The impact of professionalization and partnerships on nonprofit productivity

ABSTRACT

This research evaluates the influence of professionalization and partnering with firms on nonprofit productivity. Professionalization is measured in terms of the ratio of paid employees to volunteers, and productivity is measured through the ratio of total assets to number of beneficiaries, and the ratio of total revenues to number of paid employees and volunteers. Empirical analysis combines a survey to a representative sample of Spanish nonprofits, with information available from public sources. Results confirm the existence of a ‘U-shaped’ relationship between professionalization and nonprofits’ capability to reach more beneficiaries with lower assets; a positive effect of professionalization on revenue generation capability; and a positive effect of partnerships with businesses on the nonprofit’s asset-per-beneficiary ratio. Discussion sheds light on the on-going debate about the implications of professionalization and partnering with firms for the capacity of nonprofit organizations to attract resources and to extend their reach in a more efficient way.     

Developing a Marketing Strategy for Nonprofit Organizations: An Exploratory Study

Nonprofit organizations have grown tremendously in the last three decades. With this growth has come a greater interest from the nonprofit sector in the importance of marketing. Nonprofits did not apply marketing techniques until 1960–1970, but it is now a well accepted practice. Traditional marketing strategies do not work for nonprofit organizations, and this study proposes the development of a new marketing strategy specifically for this sector. Through the use of interviews and surveys, the authors examine issues of marketing strategy that are distinct for nonprofits. Unlike previous studies, this study examines these issues from the viewpoint of the nonprofit organization. The perception of marketing is different in nonprofit organizations, and the strategic implications of this finding are discussed.     

Market Orientation and Organizational Performance in the Nonprofit Context: Exploring Both Concepts and the Relationship Between Them

ABSTRACT

The purpose of this paper is to explore the relationship between the concepts market orientation and organizational performance for nonprofit organizations. To understand the nature of this link in the nonprofit context, the authors will discuss and elaborate on the applicability of both concepts to nonprofits. They will develop multidimensional notions of “societal orientation” and “nonprofit organizational performance,” which fit the specific operating environment of nonprofit organizations engaged in the provision of health and social services. The authors also propose a conceptual framework that relates both notions and present the main underlying propositions. They conclude by suggesting items to empirically measure both constructs and venues for future research.     

The decision to advertise nonprofit accreditation status

Nonprofits seek accreditation to bolster their reputation and signal their worthiness to funders. The Better Business Bureau accredits nonprofits who pass 20 standards of accountability. Accredited organizations have the option to pay for the right to advertise their accredited status. At issue is why some organizations pay to advertise and other organizations do not. Utilizing a sample of 495 nonprofit organizations accredited by the Better Business Bureau, we find that nonprofits that pay to advertise the seal are larger, more profitable, have higher visibility, and are more likely to hire professional fundraisers. The results should be of interest to stakeholders and fundraisers interested in the adoption of methods to signal the accountability of nonprofit organizations.     

Small Business–Nonprofit Collaboration: Locally Owned Businesses Want to Take Their Relationships With Community-Based NPOs to the Next Level

This two-part, mixed-methods study explored how and why small businesses engage in both philanthropic and transactional partnerships with community-based nonprofits (NPOs), and what business owners expect from their nonprofit partners. Findings from focus groups and a survey indicate that U.S. small businesses (a) are interested in a higher representation on nonprofit boards; (b) are more likely to support NPOs that focus on the local community’s needs; and (c) seek long-term, committed partnerships with NPOs to jointly address communal issues rather than one-time contributions or sponsorships. The study adds to the literature on nonprofit–business collaboration by applying the concepts of integrative (Austin, 2000) and communal (Cho & Kelly, 2014) relationships in the context of locally owned businesses and community-based NPOs rather than more commonly studied large corporations and national/international nonprofits. These findings also offer practical recommendations for the leadership of community nonprofits interested in enhancing their relationships with small businesses.     

