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.     

Local cross‐sector partnerships

We focus in this article on the challenges local governmental (municipal) and third‐sector (nonprofit) organizations face when they seek to work collaboratively or in partnership. We build on the findings of an action research project to draw out the practical implications of cross‐sector working for the organizations involved. We describe jointly agreed suggestions for tackling the challenges that emerged when third‐sector organizations and local governmental agencies themselves worked collaboratively in a search for mutually acceptable solutions. Finally, we draw out learning points on cross‐sector working for practitioners, policymakers, and researchers.     

Organization and Management in the Third Sector: Toward a Cross‐Cultural Research Agenda

Third sector organizations in the industrialized and the developing world—and particularly the subset of third sector organizations known as development nongovernmental organizations (NGOs)—are becoming more culturally diverse in internal staff composition, management styles, and working environments. Although cultural issues have been largely absent from the nonprofit and the NGO research literatures, the organizational implications of societal culture and organizational culture are widely debated within other research fields. This article proposes a closer engagement between third sector management research and the wider study of cross‐cultural organizational issues within anthropology, development studies, and management theory. It argues that such an exchange is necessary if third sector organizational research agendas are to include changing organizational landscapes effectively, and the article concludes with some ideas for future research.     

Improving performance? The adoption and implementation of quality systems in U.K. nonprofits

There are increasing and multiple pressures on nonprofit organizations to demonstrate excellence in performance. Although there is a growing literature on the various approaches to performance improvement taken by nonprofits, little is known about the processes involved in the adoption and implementation of specific approaches. This article is about the adoption and use of one approach to performance improvement, “quality systems,” in the U.K. nonprofit sector. We report findings about factors that encourage nonprofits to adopt quality systems. We also analyze the distinctive challenges of implementing quality approaches in a nonprofit sector context and suggest critical success factors. The article concludes with a discussion of the organizational and policy implications of applying the management concepts of quality and performance to the nonprofit sector.     

Advocacy with Gloves on: The “Manners” of Strategy Used by Some Third Sector Organizations Undertaking Advocacy in NSW and Queensland

This article examines the strategies used by some third sector organizations in Australia to advocate. The purpose of this article is to identify the kinds of activities that organizations in New South Wales and Queensland use to promote advocacy, the kinds of language that is used to describe these activities, and the reasons given for the particular strategies adopted. The extent to which the organizations adopt “softer” (that is more institutional forms of advocacy) rather than more openly challenging forms of activism is examined, particularly in light of a neo-liberal political and economic environment. In this analysis emergent strategies are identified that are not easily categorized as either “institutional” or “radical” advocacy. The article presents an exploratory analysis of some of the implications of the strategies adopted, in terms of their democratic effects and potential to strengthen the capacity of third sector organizations. The article is informed by the findings of a qualitative research project involving interviews with 24 organizations in the community services and environmental fields.     

Qualified Employment in the Third Sector in Portugal

Departing from regulation theories and varieties of capitalism school this article focuses on employment in the third sector. We start by discussing the emergence of the new third sector in the western world. In the second part of the article, we provide an overview of the third sector in Portugal today. The ideal values of the organizations of the third sector, namely the principles of democratic and participative management, the primacy of people and work over capital, and the centrality of social capital, frame the discussion of empirical data regarding the wage relation that characterizes the University of Porto (UP) graduates currently working in the third sector. We end with a critical discussion of the optimistic expectations and projections that loom over the third sector regarding the construction of an alternative model of social and economic development based on justice and equity.     

The validity of supplementary pay systems in nonprofit organizations

The theory and assumptions used by nonprofit organizations when adopting employee incentive pay systems are examined in this article. A theory to explain the use of financial incentive is described. This theory states that nonprofit employees are motivated, like employees in the for-profit sector, to seek financial rewards contingent on achieving certain performance goals. To validate the Theory, a review of select literature is provided.     

A Review of Models for Measuring Organizational Effectiveness Among For‐Profit and Nonprofit Organizations

Induced by unprecedented growth, invasion of for‐profit organizations in the nonprofit domain, and high‐profile cases of mismanagement in the nonprofit sector, a recent surge in the literature suggests ample opportunities for research to compare the organizational effectiveness of for‐profit and nonprofit organizations. This article presents a literature review of nonprofit organizational effectiveness from which four models of organizational effectiveness are selected. These models are discussed and analyzed because they apply to both for‐profit and nonprofit organizations.     

