Nonprofit Performance Research Articles

Executive functional experience and its relationship to the financial performance of nonprofit organizations

This study examines the relationship between a chief executive's functional business experience and multiple financial measures of Nonprofit organization performance within higher education foundations. Executive experience in specific business disciplines was found to be associated with two financial performance outcomes examined in this study. Specifically, prior functional experience of CEOs in the areas of accounting, production, and marketing were significant and positive predictors of financial performance.

Book Review: Pathways to Nonprofit Excellence, Sustaining Nonprofit Performance: The Case for Capacity Building and the Evidence to Support It

Book Review: Pathways to Nonprofit Excellence, Sustaining Nonprofit Performance: The Case for Capacity Building and the Evidence to Support It

A corporate executive's short guide to leading nonprofits

PurposeBy introducing business people to the frustrations of leadership roles in nonprofits and showing how executives with corporate experience have dealt with these challenges, the authors provide a guide for volunteers who serve as board members, executives, donors, consultants or partners in the nonprofit sector.Design/methodology/approachMcKinsey & Company consultants interviewed executives who have served as both corporate and nonprofit leaders.FindingsCorporate executives working with nonprofits need to take the time to get to know the organization and all its stakeholders before proposing any new practices or initiatives. They should avoid unilateral decisions – instead involving board, staff and key stakeholders as appropriate.Research limitations/implicationsThe sample interviewed was small, about a dozen top executives. However, as more corporate executive take leadership positions in nonprofits, there will be an opportunity to survey a much larger sample.Practical implicationsBusiness leaders serving as nonprofit board members will better understand their nonprofit roles. Donors will learn to use their financial clout to improve nonprofit performance. Cross‐sector partnerships – which are central to addressing society's most intractable problems – can anticipate and solve roadblocks caused by the nonprofit sector's different culture and demands. Top business executives will gain a better understanding of what makes the nonprofit world tick.Originality/valueThis article assesses the factors for nonprofit sector leadership success based on the first‐hand experience of top executives who have run major corporations.

Exploring the association between board and organizational performance in nonprofit organizations

Note: This study investigated six dimensions of effective board performance, as suggested by Chait, Holland, and Taylor (1991), in relation to three theoretical explanations (agency theory, resource dependency theory, and group/decision process theory) of how board governance activities potentially influence organizational performance. Survey research findings revealed that strategic contributions from the board are more robust in organizations with higher financial performance. In addition, organizations that are judged to be higher performing also reported having high-performing boards across all dimensions. In particular, the interpersonal dimension provided a unique explanation of judgments of organizational performance.

Restoring Public Legitimacy to the Nonprofit Sector: A Survey Experiment Using Descriptions of Nonprofit Ownership

The authors argue that declining legitimacy of the nonprofit sector in American society can be traced to a limited public understanding of nonprofit enterprise. In this article, they explore the nature and correlates of ownership-related expectations in medical care. Data from a new national survey document that most Americans believe that ownership affects medical care. However, about a third of the public does not understand ownership; those who do not have decidedly less favorable attitudes toward nonprofits. Expectations for nonprofits are more positive among those who feel vulnerable to bad outcomes in medical care, but are substantially more negative among minority groups. Using an experimental design incorporated into the survey, the authors demonstrate that having additional information about ownership improves expectations about nonprofit performance but to varying degrees, depending on the content of the explanation, the particular dimension of performance, and the level of prior understanding.

The Effects of Governance on the Accuracy of Charitable Expenses Reported by Nonprofit Organizations

Abstract: Various users rely on nonprofit financial information for investing, contracting, and regulating decisions. The ratio of reported charitable to total expenses is one of the most widely used metrics to measure nonprofit performance. Prior research shows that many nonprofit organizations inflate this ratio by overstating their charitable expenses, reducing the decision usefulness of the information. Using a large sample of data from 1998–2006, as well as a sample of data from the newly redesigned 2008 IRS form 990, we find that existing governance mechanisms improve the accuracy of reported charitable expenses across a broad sample of nonprofit organizations.

An Empirical Investigation of the Link between Market Orientation and Business Performance in Nonprofit Service Providers

While researchers have explored the relationship between market orientation and finn performance in commercial organizations, such studies in non-profit organizations are scarce. This paper uses a structural equation model to show the impact of market orientation on the performance of non-profit organizations. To conduct the ’study, the authors employed the Kohli, Jaworski and Kumar (1993) market-orientation scale (MARKOR). Data for this study was collected by mail survey. One thousand market orientation surveys were sent to the executive directors of non-profit organizations across the U.S. One hundred forty-eight nonprofit agencies responded to the survey, representing 14.8% response rate. The performance criterion was based on the self-stated funding activities for the non-profit organizations collected in this sample. Results indicated that the Kohli, Jaworski and Kumar (1993) market-orientation scale provided a good measure of market orientation in non-profit organizations. The model of the relationship between market orientation and the performance of a non-profit organization supported the theory. The managerial implications are discussed for non-profit organizations.

