Article

Network Connections and Competitively Awarded Funding: The impacts of board network structures and status interlocks on nonprofit organizations’ foundation grant acquisition

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Abstract

This analysis investigates whether nonprofit board connections with other nonprofit organizations and foundations explain organizational performance in earning foundation grants. Using a sample of 402 nonprofits and sixty-eight foundations in a single metropolitan area, we find that greater connectedness and status interlocks significantly influence organizations’ ability to acquire resources. Network effects are partially mediated by the number of past grants received and a nonprofit’s financial characteristics, including organizational size, fundraising expenses, and financial health. These findings, while supporting the role of networks in resource attainment, point to the complex and mutual relationships between organizational characteristics, network characteristics, and organizational performance.

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... Eight of the fifteen articles emphasize the role of control and influence over the movement of information and resources. For instance, Faulk et al. (2016) argue that organizational power results from an organization's ability to influence others by controlling the movement of information and the availability of opportunities in the network. ...
... They use betweenness centrality to test how optimally positioned actors control the flow of information and resources in the network (Koliba et al., 2017) or access to foundation grants (Faulk et al., 2016). ...
... Instead of framing the hypotheses according to a specific social theory, the authors relied on general findings of the collaborative governance, public management, and public policy literatures. Similarly, Faulk et al. (2016) test the extent to which nonprofit organizations gain more grants if they have board interlocks with foundations. The authors frame this hypothesis based on the nonprofit management literature and on empirical findings related with factors that increases the probability of nonprofit organizations accessing foundation grants. ...
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This article contributes to the network effectiveness literature by identifying the theoretical mechanisms and network measures scholars in public administration and policy use to draw inferences between network structures and network effects. We conducted a systematic review of empirical network effects research in 40 journals of public administration and policy from 1998 to 2019. We reviewed and coded 89 articles and described the main social theories used in the network effectiveness literature and the associated mechanisms that translate network structures to network effects. We also explain how scholars operationalize those theoretical mechanisms through network measures. Overall, our findings reflect that there is a limited use of social theories for the explanation of network effects and in some cases, there is an inconsistent use of network measures associated with theories. Moreover, we identify the main challenges related to network effects, including the difficulty of isolating specific mechanisms related to a particular social theory, the use of network structures both as a mechanism and as a measure, and the lack of data to examine network dynamics and coevolution.
... As explained earlier, federal funding allocation is typically affected by the amount of funds received in the preceding year, as CoC networks compete for funding on an annual basis (Rich, 1989). Therefore, an LDV was added into the models to account for the fact that the amounts of fund awarded this year could be largely affected by the amounts of fund awarded last year (see Faulk et al., 2016, for a similar case). However, adding the LDV may lead to the biased coefficient estimates as the error term is no longer randomly distributed (Wooldridge, 2015). ...
... However, adding the LDV may lead to the biased coefficient estimates as the error term is no longer randomly distributed (Wooldridge, 2015). We accordingly conducted a series of regression analyses with and without the LDV to check for consistency in the results, in line with the strategy adopted by Faulk et al. (2016). All results are reported in Table 4. ...
Article
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Does the nonprofit leadership have an impact on the performance of collaborative networks? This article examines the degree to which nonprofit-led network and other governance characteristics matter in explaining the performance of network achieving federal funding. Specifically, we hypothesize that networks led by nonprofit organizations may achieve more funding and project award than those led by government organizations. Using data from a national survey of local homeless service networks, we find that contrary to the hypothesized expectations, networks led by nonprofits are less successful in federal funding and project award than networks led by government organizations.
... Eight of the fifteen articles emphasize the role of control and influence over the movement of information and resources. For instance, Faulk et al. (2016) argued that organizational power results from an organization's ability to influence others by controlling the movement of information and the availability of opportunities in the network. Similarly, Marcum et al. (2012) argued that direct ties are insufficient to maintain authority in an interorganizational network. ...
... Instead of framing the hypotheses according to a specific social theory, the authors relied on general findings of collaborative governance, public management, and public policy literature. Similarly, Faulk et al. (2016) tested the extent to which nonprofit organizations gain more grants if they have board interlocks with foundations. The authors framed this hypothesis based on the nonprofit management literature and on empirical findings related to factors that increase the probability of nonprofit organizations accessing foundation grants. ...