Unintended? The effects of adoption of the Sarbanes‐Oxley Act on nonprofit organizations

This article investigates the benefits and costs to nonprofit organizations emanating from the adoption of the Sarbanes‐Oxley Act (2002). The act was intended to stem financial malfeasance in the for‐profit sector; nevertheless the article finds that about half the surveyed nonprofits adopted provisions of the act and experienced effects in proportion to the level of adoption. About one in four of the nonprofits attributed benefits of better financial controls and reduced risk of accounting fraud to the adoption of the Sarbanes‐Oxley Act. More than one‐third of the nonprofit organizations reported increased fees for external audit, and about 15 percent cited “reallocation of resources from program to administrative expenses.” This article discusses the unintended positive and negative effects of public policy on nonprofit organizations.     

Legitimacy and the Role of UK Third Sector Organizations in the Policy Process

This paper explores the legitimacy of third sector organizations in the policy process in the United Kingdom. It draws on empirical research to examine how legitimacy is defined, both by third sector organizations and by those they target within government. The paper argues that while many third sector organizations give high priority to political forms of legitimacy—in the sense of participatory structures and accountability to members and beneficiaries—government is generally more likely to give priority to technical forms of legitimacy, e.g., the quality of research and the ability to implement policy. Nonetheless, political legitimacy is still important, first because this is the form of legitimacy that third sector organizations claim for themselves and second because, as government gives way to governance with an increase in partnerships and collaboration, the dilemmas faced by third sector organizations in achieving political legitimacy are being faced on a broader canvas.     

Understanding workplace deviant behavior in nonprofit organizations

Workplace deviant behavior has traditionally been studied with respect to business or for‐profit organizations. In this article, we argue that nonprofit organizations also experience deviance, and due to their unique characteristics, they deserve special attention for extending the understanding of workplace deviant behavior to other types of organizations. Based on a review of the literature on deviance, we develop a general model of workplace deviance that we apply to nonprofit organizations. Based on the integrative conceptual framework, we advance relevant propositions for understanding and explaining deviance in nonprofit organizations.     

Revisiting the Prediction of Financial Vulnerability

Whether or not a nonprofit organization is vulnerable to financial problems is a concern of all stakeholders of the organization. Recently, Greenlee and Trussel (2000) and Trussel and Greenlee (2001) expanded Tuckman and Chang's work (1991) to predict which organizations are financially vulnerable. This article extends the work of these authors by developing a model of financial vulnerability that includes four financial indicators, controls for the sector to which an organization belongs, and is based on a sample of over ninety‐four thousand organizations. The model is useful as a screening, monitoring, and attention‐getting device.     

Quantifying the Third Sector in Portugal: An Overview and Evolution from 1997 to 2007

This article presents a global overview of the third sector in Portugal drawing on data from a linked employer–employee database—“Quadros de Pessoal,” which is based on a compulsory annual inquiry to organizations, making it a better source of information than those based on sample surveys and estimates. This study advances on previous overviews by providing more updated numbers for organization size, age, gross revenue and employment levels, as well as their distribution across the ICNPO third sector activity classification. The evolution of these variables from the period 1997 to 2007 is also analyzed. The Portuguese third sector has been fast growing, with revenues amounting to 5.64% of Portugal’s GDP and employment representing 4% of the country’s employment in 2007. It is mainly composed of very small organizations, with diminutive revenues. Perhaps its most striking features are the uneven distribution of employment and revenue and the strong concentration on social services.     

The Third Sector, Human Security, and Anti-Terrorism: The United States and Beyond

This paper, a revised version of the keynote address to the Seventh International Conference of the International Society for Third Sector Research (Bangkok, July 2006), explores the increasing tendency of governments to view the third sector as a source of human insecurity and uncivil society in the wake of terrorist attacks. The paper discusses the means governments use to control third sector activity that they view as potentially linked to terrorism, the need for comparative analysis of these measures, and the role of the third sector and scholars in recognizing the responsibilities of governments to prevent third sector organizations being used in terrorism while preserving the independence and vitality of the third sector.Professor of Law and International Affairs and Faculty Scholar, University of Iowa; Visiting Professor of Law, Harvard Law School (2005–06). This paper is a revised and expanded version of the keynote address to the Seventh International Conference of the International Society for Third Sector Research, Bangkok, Thailand, July 9, 2006.     

