Dennis R. Young

Alternative Models of Government-Nonprofit Sector Relations: Theoretical and International Perspectives

Economic theories of the nonprofit sector suggest several different ways of understanding the relationship between government and private, not-for-profit organizations. In particular, different strands of theory support the alternative views that nonprofits (a) operate independently as supplements to government, (b) work as complements to government in a partnership relationship, or (c) are engaged in an adversarial relationship of mutual accountability with government. A historical review of the United States revealed that all three views have validity and that government-nonprofit sector relations must be understood as a multilayered phenomenon. In this article, the foregoing analysis is extended internationally. The three theoretical perspectives are applied to four countries: the United States, the United Kingdom, Israel, and Japan, in an effort to illuminate nonprofit-government relations in those countries and to assess whether the multilayered approach provides a substantially richer understanding than any one theoretical perspective.

Local Autonomy in a Franchise Age: Structural Change in National Voluntary Associations

Many national voluntary associations seem to be evolving toward franchise-like systems in which national headquarters sanctions and controls the operations of local affiliates. This paper identifies feder ated movements as the type of association whose participants are especially concerned about the evolution toward the franchise model. The environmental factors and organizational dynamics that pro mote central direction and standardization are identified, and the issues facing these associations in attempting to balance the benefits of central initiative and local autonomy are framed.

Issues in Nonprofit Finance Research: Surplus, Endowment, and Endowment Portfolios

As the first systematic attempt to identify the issues involved in the use of large data sets to examine nonprofit surpluses and endowments, this paper provides suggestions for how best to ensure that the data are consistent and useful. We introduce five definitions of nonprofit surplus (the analogue of profit) and identify when researchers should use one in preference to the other. The distinctions are especially important when analyzing endowed organizations because surpluses affect the amount and rate of accumulation of endowment assets. Conversely, an endowment affects how managers and analysts should calculate surplus. Information on IRS 990 reports is incomplete, so we explain how to construct a pro forma endowment portfolio and endowment spending from available data for the purpose of calculating operating surplus of endowed organizations. We argue that researchers doing statistical analyses with large data bases should distinguish between endowed organizations and those without endowments because their financial behavior may differ. To lump them together is likely to distort statistical results. Finally, we discuss practical issues of data cleaning when using data from IRS 990 reports.

How Does Program Composition Affect the Revenues of Nonprofit Organizations?: Investigating a Benefits Theory of Nonprofit Finance:

Nonprofit organizations draw financial support from multiple sources including contributions, earned income, government support, and returns on investment, but the source of variation in income portfolios is not well understood. The authors draw on a ‘‘benefits theory of nonprofit finance’’ to illuminate the relationship between the programs and services that a nonprofit provides and the sources from which it obtains income. The authors analyze detailed revenue and expenditure data from eighty-seven Jewish Community Centers, estimating models that show significant associations between expenditures on particular types of services and the sources of an organization’s revenue. Specifically, expenditures on services of a more private goods nature are associated with greater reliance on earned income while expenditures on services of a more public goods nature are associated with greater reliance on charitable sources. Results are potentially important for nonprofit management practice because they suggest closer coordination of an organization’s resource development strategy with its programming.

Social enterprise in community and economic development in the USA: theory, corporate form and purpose

Social enterprises intended to contribute to community development in the USA engage in a variety of activities ranging from retail businesses to counselling services. These enterprises are structured in various ways, including direct programmes and for-profit subsidiaries of nonprofit organisations, and alliances among non-profits and business corporations. The various forms reflect a range of purposes, organisational identities, and entrepreneurial motivations. This paper grounds this spectrum in economic and organisational theory, and examines a sample of ventures, finding that they commonly take the form of initiatives by non-profit organisations, often rely on external collaborations, and are concerned with direct contributions to social mission as well as net revenue generation.

