Melissa M. Stone

Research on Strategic Management in Nonprofit Organizations Synthesis, Analysis, and Future Directions

This article presents a review and analysis of empirically based research on strategic management in nonprofit organizations reported in major journals from 1977 to the present. Although much work has been done on strategy formulation, types of strategies pursued, and implementation in nonprofits, significant gaps exist in our knowledge. Few explicit connections have been made among research studies, contributing to fragmentation of the field. Crucial relationships among strategy components are missing, and links between these components and organizational performance have yet to be made. The article analyzes what is known about strategic management in nonprofits and identifies questions for future research.

Planning in ambiguous contexts : the dilemma of meeting needs for commitment and demands for legitimacy

This paper argues that ambiguity of context manifested in pressures for legitimacy and commitment affect planning processes. Ambiguity arises from multiple conflicting constituencies and the lack of direct control over resources. Using nonprofit and entrepreneurial organizations as examples of organizations facing ambiguous contexts, we examine their planning practices to develop an understanding of the relationship between commitment, legitimacy, and planning. From this analysis, we articulate a managerial dilemma: the need to use informality and vagueness to gain commitment from diverse interests, and the need to demonstrate formalization of managerial practices to acquire legitimacy from critical resource suppliers. Using elements of this dilemma, we present a new planning framework for organizations in ambiguous contexts that recognizes planning as a strategy for resource acquisition rather than a strategy for resource allocation.

Acting in the Public Interest? Another Look at Research on Nonprofit Governance

This article begins to fill gaps that currently exist between research on the governance of nonprofit organizations and research on public governance and focuses on how nonprofit governance research can benefit from insights in the public governance literature. As boundaries between nonprofit governance and public governance are increasingly fluid, our theoretical understanding as well as our empirical work on governance must expand to encompass these new relationships. The article summarizes the extant empirical literature on nonprofit governance and compares this research to emerging work on public governance. Drawing on this literature, the article specifically calls for research on nonprofit governance that (a) gives greater attention to the links between organizational governance and the public interest, (b) incorporates a broader view of governance as a process engaging multiple actors and taking place at multiple levels, and (c) links governance to accountability for results.

Organizational characteristics and funding environments: A study of a population of United Way-affiliated nonprofits

This study examines a population of United Way–affiliated nonprofit organizations in Massachusetts (1) to test hypotheses generated by previous research on relationships between government funding and specific nonprofit organizational characteristics, (2) to compare differences in organizational characteristics between nonprofits receiving higher percentages of revenues from the United Way and from government sources, and (3) to explore associations between government funding and United Way and underexamined characteristics, including use of commercial income and racial diversity of organizational membership. The study supports previous research on the relationship between government funding and nonprofit characteristics, with one notable exception—less administrative complexity was associated with higher percentages of government funding. The study also finds differences in organizational characteristics between nonprofits with higher proportions of government funding and those with higher percentages of United Way funding, including organization size, number of board members, administrative complexity, use of volunteers, and the racial diversity of boards, staff, and volunteers.

Moving Governance Research Forward: A Contingency-Based Framework and Data Application

The purpose of this article is to present an initial framework for understanding nonprofit board governance and then, using findings from the Urban Institute National Survey of Nonprofit Governance, explore relationships between variables presented in the framework. The framework is based on a recent review of the literature and highlights the ways in which internal organizational characteristics, board attributes, and the external environment influence board roles and responsibilities. In brief, our results confirm the importance of developing a more systematic body of knowledge about relationships between specific elements of context and board practices. The results suggest that the proposed contingency-based framework is a useful beginning point for future research.

Competing Contexts The Evolution of a Nonprofit Organization's Governance System in Multiple Environments

Using a historical case study, this article presents an analysis of the evolution of a nonprofit organization and its governance structure as it was transformed from a grassroots and advocacy agency into a multimillion dollar contractor with the state. The case illustrates how boardfunctions, composition, and board management relations significandy changed in response to an environment increasingly organized around governments contracting out for services. The article argues that these changes can be understood as responses to contradictory logics embedded in the nonprofits environment whereby competing beliefs and ideologies eventually ledto the creation of two distinct butloosely coupled organizations.