Market Orientation in the Nonprofit Sector: Taking Multiple Constituencies into Consideration

Although nonprofit organizations deal with multiple stakeholders, most nonprofit market orientation-organizational performance research to date has focused exclusively on client/customer market orientation in a single nonprofit subsector. This study investigates orientation towards client/customer and government funder markets in multiple nonprofit subsectors. Overall results, based on data collected from 453 nonprofit organizations in Canada and analyzed using structural equation modeling, confinn that nonprofit organizations hold multiple market orientations, that these orientations are independent constructs that vary substantially in strength across organizations, that orientations towards different markets impact different performance dimensions, and, finally, that different resource structures affect market orientation-performance relationships. Results also indicate that the implementation of the marketing concept provides different benefits in the nonprofit and for-profit sectors.

Unnatural Selection: An Examination of the Fraser Institute’s Performance Index for the Donner Canadian Foundation Awards for Excellence in the Delivery of Social Services

Abstract: Using Darwinian metaphors, this article examines a relatively new quantitative performance evaluation tool for Canadian nonprofits: the Fraser Institute’s Performance Index for the Donner Canadian Foundation Awards for Excellence in the Delivery of Social Services. Several aspects of the Index, including strategic management, outcome monitoring, and income independence, are analyzed in light of their ability to accurately evaluate excellence in performance and their potential unsuitability for many non-profits. A theme throughout this discussion is the interaction of the “business-like” approaches favoured by the Index and the fundamentally different nature of non-profit perspectives. Particular attention is paid to the difference between organizations that share a profit motive and non-profits that have diverse organization-specific missions. Context-specific mission-driven approaches to non-profit performance evaluation are recommended.

Testing the Implementation, Board Performance, and Organizational Effectiveness of the Policy Governance Model in Nonprofit Boards of Directors

This article presents an empirical study of the relationships between implementation of thepolicy governance model in nonprofit organizations, board performance, and organizational effectiveness.An implementation measure of the policy governance model was created to investigate these relationships.Data were gathered from three samples: organizations that have implemented policy governance, a matched sample of randomly selected nonprofit organizations, and nonprofit organizations that had received board development from the National Center for Nonprofit Boards.Analysis yielded several positive, significant relationships between the extent of implementation of policy governance board behaviors, perceptions of improvement in board performance following implementation of policy governance, and some aspects of organizational effectiveness.

Peer Reputation in the Nonprofit Sector: Its Role in Nonprofit Sector Management

Reputation is a complex construct. Any one organization normally has several different reputations based on attributes and criteria of specific interest to different publics, constituencies, interest groups and/or stakeholders. Managers of nonprofit organizations need to think beyond how their organization is perceived by the general public and to be aware of the reputation their organization has among different key interest groups, how each of these reputations influences organizational performance and how each can be enhanced to improve performance. This paper extends the investigation of the importance of reputation to nonprofit organizations through an empirical study of the relationships between peer reputation and other nonprofit performance variables. It provides the first empirical evidence that an organization's reputation among managers of similar nonprofit organizations influences its success in attracting resources. It also provides empirical evidence that an organization's peer reputation is affected by other nonprofit performance factors, such as client satisfaction and effective governance. The scholarly and management implications of these findings are discussed.

Measuring the Impact of the Nonprofit Sector

Part I: Introduction. 1. Measuring the Contributions of the Nonprofit Sector P. Flynn, V.A. Hodgkinson. Part II: Concerns of Measurement and Evaluation. 2. Measuring Failure to Find Success C.W. Cobb. 3. Challenges of Measuring Performance in Nonprofit Organizations M.M. Stone, S. Cutcher-Gershenfeld. 4. Social Indicators for Assessing the Impact of the Independent, Not-for-Profit Sector of the Society K.C. Land. Part III: Civil Society and Governance. 5. Strengthening Democracy by Re-Creating Civil Society B.R. Barber. 6. The Vicious Circle of the Constricting State as Viewed through the Failure of Executive Leadership in Anglo-American Democracies C. Campbell. 7. The Necessity for Studying Organizational Advocacy Comparatively J.D. McCarthy, J. Castelli. 8. The Distributional Impacts of Nonprofits and Philanthropy J. Wolpert. 9. Can Public Life Be Regenerated? D. Mathews. Part IV: Measuring the Impact of Various Sub-Sectors and Special Populations. 10. Women and Philanthropy: Charting a Research Agenda K.D. McCarthy. 11. A Theory of Change Approach to Evaluating Investments in Public Education J.P. Connell, A.M. Klem. 12. Measuring the Impact of Nonprofit Health Care Organizations B.H. Gray. 13. Revealing the Implicit: Searching for Measures of the Impact of the Arts M.J. Wyszomirski. 14. The Emerging Status of Outcome Measurement in the Nonprofit Human Service Sector M.T. Greenway. 15. The Religious Dimension of Giving and Volunteering R. Wuthnow. Part V: Conclusions. 16. Measuring the Impact of the Nonprofit Sector on Society is Probably Impossible But Possibly Useful: A Sociological Perspective P. DiMaggio. 17. An Agenda for Quantitative Evaluation of the Nonprofit Sector: Need, Obstacles, and Approaches B.A. Weisbrod. Index.