Social Entrepreneurship and the Financing of Third Sector Organizations

Abstract In this paper, we review the literature on entrepreneurship and the skill sets required by entrepreneurs operating in different sectors of the economy.1 Case studies from the social enterprise literature are examined in some detail. We search for distinctions between entrepreneurship in the business and public sectors and entrepreneurship in the nonprofit sector and relate this to the variations in financial support found among nonprofit sector organizations. We conclude that third sector social entrepreneurs are likely to require a different mix of skills than business entrepreneurs. In particular, political skills broadly defined, and the ability to secure and maintain charitable support, appear to be common to successful social enterprise ventures. Hence, taking too narrow a view of social entrepreneurship and social enterprise by confining it to the traditional business model of entrepreneurship constrains the potential benefits of developing social entrepreneurship in the third sector. This implies that education of potential social entrepreneurs should be broadly construed, combining business, public and nonprofit based instruction.

Can social enterprises remain sustainable and mission-focused? Applying resiliency theory

Purpose – The purpose of this paper is to adapt concepts from resiliency theory to understand the conditions under which social enterprises may remain true to form and purpose or are likely to change their character. This leads us to consider issues of governance, economic incentives associated with different organizational forms of social enterprise and the effects of the financial environment, the role of organizational slack and the influence of organizational leadership on the dynamics of social enterprises. Three case studies of organizations in the USA are analyzed to illustrate the application of resiliency theory to the stability of social enterprises. The fact that all forms of social enterprise must reconcile the tensions of social purpose and market raises important questions about the dynamics of these enterprises. Design/methodology/approach – Theory and case study analysis. Findings – Governance, financial incentive structure, organizational slack and leadership influence the stability of so...

Mission-Market Tension in Managing Nonprofit Organizations

Private not-for-profit organizations combine characteristics of a public sector agency with those of a private, proprietary firm. In particular, nonprofits are required to address designated social missions while breaking even financially. This structure underlies the difficulty that nonprofit organizations face in making decisions with important resource implications. Specifically, choices that would achieve maximal mission impact may differ from choices that reward the organization in purely financial terms. As result, nonprofit managers face a variety of trade-offs between missionresponsive and financially rewarding actions. This paper considers some of these tradeoffs by exploring how tensions between mission and market manifest themselves in a variety of nonprofit decision making applications. The analysis is based on a set of task forces assembled by the National Center on Nonprofit Enterprise in eight areas of nonprofit decision making. The paper suggests the development of metrics to reconcile mission goals with market incentives and research on appropriate nonprofit practices in areas such as pricing, employee compensation, outsourcing, collaboration, investment,fund raising and the undertaking of commercial ventures.

How Nonprofit Organizations Manage Risk

The purpose of this essay is to identify the kinds of decisions where nonprofit organizations need to manage their risks in a strategic fashion, to review what is known about how they approach these decisions, and to offer a conceptual framework that nonprofits can use to develop a more sophisticated and effective approach to their risk-management decisions. For various reasons, nonprofits have not taken a sufficiently robust view of risk management, A simple framework is presented to address the risk-related decisions of nonprofits in a strategic fashion, with a view to inspire fuller attention to risk management in the nonprofit academic literature and in professional forums.

Oil and Water Rarely Mix: Exploring the Relative Stability of Nonprofit Revenue Mixes Over Time

Abstract This paper explores whether nonprofits are increasingly adopting mixed revenue strategies, and the sustainability of these strategies over time. We constructed a panel using NCCS data from 1998 and 2007, and divided nonprofits into three groups: Commercial, Donative, and Mixed Revenue. We found no evidence that nonprofits are increasingly adopting mixed revenue strategies. Mixed revenue strategies appeared less sustainable over time than predominately commercial or predominately donative strategies. Our results suggest that for most nonprofits, relying predominately on either commercial or donative revenue (DR) is a more stable equilibrium than attempting to achieve a balanced revenue mix. Exceptions may be those nonprofits, such as arts organizations, where there is a natural alliance between donors and customers.