Article
This article contributes to the network effectiveness literature by identifying the theoretical mechanisms and network measures scholars in public administration and policy use to draw inferences between network structures and network effects. We conducted a systematic review of empirical network effects research in 40 public administration and policy journals from 1998 to 2019. We reviewed and coded 89 articles and described the main social theories used in the network effectiveness literature and the associated mechanisms that translate network structures to network effects. We also explain how scholars operationalize those theoretical mechanisms through network measures. Overall, our findings reflect that there is limited use of social theories for the explanation of network effects and in some cases, inconsistent use of network measures associated with theories. Moreover, we identify several challenges confronting network effects research. These challenges include the difficulty of isolating specific mechanisms related to a particular social theory, the use of network structures both as a mechanism and as a measure, and the lack of data to examine network dynamics and coevolution.
... The findings from the current literature, however, are mostly drawn from the corporate governance context. While corporate board interlock has been studied extensively, little attention has been paid to the formation of board interlock (except for Willems et al., 2015) and its outcomes in the nonprofit literature (except for Bloch, Harris, & Peterson, 2020;Esparza & Jeon, 2013;Faulk, Willems, McGinnis Johnson, & Stewart, 2016;Faulk, McGinnis Johnson, & Lecy, 2017;Paarlberg, Hannibal, & McGinnis Johnson, 2020). To fill this gap, this article offers an integration of research on the antecedents and consequences of board interlock. ...
... Evidence shows that organizational status conferred through interorganizational network ties, such as through board interlock, is positively associated with the probability of acquiring foundation grants (Esparza & Jeon, 2013;Faulk et al., 2017). In recent studies, Faulk et al. (2016) and Paarlberg et al. (2020) find that nonprofits which share overlapping board members with foundations and other nonprofit organizations are more likely to acquire foundation grants. ...
Article
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Board interlock represents a phenomenon where organizations are connected via overlapping board members and executives. Board interlock is an important area of research in governance study because of its potential to impact governance outcomes through the flow of information, resources, and status. Despite its potential significance, the role of board interlock in governance has not been explicitly discussed in the nonprofit board governance literature. I review and synthesize corporate and nonprofit board governance literature and link this literature to the study of board interlock. Then, I review the extant literature on the antecedents and consequences of board interlock. I conclude by identifying gaps in the literature and proposing directions for future research.
... Institutions such as governments and foundations, in contrast, can request and process more detailed information. Various scholars found that the amount and number of grants is potentially higher for organizations that send positive objective signals, such as financial health, funding experience, and a considerable organizational size (Ashley & Faulk, 2010;Faulk, Willems, McGinnis Johnson, & Stewart, 2016;Lecy & Van Slyke, 2013;Lu, 2015;McGinnis & Ashley, 2011). McGinnis Johnson (2016 argues that foundations can request documents of nonprofit organizations that apply for a grant, which provide additional organizational information, for example about board members, performance records, and funding history. ...
... Revenue diversification displays financial stability (Carroll & Stater, 2009;Searing, 2018), which leads to more fund-raising efforts that help to inform and educate the public about a public service organization or its cause (Andreoni & Payne, 2011). Hence, although foundation and government grants may decrease the need for fund-raising as the organization is already financially stable (Andreoni & Payne, 2003;Faulk et al., 2016;Hughes et al., 2014), additional grants enable nonprofit organizations to increase their fund-raising and promotion expenditures. With increasing fund-raising efforts, a crowding-in of individual support is likely. ...
Article
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There is a broad academic discussion about the impact of funding grants from a foundation or a government department on individual support intentions toward the nonprofit organization receiving the grant. However, the role of the grant provider's reputation has frequently been overlooked. In this study, we experimentally tested whether there is a reputation spillover effect of a grant‐providing organization. Based on a real‐life example, we asked citizens to rate their willingness to donate to a nonprofit organization, and we experimentally manipulated the available information on funding sources. We test this for both a government department and a foundation as a grant provider. Our results suggest that not the act of receiving a grant, but the citizens' awareness about the funding organization—at least in the case of a foundation—has an impact on support intentions. In contrast, for a prominent government department as a grant provider, we did not find support for a reputation spillover effect.
