicate that neither access to resources nor poor socioeconomic indicators are powerful influences on nonprofit location in Brazilian municipalities. The main predictor of nonprofit entry is a high pre-existing density of nonprofits in that area. These findings, however, vary across regions and nonprofit fields of activity. By mapping the effect of key explanatory variables, this paper helps understand nonprofit location. The methodology and findings on nonprofit location presented here are novel and may contribute to research in other countries.     

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.     

Charity Watchdogs and the Limits of Information-Based Regulation

Transparency concerns and the concomitant accountability challenges have motivated policy and legal scholars to explore information-based regulatory approaches. We examine their usefulness in the context of the nonprofit sector which tends to show signs of governance failure. Although nonprofits are required by law to disclose information on fund use, nonprofit donors face difficulties in accessing and interpreting information about how nonprofits are deploying resources. Charity watchdogs make this information available to donors in a convenient format. In theory, this should allow donors to reward nonprofits that devote resources to service delivery and to punish those that are less careful about controlling overheads. To test the relationship between charity ratings and donations, we examine 90 nonprofits in the state of Washington for the period 2004–2007. Drawing on ratings data provided by Charity Navigator, we find that changes in charity ratings tend not to affect donor support to these nonprofits. We explore this statistical finding via interviews with 10 charities located in Washington State. Supporting the statistical results, we find that charities believe that donors tend not to systematically embed ratings in their donation decisions. Instead, they believe that donors assess nonprofits’ effectiveness and trustworthiness via other means such as familiarity, word-of-mouth, or the visibility of the nonprofit in their community. In sum, the policy challenge is to provide information which users desire such as organizational effectiveness as opposed to basic fund allocation in the case of non-profits. What matters for policy efficacy is not how much information is provided but of what type.     

Understanding how corporate social responsibility partnership factors influence nonprofit supportive intentions

Public relations literature on corporate social responsibility (CSR) has long detailed the impact of CSR outcomes for corporations. This study seeks to understand how CSR influences the nonprofit partners involved in these initiatives and what types of CSR partnerships lead to nonprofit supportive intentions. This study merges perspectives on organization-public relationships (OPR) with nonprofit management literature. An online 2 (NPO reputation: low vs high) x 2 (partnership duration: short vs. long) x 2 (CSR fit: low vs. high) experiment was conducted. A few key factors emerged in the analysis: Positive nonprofit reputation strongly predicted all OPR outcomes and mission accomplishment. Unexpectedly, the short-duration condition led to more positive outcomes and intentions. Fit did not seem to have a direct effect on outcomes, but the high-fit, short-duration partnership led to increased levels of all outcomes. For mediation, satisfaction and commitment had the strongest indirect effects on nonprofit supportive intentions (donation, volunteer, and word-of-mouth). This study expands the understanding of CSR effects on nonprofit partners, specifically by showing how different CSR partnership types play a role in the relationship-building efforts of nonprofits. Additionally, demonstrating how mission accomplishment can strengthen these relationships helps to disentangle the unique position of nonprofits in CSR, whose reputation and mission are at stake.     

Resource Constraints or Cultural Conformity? Nonprofit Relationships with Businesses

Nonprofit interactions with businesses have become increasingly diverse, but which nonprofits establish relationships, and to what extent do relationships depend on the form or type of tie? Focusing on nonprofit collaboration with businesses and donations from businesses, we test arguments based on sociological institutionalism and resource dependence theory. We find that nonprofits relying on earned income, nonprofits led by individuals with management degrees, and rationalized nonprofits all are more likely to report collaborations with businesses, aligning with expectations from institutional theory. For donative ties between businesses and nonprofits, we find that rationalized nonprofits are more likely to have charitable gifts from businesses. However, nonprofits with earned income are less likely to have business donations, and funding diversity has a salient positive effect. These results reveal important but paradoxical institutional and resource dependence effects. We conclude with a discussion of our divergent findings and set an agenda for additional research on the topic.     

