Book Review: Strategic Management for Voluntary Nonprofit Organizations,by Roger Courtney. Routledge,New York, 2002

VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations -     

Capital Structure of Nongovernmental Development Organizations

In the first international study of this kind, we analyze the capital structure of 364 nongovernmental development organizations (NGDOs) from three different countries: Belgium, Spain, and the United Kingdom. We observe lower debt ratio values in the United Kingdom, and significant differences between countries were found by testing an econometric model with the five classical determinants of leverage, considering total debt and both long‐ and short‐term debt. We find support for the pecking order theory, and we broadly discuss some possible reasons for the obtained differences.     

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.     

A Coalition Perspective on Nonprofit Governance Quality: Analyzing Dimensions of Influence in an Exploratory Comparative Case Analysis

We answer the call that governance research should focus more on processes outside the boundaries of boards, especially for nonprofit organizations. In particular, we suggest and elaborate concrete steps with respect to the advantages of a leadership coalition perspective to focus more on the behavioral and informal aspects of governance. Through a comparative case analysis of five nonprofit organizations, we explore contingencies between characteristics of nonprofit leadership coalitions and governance quality. We identify two dimensions to classify leadership coalitions: centralized versus diffused influence and specific versus holistic influence. These dimensions are subsequently related with observed governance quality. We frame our finding in the existing literature on group faultlines, which are socially constructed dividing lines within groups, and we discuss the importance of establishing a balanced coalition between a weak or nonexisting and a strong dominant coalition to ensure high governance quality. We also present propositions on how governance quality and its various sub-dimensions can be studied as a complex, nonlinear intermediate concept between coalitional aspects of leadership groups and nonprofit organizational performance. Finally, we discuss concrete avenues for further testing and verification of our theoretical interpretation.     

From Consultation to Participation

Empirical research in the literature on accountability of nonprofit organizations (NPOs) toward their beneficiaries is scarce, and the available studies have a number of limitations. Our study attempts to overcome some of them and focuses on one specific component of accountability toward beneficiaries: beneficiary impact on organizational decision making and output. Data were collected by surveying general managers of 790 Belgian NPOs in fourteen industries. Results show that most NPOs implement some mechanisms to involve beneficiaries and their representatives in organizational policy making, mechanisms that vary between and within industries. Despite the existence of such mechanisms, their perceived association with impact on policy making and associated potential organizational effects is weak, though positive.     

“Corporate” governance in nonprofit organizations

The economics‐based theoretical and related empirical literature on the governance of nonprofit organizations is brought together and integrated in a way easily accessible for noneconomists. This literature is scattered in academic journals covering economics, health economics, management, and accounting, and in the more nonprofit‐geared research publications. After defining corporate governance, I present in a nontechnical way the most appropriate economic framework for studying governance problems: the principal‐agent theory. Most of the economic literature deals with the role and influence of the board and its relation to the organization's management and performance. This is reflected in the article's structure. The board's functioning, composition, and committee structure are first discussed, followed by a review of the literature on incentive‐based remuneration schemes, disclosure of financial information, and the use of debt to mitigate agency problems between the board and management. The literature dealing with donors and subsidizing authorities in governance relations is then presented. The article concludes with a number of practical implications of the scholarly obtained results to date, as well as some suggestions for further theoretical and empirical research.     

Seven Trade-offs in Measuring Nonprofit Performance and Effectiveness

To complement contemporary nonprofit literature, which mainly offers theory-driven recommendations for measuring nonprofit effectiveness, performance, or related concepts; this article presents seven trade-offs for researchers and practitioners to consider before engaging in a nonprofit effectiveness measurement project. For each trade-off, we offer examples and suggestions to clarify the advantages and disadvantages of methodological choices that take various contextual elements into account. In particular, we address the differences between formative and reflective approaches, as well as the differences between unit of interest, unit of data collection, and unit of analysis. These topics require more in-depth attention in the nonprofit effectiveness literature to avoid misinterpretations and measurement biases. Finally, this article concludes with five avenues for further research to help address key challenges that remain in this research area.     

Autonomous Motivation Stimulates Volunteers’ Work Effort: A Self-Determination Theory Approach to Volunteerism

Although today’s nonprofit organizations make a strong appeal to volunteers, they often have difficulties with attracting and retaining these free labor forces. In this sense, studying the motivation of volunteers and its effects proves useful. In the present article, we investigate the relationship between volunteers’ motivation and their self-reported work effort, while relying on the Self-Determination Theory. The results indicate a positive link between volunteers’ autonomous motivation and work effort. Moreover, this relationship holds for each person in our sample, irrespective of the organization in which she/he is volunteering. Implications for future research, as well as the practical impact of these findings, are discussed.