... As noted above, these are hypotheses for which no explicit theory is provided. For example, Faulk et al. (2016) hypothesize that nonprofit organizations will gain more grants if their board interlocks with foundations. This hypothesis is supported by findings and evidence in the 2 Structural Argument-Transitivity ...
... At the community level, neighborhoods with greater social capital may be more resilient in the face of disasters (Aldrich & Meyer, 2014). Organization's ability to secure foundation grants (Faulk et al., 2016) Achievement of organizational mission and goals ...
Book
Networks contain complex patterns of dependency and require multiple levels of analysis to explain their formation, structure, and outcomes. In this Element, the authors develop the Multilevel Network Framework. The framework serves as (i) a conceptual tool to think more deeply about network dynamics, (ii) a research tool to assist in connecting data, theory, and empirical models, and (iii) a diagnostic tool to analyze and categorize bodies of research. The authors then systematically review the network literature in public administration, management, and policy. They apply the Multilevel Network Framework to categorize the literature; identify significant gaps; examine micro, macro and cross-level relations; and examine relevant mechanisms and theories. Overall this Element helps readers to (i) understand and classify network research, (ii) use appropriate theoretical frameworks to examine network-related problems, (iii) understand how networks emerge and produce effects at different levels of analysis, and (iv) select appropriate empirical models.
... This alternative hypothesis is informed by status-signaling theory (Podolny 2005 ) and the role of stakeholders and network connections in developing an organization ' s reputation, funding, and financial growth (Esparza and Jeon 2013 ;Faulk, Johnson, and Lecy 2016 ;Faulk et al. 2015 ;Galaskiewicz, Bielefeld, and Dowell 2006 ;Hager, Galaskiewicz, and Larson 2004 ). Any capacity-building grant functions as an external endorsement of the organization to other funders, signaling that the organization is worthy of greater financial investment than other organizations, all else equal. ...
... Of particular interest, controls for lagged foundation grant amounts from both the foundation that made the capacity grants and from other foundations had consistent, positive, and significant effects on future financial growth across all models. These findings support the theoretical perspectives that informed Hypothesis 3, and add to a growing body of evidence that external endorsements from institutional funders add to an organization ' s ability to garner future financial resources from additional stakeholders and increase their sustainability over time (Faulk et al. 2016 ;Faulk et al. 2015 ; ). ...
Article
Foundations’ capacity-building grant programs strive to bolster performance and outcomes for their nonprofit grantees. Yet with few outcome evaluations of such programs, we have limited understanding of whether these capacity-building efforts achieve their intended result. This study evaluates fifteen years of data for one foundation's capacity-building grant program to understand whether targeted capacity building for financial management and development contributes to nonprofit financial growth. The authors examine the management–performance link in this context and inform sector leaders who dedicate resources to capacity-building programs about the outcomes of these efforts.
... When the boards of different organizations have members in common-when their boards interlock-they can synchronize both their values and behaviors in the absence of explicit central control (Fennema and Schijf, 1978;Mintz and Schwartz, 1981;Mizruchi, 1996;Davis and Greve, 1997;Michael Dreiling, 2011). Organizations that share key members in this fashion can reap the benefits of network connections and solve coordination problems (Pombo and Gutié, 2011;Faulk et al., 2015). ...
Article
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In response to failures of central planning, the Chinese government has experimented not only with free-market trade zones, but with allowing non-profit foundations to operate in a decentralized fashion. A network study shows how these foundations have connected together by sharing board members, in a structural parallel to what is seen in corporations in the United States and Europe. This board interlocking leads to the emergence of an elite group with privileged network positions. While the presence of government officials on non-profit boards is widespread, government officials are much less common in a subgroup of foundations that control just over half of all revenue in the network. This subgroup, associated with business elites, not only enjoys higher levels of within-elite links, but even preferentially excludes government officials from the NGOs with higher degree. The emergence of this structurally autonomous sphere is associated with major political and social events in the state–society relationship. Cluster analysis reveals multiple internal components within this sphere that share similar levels of network influence. Rather than a core-periphery structure centered around government officials, the Chinese non-profit world appears to be a multipolar one of distinct elite groups, many of which achieve high levels of independence from direct government control.