Retaining the Benefits of Government–Nonprofit Contracting Relationship: Opposites Attract or Clash?

The benefits and negative consequences of government–nonprofit contracting are well documented. From the literature, we know that government and nonprofits can demonstrate contradictory organization-level characteristics. Some argue that these contradictions make government and nonprofits complementary partners, but empirical evidence reveals the potential loss of nonprofit voluntariness. How does one harvest the alleged benefits of the government–nonprofit relationship while minimizing the potential loss of nonprofit voluntariness? Through the qualitative investigation of one nonprofit, this study identifies seven types of organizational-level differences between the government and the nonprofit. These conflicts are manifested by three forms of power struggle. This illuminates that power struggles are the root cause of the potential loss of nonprofits’ voluntariness. The author argues that as long as nonprofits depend on the government for resources, power struggles will persist and voluntariness will be at risk; hence, addressing resource dependence is the key to answering our research question.     

Explaining Trust in Canadian Charities: The Influence of Public Perceptions of Accountability,Transparency, Familiarity and Institutional Trust

Public trust of nonprofits can augment social benefits of the nonprofit sector by enhancing engagement of the general population in the sector. This study analyzed cross sectional data collected from a random sample of Canadians (n?=?3853) to test the effects of respondents’ perceptions of financial accountability, transparency, and familiarity of charitable nonprofits, along with the effects of trust in key institutions on their general trust in charitable nonprofits. Results show that each factor (except for trust in government institutions) has a significant effect on the level of trust respondents had in charitable nonprofits. The study helps advance our understanding of what contributes to trust in charitable nonprofits among Canadians and offers suggestions on how nonprofits can garner greater trust with the population.

     

How well is debt managed by nonprofits?

Little is known about why nonprofits accrue debt, how much they owe, and whether the funds they borrow are used productively. This article distinguishes between productive, problematic, and deferred debt. Employing a data base representative of 114,726 tax-filing charitable nonprofits in the United States in 1986, it examines the pervasiveness of nonprofit debt and the relation between this debt and nonprofit financial health. The analysis finds that over 70 percent of the nonprofits hold debt, the distribution of this debt is highly concentrated, and the level of debt and leverage varies with asset size and type of activity. Nonprofits with higher leverage and absolute debt levels are financially healthier than those with lower levels. While the analysis does not determine whether financially stronger nonprofits are better able to borrow, the results support the view that borrowing in the nonprofit sector is economically efficient.     

Termination of Nonprofit Alliances: Evidence from China

Nonprofit alliances have grown with a striking speed in recent decades. While researchers focus on why nonprofits build interorganizational partnerships, few discuss how such partnerships are terminated. Through a multiple case study of 13 nonprofit alliances that had been established in response to the 2008 Sichuan earthquake in West China, this study explores how nonprofit alliances were terminated and what caused their termination. Four patterns of alliance termination emerged out of our data analysis: failure at birth, planned termination, failed transition, and evolution into independent organizations. Four determinants were identified as accountable for alliance termination: political pressure, resource shortage, short-term orientation, and leadership failure.     

Identity and integration: The roles of relationship and retention in nonprofit mergers

Prior research suggests that nonprofits are flexible and possess multiple identities, although we know less about how transformative changes, such as mergers, shape nonprofit identity. This qualitative study draws upon in‐depth interviews from 13 nonprofit merger cases to explore factors that influence postmerger identity and integration. In particular, we focus on the roles of organizational similarity and relationships, program and personnel retention, and rebranding. Ultimately, we derive a typology of postmerger integration in nonprofits and suggest that postmerger identity may be classified in terms of absorption, preservation, or creation. Implications for nonprofit leaders are discussed.     

When the management is the message: Relating values to management practice in nonprofit organizations

The values-expressive character of many private, nonprofit organizations is what distinguishes them from business and government organizations. The distinctive character of these organizations creates a special context for their management. This article examines the origins and development of private nonprofits in the religious realm and explores the implications of this character for management and for education of nonprofit managers.     