The theoretical foundations of nonprofit competition: a resource-advantage theory approach

Competition in the nonprofit sector has dramatically intensified in the past two decades because of (1) the increased number of nonprofit organizations (NPOs), (2) the decline and diffusion of governmental support, and (3) the entry of for-profit companies into markets that traditionally have been the domain of nonprofits. In an attempt to enhance the understanding of nonprofit competition, the authors apply resource-advantage (R-A) theory, a dynamic theory of competition adapted from the for-profit business literature, to commercial nonprofits and explain how commercial nonprofits can leverage their various resources to successfully compete and deliver social value. Contributing to the understanding of nonprofit competition and the challenge that NPOs face in balancing mission and money, this paper provides a foundation for a theory of nonprofit competition that can guide future research in the area and help NPO managers as they maneuver in today’s increasingly competitive environment.     

The impact of online financial disclosure and donations in nonprofits

Decreased public confidence and trust in the nonprofit sector has fueled increased calls for transparency. In response, federal regulators and watchdog organizations have recommended that nonprofits voluntarily disclose their financial information on their own public websites. Despite the potential benefits of enhanced public confidence and trust, improved donor decision making, and increased donations, many nonprofit organizations have not adopted the recommended disclosure practices. We investigate the disclosure practices of 3,217 nonprofits and find that voluntary web disclosure of the IRS Form 990 is strongly correlated to donations, independent of other variables such as age, size, and fundraising expenditures. Further, fundraising is also clearly related to the performance indicators shown in the 990 disclosures, particularly the program ratio of program expenditures to total expenditures. This is true on a general level and when specifically compared to other nonprofits within particular sectors. As a result, nonprofits should seriously consider voluntarily posting their Form 990 results on their websites when it reflects favorably and strive to improve their financial performance if online disclosure would reflect poorly on the organization.     

The Impact of Revenue Sources on Marketing Behavior: Examining Web‐Promotion and Place‐Marketing in Nonprofit Organizations

To overcome failure to generate profits from the goods they produce, nonprofit organizations have unique methods to generate and sustain capital flows resulting in distinct exchange relationships. This leads scholars to argue that nonprofit marketing strategies should differ as well. Given the lack of empirical work that investigates this possibility, this article explores how the uniqueness of the nonprofit funding environment shapes the ways in which nonprofits use business principles to market their products and services, asking if the resource acquisition process is the primary mechanism that predicts business‐like marketing behavior. Findings indicate that both the resource acquisition process and institutional relationships are influential in predicting business‐like marketing behavior.     

Operationalizing the Marketing Concept in the Nonprofit Sector

ABSTRACT

This paper questions the validity of applying the market orientation construct, which was developed ostensibly for and in large multinational organizations, to a sector whose characteristics differ greatly. Instead, this paper argues for a new approach to the operationalization of the marketing concept in the nonprofit sector. The components of this 'societal orientation' are delineated, as are the organizational imperatives, antecedents and the potential consequences and benefits associated therewith.     

Barriers to Elderly Consumers’ Use of Support Services: Community Support in Japan’s Super-Aged Society

ABSTRACT

Rural areas need support services to help elderly people sustain their ordinary lives, especially in light of today’s aging societies. In Japan, nonprofit organizations and residents’ associations, which are based in local relationships, provide support services aimed at helping the elderly with their daily buying behavior. This study provides a comprehensive understanding of the barriers preventing the use of such support services. We collect 133 respondents from semi-structured interviews through door-to-door visits using snowball sampling to show that there are three such barriers: lifestyle, capability, and trust. Furthermore, we discussed measures to reduce these barriers using our results of correlation analysis and analysis of variance. Our findings have implications for a new direction in social marketing for elderly people. As societies continue to age and highly accessible services become ever more necessary, the insights of our study will be applicable not only in Japan but across the world.     

Online Media,Market Orientation,and Financial Performance in Nonprofits

The combination of social, political, and economic changes causing simultaneously decreasing funding and increasing demand for services is driving nonprofit managers to engage in proactive marketing in a for-profit model, including the use of online media. This research extends the MARKOR model of market orientation to examine the relationship between market orientation practices, as reflected in the utilization of online media, and their effects on the financial viability of nonprofit organizations (NPOs). The Wayback Machine website (http://waybackmachine.org) provided a unique ability to track site content over time, for comparison with each organization's financial indicators at corresponding points in time. The results of this study confirm the positive relationship between higher market orientation via online media presence and improved financial viability for the sampled group of NPOs. This study provides a simple, actionable, and free measure that NPOs can use to assess their current and planned online media.     