... -Externe laterale Rechenschaftspflicht (Partner Accountability) besteht gegenüber Partnerinstitutionen und -organisationen: Die Organisation stellt Informationen für andere Organisationen vor Ort bereit, die komplementäre oder sogar dieselben Ziele verfolgen(Murtaza 2012). Eine solche partnerschaftliche Rechenschaftspflicht kann die Organisation dahingehend unterstützen, ihre Bemühungen an die anderer Organisationen anzupassen und so bessere Gesamtergebnisse zu erzielen(Faulk, Willems, Johnson und Stewart, 2016;Paarlberg und Meinhold, 2012;Provan und Milward, 2001). • Gemeinsame Rechenschaftspflicht (Shared Accountability) bedeutet, dass Organisationen zusammenarbeiten, um Informationen für über-oder untergeordnete Stakeholdergruppen bereitzustellen. ...
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In den letzten Jahrzehnten hat das Streben nach Effizienz und Effektivität des Managements viele öffentliche und zivilgesellschaftliche Organisationen verändert. Viele öffentliche Organisationen – wie z.B. die deutschen öffentlichen Universitäten im oben beschriebenen Fall – haben sich im Zuge der New Public Management Reformen als eigenständige Einheiten neu organisiert. Eine solche Umstrukturierung hat die Chance erhöht, dass kontextspezifische Management- und Führungspraktiken eingeführt werden. So können die öffentlichen Universitäten nun beispielsweise freier über die Verwendung der Mittel entscheiden. Die Umstrukturierung hat jedoch auch die Notwendigkeit erhöht, dass die Organisationen ihre Leistungen managen und darüber berichten, um somit langfristig ihre Reputation gegenüber externen Stakeholdern aufzubauen. Dies können sie erreichen, indem sie das richtige Maß an Transparenz wahren und ihren Stakeholdern gegenüber Rechenschaft ablegen. Öffentliche Universitäten bemühen sich nun mehr um ihr Image, z.B. indem sie Hochglanzbroschüren drucken und ihre Jubiläen feiern. Gleichzeitig wird von ihnen mehr Transparenz bezüglich ihrer Prozesse und Wirkungsbereiche erwartet. Wenn zivilgesellschaftliche Organisationen für den Staat die Erbringung öffentlicher Leistungen übernehmen, dann geschieht dies zunehmend auf Basis von Leistungsverträgen mit komplexen Leistungs- und Zielvereinbarungen. Infolgedessen ist bei zivilgesellschaftlichen Organisationen die Notwendigkeit gestiegen, ihre Leistung, ihre Reputation, ihre Transparenz und ihre Rechenschaftspflicht gegenüber staatlichen Akteuren zu verwalten und zu steuern. Auch die Erwartungen privater Geldgeber/innen sind gestiegen, weil Skandale im Zusammenhang mit dem Missbrauch von Spendengeldern Spender/innen sensibilisiert haben (in Österreich z.B. der berüchtigteWorld Vision Skandal von 1998, der schließlich zur Einführung des österreichischen Spendengütesiegels führte). Aktuelle Trends in Richtung Venture Philanthropy und Impact Investment haben die Anforderungen privater Geldgeber/innen in Hinblick auf die Rechenschaftslegung von NPOs weiter erhöht.
... Pender (2015) finds a similar positive (and significant) association between the share of adults with a college degree and the total real value of 3 Another body of research examines what influences the likelihood that a nonprofit organization receives foundation grants. See Giving USA (2015) and Faulk (2015) for examples of this work. foundation grants per capita in both nonmetro and metro counties. ...
... When the boards of different organizations have members in commonwhen their boards interlock -they can synchronize both their values and behaviors in the absence of explicit central control [1,2,3,4,5]. Organizations that share key personnel in this fashion can reap the benefits of network connections and solve coordination problems [6,7]. ...