Why Don't They Do What We Want? an Exploration of Organizational Responses to Institutional Pressures in Community Health Centers

Throughout the last two decades, the nonprofit sector has emerged as a major provider of basic health and human services and as a prime implementor of certain public policies (Kramer, 1981; Saidel, 1991; Salamon, 1987; Smith and Lipsky, 1993). At the same time, resource suppliers to nonprofit organizations, such as government agencies at local, state, and federal level, have been under pressure to demand that non-profits reduce costs and increase efficiency and productivity. However, nonprofit response to such demands is not well understood despite the fact that public administrators, policy makers, and foundation managers, among others, find that implementing their goals is increasingly intertwined with the work of nonprofit organizations (Saidel, 1991). Our purpose in this article is to examine what specific organizational and environmental characteristics shape nonprofit responses to these downsizing demands. Through a study of budget cuts in four community health centers, this research demonstrates that conformity through compliance - a response often anticipated by funding sources - is only one among four responses made in the face of pressures for improved efficiency and productivity that accompanied the cuts. Nonprofit organizations operate in environments characterized by uncertain relationships between means and ends. In such institutional environments, legitimacy, not efficiency, is critical to an organizations ability to secure vital resources (Meyer and Rowan, 1977). Organizations gain legitimacy through conformity with prevailing norms, practices, and beliefs of multiple constituencies (Meyer and Rowan, 1977; Zucker, 1983), and through organizational responses to institutional pressures. The nature of these pressures has been well defined (see, for example, DiMaggio and Powell, 1983) and their effect on the diffusion of different organizational structures and processes is well documented (Burns and Wholey, 1993; Fligstein, 1979; Tolbert and Zucker, 1983). However, implicit in much of this work is an assumption of organizational passivity and conformity in the face of institutional pressures (Covaleski and Dirsmith, 1988a). Oliver (1991) developed a conceptual framework of organizational response to institutional pressures that directly challenges this assumption of passivity. First, organizations may conform or acquiesce. Second, they may compromise, particularly in the face of conflicting demands. This response includes the partial conformity described by Scott (1983) in which health care organizations meet at least minimum standards set by federal agencies. Third, organizations may attempt to avoid institutional pressures through, for example, symbolic compliance (Meyer and Rowan, 1983) where organizations conceal nonconformity or minimize external evaluation. Fourth, organizations may actively resist pressures or, fifth, attempt to manipulate or change them. The analysis in this article builds directly on Olivers (1991) framework. Both Covaleski and Dirsmith (1988a; 1988b) and Oliver (1991) suggest that internal characteristics and interorganizational relationships combine in unique ways to produce this variety of responses. In this article, we investigate organizational responses to one form of institutional pressure - the expectations accompanying budget cuts demanded of community health centers. Although funders do not dictate what cuts should be made, they use coercive pressures in the form of productivity standards or staffing levels to encourage certain ends. However, community health centers are not dependent solely on funders for legitimacy and resources. As a consequence, the conformity desired by funders may be problematic as centers respond not only to pressures emanating from them but from other critical constituencies such as communities, clients, and others. In the next section, three characteristics of community health centers likely to affect organizational response are described: intraorganizational conflict, organizational coalitions, and interorganizational conflict. …

Planning as Strategy in Nonprofit Organizations: An Exploratory Study

This exploratory study examines formal planning processes in two different nonprofit organizations, those serving the mentally retarded and those in the performing arts, in two distinct geographical areas. Significant differences existed in the major types of Planning pro cesses employed by these nonprofits that seemed to relate to the nature of their funding environments. Important internal and exter nal factors influenced whether these forty-four nonprofits adopted plans for such matters as the size of the organizations budget, the primary function of its board of directors, and interaction with other local nonprofit managers engaged in formal planning. Differences in the extent of planning behavior between the two geographical areas suggests that local structures that support professional manage rial practices influence the diffusion of such practices.

Challenges of Measuring Performance in Nonprofit Organizations

In some ways, the title of this chapter is misleading, for we are well aware of the challenges inherent in measuring performance in nonprofit organizations. It is time to deal with the challenges directly. Young, Bania, and Bailey succinctly summarized the reasons for the task before us: “Having inherited from the 1980s a legacy of a full and growing agenda of social problems, and a stringent fiscal environment of restricted government funding and fierce competition for private contributions, nonprofits have now been challenged where it hurts most—their very integrity has been called into question” (1996, p. 347). Funders are under increasing pressure to demonstrate results from their resource allocation decisions; the public wants to know what outcomes justify inflated nonprofit executive salaries and fund-raising costs; and those who run nonprofits are beginning to realize that “doing good” must be measurable.

Building a Policy Fields Framework to Inform Research on Nonprofit Organizations

Although the importance of the public policy environment for strategic action of nonprofit organizations has become increasingly clear, research on nonprofits is often divorced from their policy context. The purpose of this article is to present a theoretically informed framework for analyzing policy environments that can inform nonprofit research. Drawing on insights from political science, organization theory, public management, and nonprofit studies, the authors propose that the framework reflects a policy field that is an identifiable set of elements in a specific environment that directly shapes local public service provision. These elements include the structures created by institutions that deliver public programs and the ways in which state and local actors interact with and shape these structures as they work on public problems. Through a research example, the article presents the policy field framework’s analytic steps.