The Influence of Reputation and Sector on Perceptions of Brand Alliances of Nonprofit Organizations

Brand alliances long have been used in the private sector and are being more frequently engaged by nonprofit organizations. It is assumed that the alliance benefits both organizations, particularly the focal nonprofit organization that strategically forms the partnership. But care must be taken in selecting partners. A quasi‐experimental design examines the relationship between partner reputation and sector (private or nonprofit) on subject willingness to contribute to a focal nonprofit organization. Partner public reputation was systematically varied using created organizations and a positive reputation enhanced willingness to contribute. Partnering with private sector organizations was only slightly less desirable than nonprofit organizations.     

Improving Fundraising Efficiency in Small and Medium Sized Non-profit Organizations Using Online Solutions

ABSTRACT

Although Switzerland enjoys a mature e-commerce sector and online marketing with widespread use of social media, large Swiss nonprofit organizations (NPOs) still adopt mainly off-line marketing and mass marketing strategies to support their fund-raising efforts. Mass marketing techniques are expensive and require a large financial investment, which Swiss small and medium-sized organizations cannot afford. The high cost of adopting these conventional fund-raising strategies greatly affects small NPOs, who lack funds to run their social and humanitarian projects. If instead NPOs focused on more cost-efficient marketing strategies, they could improve the sustainability of their fund-raising campaigns. Taking an explorative approach, this study first surveys Swiss donors to understand and quantify their behaviors. Second, it conducts qualitative interviews with NPOs to provide insights into their fund-raising strategies. Finally, it concludes with a set of practical suggestions for small and medium-sized NPOs to build specific capabilities to collect online donations more efficiently.     

The Ethical Frameworks of Social Media Policies Among U.S. Nonprofit Organizations: Legal Expectations,Dialogic Prescriptions,and a Dialectical Model

Nonprofit organizations are experiencing a new world of fundraising, marketing, and stakeholder engagement on a scale previously unseen and due largely to social media. This study investigated the extent to which nonprofits craft social media policies using ethical frameworks to guide online activity mindful of this new reality. Assessing the top 100 U.S. nonprofits and their social media policies, this study examined the 80,000 words of text extant within the available 55 nonprofit social media policies and found emergent themes that articulate the current ethical state of nonprofit social media policies. Hand-coding processes yielded themes of engagement, responsibility, privacy, protection, transparency, and respect. Computer-coding additionally aggregated these themes into larger themes of privacy, sharing, communication, accuracy, inaccuracy, engagement, and dialogue. Further analysis explored the ways in which nonprofit social media policies imply a dialectical model of ethical frameworks between legal and dialogic dimensions.     

Princes and Paupers: Network Ties and Financial Contributions Among Nonprofit Arts Organizations

ABSTRACT

In the United States, nonprofit organizations are the primary vehicle through which wealthy patrons nurture arts and culture. They provide support for theatres, orchestras, operas, and ballet troupes of all sizes, as well as museums, galleries, zoos, and public radio and television stations. The survival of this subsector is dependent on the ability of individuals and foundations to raise and funnel money to the almost 7,000 nonprofit arts and cultural organizations in the United States. Nonprofit arts organizations have historically fared well during periods of financial constraint, in part because they have not depended heavily upon government subsidies. But another explanation for this stable funding picture may be the networks of overlapping board member and interpersonal ties of collegiality and friendship which characterizes the world of nonprofit arts organizations.

We began our research with the idea that network position, particularly as measured by network centrality, is an important resource for nonprofit arts organizations. We hypothesized that the more central an arts organization is in the entire network of for-profit and nonprofit arts organizations in the community, the greater will be the level of support it can generate from local donors. We also hypothesized that the more wealthy a nonprofit arts organization, the more central it is likely to be in the entire network of for-profit and nonprofit organizations.

Using an extensive database of almost 3,000 directors in the Louisville, Kentucky area, and special computer-based network analysis software packages, we were able to calculate the precise centralities of local arts organizations within a network of 149 organizations, corporations, and umbrella funding agencies. In order to determine the local financial support, we collected the 1990 IRS (Internal Revenue Service) Form 990 returns for nineteen of the twenty-five organizations (76%) we identified as active in the Louisville area. After determining organizational centrality, we did a bi-variate analysis between the centrality of an individual arts organization and total organizational wealth. What we found was that centrality is strongly associated with level of contributions and weakly associated with overall wealth. We believe that nonprofit arts organizations can take deliberate steps to maximize this resource by being aware of the other organizational (and social) ties of prospective directors.     