Article
In response to failures of central planning, the Chinese government has experimented not only with free-market trade zones, but with allowing non-profit foundations to operate in a decentralized fashion. A network study shows how these foundations have connected together by sharing board members, in a structural parallel to what is seen in corporations in the United States. This board interlock leads to the emergence of an elite group with privileged network positions. While the presence of government officials on non-profit boards is widespread, state officials are much less common in a subgroup of foundations that control just over half of all revenue in the network. This subgroup, associated with business elites, not only enjoys higher levels of within-elite links, but even preferentially excludes government officials from the nodes with higher degree. The emergence of this structurally autonomous sphere is associated with major political and social events in the state-society relationship.
... Other control variables used in the study that are typically associated with greater organizational capacity include managerial tenure, measured as the number of years in the position and governmental funding, measured as percent of total revenue. We also controlled for organizational location (urban) based on previous studies that indicated that being located in an urban environment tends to increase organizational access to strategic resources and connections (Faulk et al., 2016), which may be beneficial for engagement in sustainability roles, and for the sub-sector affiliation by including a dummy variable for belonging to the performing arts, which is the largest sub-set of organizations in the study. ...
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This article investigates the relationship between several elements of organizational strategy and arts and culture nonprofits perceived contributions to community sustainability. We ask the following research question: What are the drivers of arts and culture nonprofits’ engagement in community sustainability? Drawing on data collected from a survey of 175 nonprofits in the state of Michigan, this article reports the findings about arts and culture organizations perceived engagement in community sustainability and factors that may foster or inhibit such engagement. The study advances our understanding of the role that nonprofit organizations play in fostering local sustainable development, and it also informs broader scholarly discourse on the role of arts and culture organizations in a society.
... It has been well documented that financial resources primarily guide organizational outcomes (Finkler et al., 2018;Mitchell & Calabrese, 2019). For instance, researchers have shown that procurement of financial resources affects program performance (Evans et al., 1997;Simon, 1947;Thompson, 2003;Wenglinsky, 1997), managerial efforts toward networking (Faulk et al., 2016), and nonprofit managers' decisions on taking reasonable risks and pursuing entrepreneurship (LeRoux, 2005). In sum, appropriate management of financial resources, the lifeblood of organizations, is increasingly seen as a key to success in public administration and governance (Kioko et al., 2011). ...
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Managing financial resources is one of the most important responsibilities of every organization; however, the literature still cannot provide an answer to an important question: how does financial health matter to organizational mortality, especially for nonprofit organizations? To advance our knowledge in this regard, this study empirically examines the effects of solvency, profitability, margin, and liquidity on nonprofit dissolution. Higher solvency, profitability, and margin have significant effects on reducing the likelihood of nonprofit dissolution, but liquidity does not function as a significant predictor.
... The board interlocking practice is "a means by which organizations reduce uncertainties and share information about acceptable and effective corporate practices" (Borgatti & Foster, 2003, p. 996). Studies of nonprofit organizations also suggest that boards and board interlocking relationships have critical roles in resource acquisition and bridging external constituencies (Faulk, Willems, McGinnis Johnson, & Stewart, 2016;Guo, 2007;Paarlberg, Hannibal, & McGinnis Johnson, 2020). Although critics remain, studying such networks is a valid approach to understanding the organizational behavior embedded in social relations. ...
Article
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This study considers the effects of government funding to nonprofits from a network perspective. By analyzing a novel, 12‐year panel dataset from the People's Republic of China, I find no evidence that government funding to a nonprofit crowds out private donations to the same organization. However, I find a substantial crosswise crowding‐in effect at the ego network level: an increase of one Chinese Yuan in government funding to a nonprofit's neighbor organizations in board interlocking network can increase the private giving to the nonprofit by 0.4 Chinese Yuan. A nonprofit's network position measured by Katz centrality negatively associates with its private giving. The results suggest that, if we consider the funding system from a holistic network perspective, government should support nonprofits with confidence because of the spillover effect. Moreover, a nascent nonprofit cannot increase donor's confidence by only borrowing board members from renowned organizations.
