Understanding the Compensation of Nonprofit Executive Directors: Examining the Influence of Performance and Organizational Characteristics

In this study we aimed to provide a better understanding of executive compensation in nonprofit organizations. We examined factors including organizational size, market, subsector, organizational type, staffing level, and organizational performance as potential influences driving variation across the nonprofit sector. The models utilize data on the population of nonprofit organizations required to file Form 990 returns with the Internal Revenue Service in order to broadly examine compensation. The results indicate associations between various measures of performance and compensation in nonprofit orga‐nizations and also suggest that different types of nonprofits may be sensitive to different measures of performance.     

Playing to the Test: Organizational Responses to Third Party Ratings

External ratings of organizations have proliferated in the last few decades, impacting not only the behavior of consumers but also of the organizations being rated. This phenomenon has been widely studied in regards to the U.S. News and World Reports ratings of universities and law schools. This article strives to understand how third party ratings impact the behavior of nonprofits using the financial data the nonprofits provide in their IRS Forms 990. The results show that such ratings are, in fact, having an effect on how nonprofits report financial information on the IRS Form 990.     

The Investment Returns of Nonprofit Organizations,Part I

Nonprofit charities and foundations hold endowments and many other kinds of investments. How do these investments perform? Some high‐profile nonprofit endowments, including those of colleges and universities, have been studied previously. This study is the first, to our knowledge, that looks at a large number of the diverse types of nonprofits. We investigate the determinants of investment performance using a large panel data set culled from the 990 forms that nonprofits must file annually with the IRS. In this first part of our article, we discuss our approach and the challenges of using these data to infer investment returns. The IRS data, though less than perfect, yield valuable measures of the investment returns of nonprofits. They reveal that some charities consistently do better in their investment returns than do others.     

The Who,Why, and How of Reinvention in Nonprofit Organizations

Although reinvention of government agencies is being extensively discussed, relatively little is known about the reinvention strategies of nonprofit organizations. This article reports survey results for a randomly selected group of nonprofit organizations from across the United States. We conclude that reinvention is being used as a management tool by nonprofit organizations and that it is affecting day‐to‐day operations. Regardless of how reinvention was implemented, these organizations generally view their reinvention activities as successful for increasing productivity, enhancing services, improving performance, and managing costs.     

Nonprofit organization financial performance measurement: An evaluation of new and existing financial performance measures

Consensus about financial performance measurement remains elusive for nonprofit organization (NPO) researchers and practitioners alike, due in part to an overall lack of empirical tests of existing and new measures. The purpose of the current study was to explore potential similarities of financial performance measures derived from two sources: current NPO research and key informant interviews with NPO foundation constituencies. The authors examined financial performance measurement ratios with data from fifteen Internal Revenue Service (IRS) Form 990 line items. Using factor analytic techniques, they found three performance factors, each with two associated financial measurement ratios, to be present. They categorized the performance factors as fundraising efficiency, public support, and fiscal performance. This article discusses implications of the findings and future research.     

The role of county‐based funders in sustaining nonprofits within rural and urbanized counties

Social service nonprofit organizations in the United States originally relied on private donations and charitable events to sustain their operations. Using case studies, this article examines the role played by local officials in the thirty‐year survival of certain Indiana Youth Services Bureaus (YSBs) and highlights the salient factors that influenced the viability of some nonprofit organizations over the others.     

Structure and accountability a study of national nonprofit associations

In the 1990s, the integrity and performance of nonprofit organizations in the United States have come increasingly under attack, and there are new calls to hold nonprofit organizations more accountable for their behavior and performance. This article reports on a study of the organizational structures of national nonprofit associations and asks how these umbrella organizations can help to self-regulate the sector through appropriate checks and balances between the national organization and local affiliates. The authors identify a number of differences in how associations with alternative structures hold local affiliates and national organizations responsible for their performances, and they conclude that structure is an avenue of self-regulation for nonprofit organizations deserving further attention.     

