Linking Nonprofit Capacity to Effectiveness in the New Public Management Era: The Case of Community Action Agencies

Abstract

Nonprofits in the 21 st century find they must not only do more with less but also function in a highly accountable manner. The emergence of New Public Management (NPM), with its emphasis on accountability concerns and sound management techniques, encourages nonprofit organizations to increasingly emu late the practices of their private-sector coun terparts (Light 2000). Ryan (1999, 128) con tends that are now forced to reexamine their reasons for existing in light of a market that rewards discipline and per formance and emphasizes organizational ca pacity rather than for-profit or nonprofit status and mission. Yet, despite the current wave of managerial reform, not all scholars are convinced that NPM offers the appropri ate philosophical underpinning for the non profit sector. Indeed, some consider the entre preneurial, rational choice focus of NPM as a potential threat to the broader democratic process and the public's best interests (Cook 1998; Kelly 1998; Terry 1998). Caught in the wave of reform, nonprofits today must not only grapple with the demands and effects of managerial innovations but also cope with devolution, downsizing, and out sourcing. The convergence of welfare policy devolution, NPM, and the independent sector creates a unique environment in which to study nonprofit capacity, effectiveness, and advocacy. Using a multidimensional approach, this study examines the linkages between nonprofit capacity and program effectiveness within the current environment of NPM. The