... Need for partner and shared accountability As noted earlier, given the complexity of many social problems, it is difficult, if not impossible, to attribute and quantify the unique contribution of separate CSOs in reducing large-scale societal and/or environmental problems (Perrow, 1961;DiMaggio, 2001;Forbes, 1998;Herman and Renz, 2008). Ecosystems and their network governance mechanisms, rather than singled-out organizations, have increasingly gained attention in both scientific and practitioner literatures, with the aim to better understand how 'wicked' problems can and should be tackled (Appe, 2016;Babiak, 2009;Faulk et al., 2016;Provan and Kenis, 2007). As a result, the attention paid to responsibility, antecedents and effects of transparency and accountability has also increasingly shifted towards the network level of CSOs (AbouAssi and Bies, 2018;Babiak, 2009;Koliba et al., 2011;Meyer et al., 2013;Paarlberg and Meinhold, 2012;Paarlberg and Varda, 2009). ...
Chapter
Despite the vast repertoire of practitioner and scientific literature since the early 1990s on how civil society organizations (CSOs) should be governed, we continue to regularly hear stories of severe organizational crises. Even well-respected, internationally active CSOs sometimes find themselves in the middle of a media storm (Archambeault and Webber, 2018; Cordery and Baskerville, 2011; Harris et al., 2018; Willems, 2016; Willems and Faulk 2019). It is naïve to assume that such events will cease in the future or at least stop endangering the sustainability and continuity of CSOs. Nevertheless, an explicit evaluation of how crisis situations can be avoided and how their devastatingly negative effects can be mitigated through CSO governance processes makes it necessary to focus on CSO accountability and transparency. As a result, the clarification and elaboration of the concepts of accountability and transparency can strengthen theoretical and practical insights as to how CSOs can become more crisis-resistant and resilient (Brown, 2005; Helmig et al., 2014). In addition, insight into the inherent trade-offs that CSO leadership teams need to consider in their governance decisions can help both practitioners and researchers to (1) avoid more CSO crisis situations in the future, (2) more effectively overcome such crises when they occur and (3) identify the contextual and organizational factors affecting leaders' governance decisions. Against this background, the aim of this chapter is threefold: 1. Provide an elaborated definition of CSO transparency and accountability that takes into account the nature and role of CSOs in contemporary societies. After highlighting the uniquely defining characteristics of CSOs, the chapter identifies from the inter-disciplinary literature a set of circumstances that underpin the need for a multidimensional elaboration of transparency and accountability specific to CSOs. 2. Document governance responsibilities that CSOs have with respect to transparency and accountability. The chapter explains why transparency and accountability are necessary elements of the CSO governance function. 3. Develop propositions for further scientific elaboration and validation of how CSO governance practices encompass but also support and lead to CSO transparency and accountability. The output of the first two research aims is juxtaposed with five dimensions of a governance quality index, highlighting how governance quality dimensions include and relate to various aspects of CSO transparency and accountability.
... These organizations join organizational members' forums or groups within their sectors; such entities link independent organizations and are meant to be venues for interaction, learning, and information diffusion (AbouAssi and Bies 2018; Faulk et al. 2016), but do not necessarily lead to inter-organizational collaboration (Ozman and Findik 2008). In these venues, which can be local, regional, or international, organizations get exposed to each other's experiences and practices; this exposure can reduce the transaction costs of collaboration. ...
Article
Collaboration across sectors at the local level is seen as beneficial to both non-governmental organizations (NGOs) and local governments. Cited benefits are framed by institutional, resource dependence, and transaction cost perspectives and are often examined in a western, developed nation context. This article uses a novel sample of local governments and NGOs in Lebanon to examine whether constructs derived from these dominant theoretical frameworks explain cross-sector collaborative tendencies in the context of a developing country. We conclude that measures related to resource dependence can provide some explanatory power for collaboration behavior, but a better explanation of local government–NGO collaboration in developing countries will require reaching beyond commonly used constructs from existing dominant theories; future research toward that end is a worthwhile endeavor.
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Public policy increasingly relies upon private philanthropic actors to meet community needs. However, nonprofits located in communities of colour may be disadvantaged in the private grants marketplace. This article examines the complex relationship between grantee location in a community of colour, board networks and the size of grants in public foundations in two metropolitan communities. Larger and better-connected networks are associated with larger grants; however, nonprofits located in communities of colour have smaller and less well-connected networks. These findings confirm the importance of network connections in the grant-making process and raise important questions for future research.