Why do nonprofit managers accumulate surpluses,and how much do they accumulate?

Most theories of nonprofit behavior assume that nonprofit managers run surpluses only temporarily and that managers choose a budget level equal to expected revenues. In reality, equity accumulations have intrinsic value to nonprofit managers, and equity balances of nonprofits do grow over time. The authors discuss the tax treatment of nonprofits under U.S. tax laws, present existing theories of nonprofit behavior, and consider the reasons a prudent nonprofit manager might wish to earn and retain surplus funds. Data from a 1983 national sample of nonprofits are used to show that a large majority of nonprofits earned surpluses in 1983, that surprisingly few nonprofits had surpluses close to the zero level, and that the size of a nonprofit's surplus was related to its equity and asset holdings.     

Crisis on the Border: Specialized Capacity Building in Nonprofit Immigration Organizations

Traditional views of the nonprofit–government relationships suggest that while government may depend on nonprofit organizations to provide human services, nonprofits must also conform to government standards, monitoring, and regulation. In this paper, we argue that through specialized investments in capacity building, nonprofit providers can become irreplaceable to government funders. By developing a comparison case study of two organizations serving unaccompanied minor children who cross the U.S.–Mexico Border, we provide evidence of specialized capacity investments in a complex policy environment and discuss the implications of capacity building for both government and nonprofits.     

Toward a valid approach to nonprofit efficiency measurement

Past literature in nonprofit management uses the overhead ratio of nonprofits as a measure of efficiency. Although the overhead ratio might measure top‐heaviness, we argue that it does not measure nonprofit efficiency. To investigate this, we use financial and operational data to rank the efficiency of Habitat for Humanity affiliates with the overhead and administrative ratio, as well as data envelopment analysis (DEA) and stochastic frontier analysis (SFA), two of the most popular efficiency measures. While the DEA and SFA rankings are statistically correlated, overhead ratio rankings are negatively correlated with both SFA and DEA rankings. We argue that nonprofit scholars, managers, and donors should move away from concepts and measures of efficiency based on financial ratios, and toward ones that embrace maximizing what nonprofits are able to make and do.     

Understanding Policy Instruments for Steering Nonprofit Organizations in China: Only Carrots and Sticks?

Government–nonprofit relations in China have transformed over the past three decades. Building on policy instrument theory, this article explores which policy instruments have been used to steer nonprofits at the central level and how the use of policy instruments has changed over time. This article is based on a content analysis of 300 central-level policy documents for nonprofits using NVivo. The results show that 22 kinds of policy instruments have been used to steer nonprofits. A steep upward trend is evident in the use of four categories of policy instruments for nonprofits: authority, incentive, information, and organization. Policy instruments for nonprofits have advanced in diversity, emphasizing indirect control. The central government continues to show a significant predisposition toward regulatory instruments, which have evolved from ex ante regulation to process and ex post regulation. This article contributes to the public management literature by identifying which policy instruments governments use to shape government–nonprofit relations.

     

What Affects the Strategic Priority of Fundraising? A Longitudinal Study of Art,Culture and Humanity Organizations’ Fundraising Expenses in the USA

Fundraising is a crucial activity for many nonprofit organizations. However, scant research has examined how the strategic priority of fundraising activities may vary across organizations and over time. This study addresses this gap in knowledge by examining how economic and organization-specific financial conditions predict the priority of fundraising in a nonprofit organization. In particular, this study examines the changes in the ratio of art, culture and humanities organizations’ fundraising expenses to their total expenditure during the period of 2005–2012, which includes the great recession of 2007–2009. The findings reveal that, when facing an economic crisis, the ratio of fundraising expense to total expenditure increases, suggesting that fundraising becomes a higher priority under a hostile economic condition. The analysis also reveals differences in nonprofits’ reaction to recession depending on their revenue mix, with donative nonprofits reacting more sensitively than commercial nonprofits.