Role ambiguity and volunteer board member performance in nonprofit sport organizations

We explore the relationship between multidimensional role ambiguity and individual board member performance within nonprofit voluntary sport organizations. Role ambiguity accounted for 29 percent of the variance in perceived board member performance, and ambiguity about one's responsibilities was the strongest predictor. These findings extend our understanding of the drivers of individual board member performance within voluntary sport organizations and the multidimensional nature of role ambiguity. The study supports previous arguments that knowing what to do is fundamental to one's performance, and more critical than knowing how to do it, and what difference it makes.     

Green matters?

Although the environmental impact of nonprofit organizations is likely significant, those in the sector seem to have largely ignored this fact. We examine a model of environmental performance for corporations and consider its relevance to nonprofit organizations. Our analysis suggests that motivators of environmental performance in nonprofit organizations remain minor, and that countervailing barriers to green behavior by nonprofits remain more significant than those faced by businesses.     

Growth and resilience of pioneering nonprofit human service organizations: a cross-case analysis of organizational histories

Knowledge of organizational history is important for recognizing patterns in effective management and understanding how organizations respond to internal and external challenges. This cross-case analysis of 12 histories of pioneering nonprofit human service organizations contributes an important longitudinal perspective on organizational history, complementing the cross-sectional case studies that dominate the existing research on nonprofit organizations. The literature on organizational growth, including lifecycle models and growth management, is reviewed, along with the literature on organizational resilience. Based on analysis of the 12 organizational histories, a conceptual model is presented that synthesizes key factors in the areas of leadership, internal operations, and external relations that influence organizational growth and resilience to enable nonprofit organizations to survive and thrive over time. Both cross-sectional and longitudinal examples from the organizational histories illustrate the conceptual map. The paper concludes with a discussion of directions for future research on nonprofit organizational history.     

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.     

Gambling on an alternative revenue source: The impact of riverboat gambling on the charitable gambling component of nonprofit finances

This article examines the impact of casino gambling in and around Illinois on charitable gambling in that state. The research targets the impact of casino gambling on one of the vital revenue sources of many nonprofit organizations. Charitable gambling represents the most widespread form of legalized gambling in the United States. Net income from charitable gambling totaled an estimated $1.3 billion in 1997. Despite its apparent importance in providing an alternative revenue stream to nonprofit organizations, in a growing number of states charitable gambling operations must compete with an increasing number of private for‐profit gambling enterprises, including riverboat and land‐based casinos, Indian gambling operations, and pari‐mutuel wagering venues. As a result, there is interest in the extent to which forprofit gambling is crowding out charitable gambling—and in the process reducing funds (such as receipts from gambling operations) available to nonprofit organizations. The data analysis presented in this article suggests that spending on casino gambling in Illinois and in bordering areas of Indiana, Iowa, and Missouri may be displacing consumer expenditures on charitable gambling.     

Commitment and performance of nonprofit board members

Boards of nonprofit organizations are entrusted to oversee and ensure that the organization remains true to its mission, functions within the confines of state and federal laws, and operates in a financially responsible manner. This critically important oversight is carried out by volunteers. This study examined the relationships between board member commitment and individual performance. Commitment was assessed using Meyer and Allen's Three‐Component Model of Commitment: Affective, Continuance, and Normative (1991). The population in this study was volunteer board members of midsized, social service nonprofit organizations in the Orange County, California, area. The strongest findings were between affective commitment and performance in board roles. Committed board members reported more involvement and are perceived by the executive to be more engaged and valuable. Analysis revealed that executive judgments of participation are based on both board member behavior and Affective commitment expressed by the board member.     

Nonprofits accommodate the information demands of public and private funders

In the absence of performance reporting standards, nonprofit organizations face difficulties in accommodating the varied and changing informational requirements of public and private funders. Clients, volunteers, management, and staff also use and demand performance information. The authors studied four human services organizations in Victoria, British Columbia, Canada, and their performance reporting across the management cycle, from planning through implementation and monitoring, to external reporting and auditing. The authors analyzed documentary evidence and conducted interviews with users of performance information. they conclude this article by proposing a set of general standards nonprofit organizations can use in performance reporting.     