Preprint
This article is the synopsis to my cumulative Habilitation dissertation in the field of Management (Submitted and defended at the Faculty of business, economic and social sciences of the University of Hamburg; Department of Social Economics). This Habilitation dissertation combines eleven published articles for which the overall content relates to three interrelated concepts: leadership, performance, and reputation. Therefore, in this synopsis, I shortly introduce these concepts, and I clarify the academic contributions made by this Habilitation for these three concepts. Moreover, I explain how the public and nonprofit sectors form the unique setting to study these three management concepts. Studying these concepts in the nonprofit and public context has at least two major advantages.
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Do interlocking boards provide advantage in the grants marketplace? Drawing upon board data from nine public grant-making organizations in two metropolitan areas and their grant recipients, we test the mediating and moderating relationships between interlocking boards, organizational size, and the size of the grants received. We find that organizational size is not a predictor of grant allocations independent of network characteristics. Larger organizations have larger and better-connected boards, which is associated with larger grants.
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SYNOPSIS A board interlock occurs when a board member from one organization joins the board of a separate organization. This interlock forms a social network between board members, through which information, knowledge, practices, and policies flow between organizations. Academic research on for-profit entities suggests that interlocks are a conscious strategic choice made by organizations (Hallock 1997). We study board interlocks in the nonprofit sector. In doing so, we shed light on the impact of interlocking boards on nonprofit governance, organizational efficiency, and donations secured. Using a sample of more than 3,000 industry-diverse nonprofit organizations in the Washington, DC metropolitan area, we find that interlocked organizations have better governance practices and run more efficient operations, in line with the diffusion of best practices and shared knowledge and experience between organizations. Furthermore, we find that interlocked organizations report more donations, consistent with the expanded network provided by these relationships. Data Availability: The data used to perform this study are publicly available via GuideStar.
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The recent influx of immigrants to the United States and the corresponding growth in racial/ethnic diversity has increased the visibility of nonprofits that serve primarily people of color (POC). Combining data from an original survey with Form 990 tax returns and Census records, this study focuses on nonprofits designed to serve particular racial and ethnic groups. We explore whether organizations that serve mainly POC or those led by POC face greater financial challenges than others. We find that POC-serving or POC-led nonprofits experience greater financial difficulties stemming from additional challenges in resource development and management. However, POC-serving nonprofits led by executives of color did not show additional disadvantages compared with those serving mainly POC but led by White executives or POC-led nonprofits serving mainly White individuals. We discuss the implications of racialized organizations and how understanding this issue can help address the financial vulnerability of POC-serving nonprofits.
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Many nonprofits encourage or require their boards to give, using board giving as a signal of governance commitment to boost external donations. However, nonprofit boards are uncertain about whether their giving really is necessary and effective for improving external fundraising. This exploratory study uses a longitudinal sample and draws on signaling theory and the crowding-in hypothesis to predict whether, and under what conditions, board giving leads to external donations for arts-related nonprofits. The results indicate a positive relationship between board giving and nonprofit external donations. Moreover, the results show that the positive effect of board giving is more pronounced in commercial nonprofits and that corporate donors react to board giving more positively than foundation and individual donors. These results suggest that the use of board giving as a fundraising strategy would be the most effective when commercial, arts-related nonprofits ask corporate donors for donations.
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Is an elite consolidating among the leadership of community-based organizations (CBOs) in U.S. cities? Ethnographers identify a privatized turn in urban governance, with some nonprofit civic leaders becoming a cohesive group with enormous influence in local affairs. However, while researchers propose elite consolidation has occurred and created a more hierarchical, technocratic, and unipolar civic field, these structural changes have not been directly assessed. In this paper, I reintroduce an interorganizational network perspective to elite consolidation and evaluate how interlocking directorates among CBOs in Cleveland, OH, and Austin, TX constitute relationships among civic leaders over twenty years. Results indicate boards of directors are constituting a new civic elite, and that hierarchical interlock tendencies doubled in both cities between 1998 and 2016. The core of the networks appear to be organizations traditionally important in urban governance, though, and community analysis reveals power sharing among elite groups in the cities rather than singular dominant communities, indicating as situation of "elitist pluralism." These findings offer a new perspective on the problem of elite consolidation in civil society, and offer a benchmark for future analysis of civic elites.