Toward the Importance of Nonprofit Brand Equity

Various brand evaluation approaches assess the value and equity of for‐profit brands; accordant approaches for nonprofit brands, however, have been limited, and there is disagreement on what makes up a strong brand in the nonprofit sector. In response, this article provides insights into the conceptualization and operationalization of stakeholder‐based nonprofit brand equity and derives an initial measurement index. We conceptualize nonprofit brand equity as having three dimensions—nonprofit brand awareness, nonprofit brand trust, and nonprofit brand commitment—thereby empirically investigating trust in nonprofit brand equity building for the first time. The methodological procedure for building the index is based on partial least squares path modeling, and we draw on a sample of forty brands (N = 3,617 brand evaluations) identified as some of the best‐known nonprofit brands in Germany. Applying the index yields some of the strongest German nonprofit brands; for example, German Red Cross has by far the highest value of brand equity, followed by Aktion Mensch and UNICEF. The nonprofit brand equity index provides the basis for nonprofit managers to compare their brands’ performance over time and develop accordant branding strategies; it can be also used by organizations from other countries.     

Predicting the Financial Vulnerability of Charitable Organizations

This article describes a model that can be used to predict which nonprofit organizations are vulnerable to financial problems. The model is based on financial indicators developed by Tuckman and Chang (1991), adapts methodologies that have been developed in the for‐profit sector to predict financial vulnerability, and was empirically tested using a multiyear Internal Revenue Service database provided by the National Center for Charitable Statistics. Both internal and external stakeholders can use the model when making allocation decisions during the strategic planning process and in evaluating financial risk.     

The Third Sex: Women Leaders in Australian Agriculture

This article uses data from interviews with 20 women involved in decision‐making positions in Australian farm organizations to explore the ways in which women actively create a subject position which locates them as both ‘agricultural leader’ and ‘woman’. This is a subject position one participant describes as ‘a third sex’. In negotiating their outsider status, the participants describe being engaged in a constant process of self‐monitoring and movement between and across different discourses of managerial masculinity and normative femininity. They describe no such difficult identity work being undertaken by the male leaders with whom they work. Based on a range of gender comparisons, the article concludes that women's entry to positions of agricultural leadership does not necessarily suggest that a more inclusive or equitable Australian farming sector is emerging.     

The evolution of Israel's third sector: The role of predominant ideology

The article presents a case study of the evolution of Israel's third sector. It uses quantitative data on the economic structure of the sector, as well as historical data on the changes it has undergone in the past 80 years or so. This period is subdivided into three eras, each characterised by a different dominant ideology within which third sector organisations develop. The analysis emphasises the interplay between the dominant ideology and the type of existing third sector organisations in each era, and their functions in society. The changes are illustrated using the examples of two key organisations (the Histadrut-Federation of Labour Unions, and the Jewish Agency) and two minority populations (the Charedi-Ultra-Orthodox and the Arab). Studying the Israeli third sector within the context of its social history provides an opportunity to test some of the theories explaining the evolution and characteristics of that phenomenon. Thus, the article explores the implications and contribution of the Israeli case to international third sector theory.     

Varieties of Field Theory and the Sociology of the Non‐profit Sector

This paper reviews the use of field theory in the sociological study of the non‐profit sector. The review first shows how field theory, as a conceptual framework to explain social action, provides a valuable sociological counterweight to prevailing economic and psychological orientations in the interdisciplinary scholarship on the non‐profit sector. However, despite its certain shared assumptions, field theory in sociology encompasses three distinct, albeit interrelated, approaches: the Bourdieusian, New Institutionalist, and Strategic Action Fields perspectives. I comparatively outline the key analytical assumptions and causal claims of each version of field theory, whether and how it recognizes the specificity of the non‐profit sector and then delineate its application by sociologists to the non‐profit sector. I show how scholars' employment of each articulation of field theory to study non‐profit activity has been influenced by pre‐existing scholarly assumptions and normative claims about this third space. The article concludes by summarizing the use of these varieties of field theory in the sociology of the non‐profit sector and by identifying future directions in this line of research.