Learning for Performance in Nonprofit Organizations

The problem and the solution. Few empirical studies have examined the relationship between learning organization dimensions and nonprofit performance. This study was conducted to understand this relationship and how it impacts nonprofit organizations' ability to become nonprofit learning organizations. The results offer guidance to human resource developers and managers who desire to integrate learning organization concepts into nonprofit organizations.

An uneasy alliance: planning and performance in nonprofit organizations

The research presented here contributes to our understanding of strategic planning and its relationship to performance in nonprofit organizations. Based on a sample of 303 nonprofit organizations, the study emphasizes individual and diverse elements of the planning process. Multiple measures of performance highlight a nonprofits need to garner resource contributions from several constituencies. Using factor analysis and canonical correlation analysis, we find a positive association between scope of planning and executive satisfaction and a negative association between administrative informality and volunteer involvement. Our results suggest that two critical resource contributors, executive directors and donors, may not value formalized decision-making and planning to the extent previously assumed.

Lessons for Multisite Nonprofits from the United Church of Christ

AbstractThis article describes the restructuring process currently underway at the United Church of Christ (UCC)—a 1.4 million member Protestant denomination. Three main questions are addressed: What are the central goals of the UCC restructure? What factors might explain the particular strategic direction pursued in UCC restructuring? and How might the UCC case inform recent thinking about the structure and performance of multisite nonprofits?

Diversification of Revenue Strategies: Evolving Resource Dependence in Nonprofit Organizations

This article examines the effects of three major revenue strategies in nonprofit organizations. Evolving resource dependence is demonstrated by the shifting reliance on each source of funds: private contributions, government funding, and commercial activities. A wide-ranging literature review is condensed into summary profiles comparing revenue volatility, goal displacement, process, and structure effects of each strategy. The profiles are drawn upon to anticipate potential advantages and disadvantages of increasingly diversified revenue strategies employed by nonprofits to combat resource dependence. The potential interaction effects raise critical but unanswered questions about nonprofit performance, legitimacy, and public policy issues.

Performance Measurement in Non-Profit Organisations: Integration and Focus within Comprehensiveness

It is generally accepted that a sufficient and appropriate definition of performance in non-profit organisations requires multiple components. Such a multiple-component definition is much more useful if it can serve not only retrospectively as a framework for performance reporting, but also prospectively and continuously as an information framework for both governance and management control over the cycle of organisational activities. By defining focus and causal integration, the Balanced Scorecard developed for commercial organisations offers one useful way of transforming a multiple-component performance reporting framework into a comprehensive governance and management information framework. The Scorecard can be adapted directly for use in public sector commercial organisations, and, with more creativity - involving the redefinition of focus as the maximisation of effectiveness for a given budget -for public and private non-profit organisations. The multi-attribute reporting model developed by the CCAF...

Structure and accountability a study of national nonprofit associations

AbstractIn 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.

The relationship between formal planning and performance in nonprofit organizations

AbstractA study of 240 YMCA organizations revealed that regardless of organization size, those organizations that used a formal approach to strategic planning had higher levels of financial and social performance than those with less formal processes. The better performers also assigned the responsibility for planning to a strategic planning subcommittee of the board rather than to the board's executive committee or to an outside consultant.

Public Policy and the Performance of Nonprofit Organizations: A General Framework

This article discusses various attempts by economists to model the behavior and performance of nonprofit organizations, and it provides four desiderata of a model suitable for policy analysis: the legal definitions of nonprofit status must be incorporated into the model; the objective function must emerge from the regulatory and competitive environment; the emergence of competitors (for-profit, nonprofit, and governmental) must be endogenous; and the information structure must be fully specified and self-consistent. The article discusses how to incorporate each of these desiderata into a model.