Public Leadership Under Resource Constraints: An Examination of the U.S. Nonprofit Sector

Abstract

In our rapidly evolving postindustrial and increasingly transnational world, the study of public leadership must encompass not only leadership in government agencies and institutions but also leadership in nonprofit organizations and civil society. The nonprofit sector exists alongside the public and private sectors and responds to both government and market failures. Increasingly, the role of the nonprofit sector may shift from service providers to facilitators of building a vibrant and diverse civil society and as social accountability organizations, keeping public officials and government transparent and accountable. Leadership in nonprofit organizations presents a unique set of challenges that may limit the adaption of leadership approaches focused primarily on individual leader traits. Contingency based theories such as the multiple‐linkages model point to important mediating variables, including generating sufficient resources, that limit a leader's ability to enhance organizational effectiveness. Drawing from tax filing data for the U.S. nonprofit sector, the current paper will examine trends in two key financial indicators of resource availability: (a) program service revenue (i.e., earned income and fees for service) and (b) profit margin. Results suggest both resource scarcity and variability over time. To address these challenges, nonprofit leaders may engage in a number of strategies such as building key stakeholder relationships, partnerships with other nonprofits for shared resources, or linking revenue to benefits. Furthermore, the current paper highlights the potential of utilizing administrative financial data as measures of situational factors that may enhance the utility of contingency based models of leadership.