Use of the Customer Value/Mission (CV/M) Matrix in Strategic Nonprofit Marketing Analysis

ABSTRACT

Application of traditional portfolio methods to nonprofit marketing situations is difficult, to say the least. For the most part, they require detailed market share, market strength, market growth, market attractiveness, and cost and profit accounting information that many nonprofits do not have and may not be able to acquire given the nature of products typically offered by nonprofits, e.g., services and/or social behavior programs. We suggest use of a recently proposed product portfolio model, the customer value/mission (CV/M) matrix as a method that can help nonprofits in then-product planning endeavors. The CV/M matrix better serves the needs of marketing strategists not only in for-profit organizations but in nonprofit ones as well. This is because it reflects on customer value and differential advantage in the eyes of an organization's consumers. This paper directly compares the use of an older portfolio matrix that has been suggested for use in nonprofit organizations with use of the new matrix and discusses some advantages and disadvantages of each.     

Corporations and NGOs: When Accountability Leads to Co-optation

Interactions between corporations and nonprofits are on the rise, frequently driven by a corporate interest in establishing credentials for corporate social responsibility (CSR). In this article, we show how increasing demands for accountability directed at both businesses and NGOs can have the unintended effect of compromising the autonomy of nonprofits and fostering their co-optation. Greater scrutiny of NGO spending driven by self-appointed watchdogs of the nonprofit sector and a prevalence of strategic notions of CSR advanced by corporate actors weaken the ability of civil society actors to change the business practices of their partners in the commercial sector. To counter this trend, we argue that corporations should embrace a political notion of CSR and should actively encourage NGOs to strengthen “downward accountability” mechanisms, even if this creates more tensions in corporate–NGO partnerships. Rather than seeing NGOs as tools in a competition for a comparative advantage in the market place, corporations should actively support NGO independence and critical capacity.     

Nonprofit Organizations in Mexico: A Preliminary Study on Knowledge Creation From the Beneficiaries’ Perspectives

ABSTRACT

The purpose of this study is to assess knowledge-creation activities by nonprofit organizations in Mexico from the beneficiaries’ perspectives. The ontological shift Socialization, Externalization, Combination, Interiorization (SECI) model and nonparametric tests were applied to a sample of 429 beneficiaries of 89 nonprofit organizations. The results found socialization was the most important and externalization was the least important aspect of the four types of dynamic knowledge interaction, suggesting an imbalance in knowledge creation, specifically in the conversion from tacit to explicit knowledge, which implies a problem, failure, or explicit barrier between the nonprofit organizations and their beneficiaries. The results further suggest weak links between age and externalization activities, gender and combination activities, and educational attainment and socialization activities. In sum, nonprofit organizations should consider beneficiaries’ individual characteristics when developing activities, disseminating materials, and communicating with the public. The study contributes to our understanding of tacit and explicit knowledge-creation activities by nonprofit organizations in Mexico.     

Corporate Culture in the Nonprofit Sector: A Comparison of Fringe Benefits with the For-profit Sector

One explanation that may be given for why nonprofit organizations pay lower wages than do other organizations is that nonprofits are more pleasant places to work. Indeed, some authors have proposed that nonprofit organizations should make an effort to promote a working environment that reflects the beliefs of the organization. This paper uses several proxies for whether an organization is a pleasant place in which to work, and tests for whether nonprofits are more likely to offer such pleasant working conditions. Analysis shows that nonprofits are not more likely to offer these conditions in many instances.     

Achieving Competitive Advantage Through the Application of Open Systems Theory and the Development of Strategic Alliances: A Guide for Managers of Nonprofit Organizations

ABSTRACT

To effectively compete in today's competitive business environment, nonprofit organizations need to operate as open systems developing strategic alliances with key actors. To help managers of nonprofit organizations develop such relationships, open systems theory is explained, the phrase “strategic alliances” is defined, and a system of alliances is presented as a tool for identifying and analyzing potential relationships.