The economics of performance management in nonprofit organizations

This article analyzes whether and how private‐sector notions of performance management apply to nonprofit organizations. To this end the author shows that each concept of performance management used in the private sector is based on a specific economic theory of the firm and its environment. Before transferring concepts and tools derived from a certain model of the firm and its environment to nonprofit organizations, one must determine whether the assumptions underlying this model are also adequate for nonprofit organizations. Otherwise, one must first adjust those assumptions and analyze whether the derived concepts and tools are still meaningful in the new context; if not, one must determine how to modify them accordingly. The analysis elaborates on the differences between for‐profit and nonprofit organizations that are important for applying performance management concepts. Moreover, the author discusses the practical implications for the use of balanced scorecards in nonprofits.     

The financial information that nonprofit trustees need and how they can get it

With one exception, the accounting principles governing the information reported on the financial statements of nonprofit organizations should be the same as those for business organizations, and trustees should use this information to decide on budgets and analyze actual performance in essentially the same way as do business boards of directors. The exception is that nonprofit organizations receive capital contributions, which are rare in business corporations. In some nonprofit organizations, especially colleges, the information that trustees actually receive is confusing because of the unnecessary use of fund accounting and other peculiarities. Nevertheless, trustees can insist on businesslike financial statements.     

Research trends in nonprofit graduate studies in China: An inside perspective

This paper explores the growth of the academic study of nonprofit management and organizations in China by examining theses and dissertations written in China between 2000 and 2018. Using a keyword search, we collect and review 5,346 abstracts available in the China National Knowledge Infrastructure Thesis and Dissertation database. The number of these theses and dissertations accelerated between 2000 and 2015 and slowed thereafter. Most theses and dissertations focus on the external context of nonprofit organizations (78%) and fewer on nonprofit management per se (22%). Thematic analysis reveals several broad subjects of study including organizational development, the character of the external environment and internal operations, financial and other resource support, and organizational performance. Trends across the 19‐year study period relating to national regions of origin, discipline, and theme are also explored. The development of nonprofit studies in China in some ways resembles the growth of this field in the United States and other western countries in past decades, but with distinct Chinese historical, sociocultural, and geographical characteristics.     

Revisiting Agency and Stewardship Theories

Using principal–agent theories, this study examined differences in the perceptions of nonprofit chief executive officers (CEOs) and board chairs on key governance aspects, including board performance, leadership, satisfaction with diversity, and board meetings. Using data from the CEOs and board chairs of 474 nonprofit organizations, we found statistically significant differences in the governance perceptions of these leaders of nonprofit organizations. The findings provide support for an agency theory explanation about the differing interests of principals (board chairs) and agents (CEOs). The findings suggest that these two sets of nonprofit actors frequently operate from different perspectives, potentially affecting the governance of their organizations.     

Stakeholder Performance Measurement in Nonprofit Organizations

According to recent findings, nonprofit organizations should address the relationships of nonprofit service quality, satisfaction, loyalty, and organizational identification when planning and evaluating donor surveys. This article presents a donor satisfaction barometer that can be used to gain insights into the strength of these key relationships and thereby establish a basis for calculated relevant indices. With such indices, nonprofit organizations can compare stakeholder performance over time and benchmark themselves against other organizations. Data from 2,599 blood donors to one section of the German Red Cross, collected through the proposed donor satisfaction barometer, show that service quality drives satisfaction, and donor satisfaction and organizational identification both exert significant positive effects on donor loyalty. Therefore, nonprofit organizations should use a combined strategic approach that improves both donor satisfaction and organizational identification to increase donor loyalty. The successful application of the donor satisfaction barometer also suggests its value for other nonprofit industries and offers important insights for managers.