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SYNOPSIS This study investigates how public charities respond to the public support test—an IRS requirement that at least one-third of a public charity's financial support is derived from public sources. Using a large sample of 836,920 charity-year observations during 2009–2018, I find that a disproportionately large number of charities exceed the 33-1/3 percent public support threshold by a small margin. This result holds only for public charities actually subject to the test (six years of age or older) and not young charities that automatically retain public charity status. Further, I find that charities that unexpectedly just meet public support test are more likely to understate fundraising expenses. This evidence implies that the public support levels of charities that just surpass the 33-1/3 percent threshold are likely misrepresented. Overall, my findings provide new insights into a vitally important regulatory threshold that has been largely neglected in existing research. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: L31; L38; M41.
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Human service nonprofit organizations navigate a complex funding environment. Grants from philanthropic foundations are one piece of this puzzle, conveying both funds and legitimacy. This paper examines foundation funding to human service nonprofits in one urban grants economy. Nonprofits are stratified into three groups: new entrants, repeat players, and sustained players. This sorting has serious consequences and is related to organizational characteristics, resource dependence, institutional factors, and network participation. Further, it appears that funding to repeat players is becoming more concentrated over time. Implications for research and practice are considered.
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Purpose This study aims to investigate the role of network in affecting private firms’ internationalization decision. Specifically, it investigates the way that business ties, political ties and status influence an internationalization decision. Design/methodology/approach On the basis of the survey data collected from Chinese private firms, this study distinguishes business ties from political ties and introduces network status. Binary logistic regression is used to test the hypotheses. Findings Results show that private firms that have business ties are more likely to internationalize, whereas private firms that have political ties are less likely to internationalize. High-status private firms are more likely to internationalize. Political ties negatively moderate the relationship between business ties and internationalization. High-status firms with political ties are more likely to internationalize. Originality/value This study provides theoretical and practical contributions. Results complement previous research on social networks in the context of Chinese private firms and have implications for managers who exert effort to internationalize their firms.
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Previous research lags behind in illuminating theoretical mechanisms that shape governance decision-making on board practices. Using an integrated theoretical approach, I examine how board interlock network and institutional factors are associated with board governance policy adoption in nonprofit organizations. A linear regression model is employed to investigate policies adopted by a panel of public charities in three cities in Upstate New York during 2008 and 2014. Results show that not only the presence of board interlock networks but also central network positions relate to extensive policy adoption. Results also reveal that the use of paid professionals in management relates to institutional isomorphism reflected by more extensive governance policy adoption. These results provide insights for nonprofit leaders seeking to facilitate good governance practices by paying attention to board members’ affiliations and institutional environment considerations.
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This article introduces a novel empirical approach to the nonprofit literature that can measure competition between nonprofit organizations. Our approach provides a framework to determine how the number of organizations may be incorporated into empirical competitive analysis. We then systematically estimate the average population needed to support a given number of nonprofits in a market. We find that, for the 10 nonprofit industries examined, markets reach competitive levels once four or more nonprofits have entered. The results suggest that a relatively small number of nonprofits are needed to ensure robust competition. Our findings demonstrate that donor market competition is both predictive in nonprofit entry decisions and remarkably similar to competitive behavior among for-profit firms. We discuss several implications of these findings, in terms of both policy and future empirical research.
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A board interlock creates interorganizational networks where organizations are interconnected via overlapping board of directors. Board interlock is important for nonprofits because of its potential to impact organizational performance through the flow of information, resources, and status. While much is known about the consequences of board interlock, little is known about the mechanisms underlying its antecedents. This study explores three types of predictors of board interlock: organizational, dyadic, and structural characteristics. Inferential network analysis of a 17-year-period panel of nonprofits demonstrates that network relationships are shaped by the existing network structures, such as the tendency for preferential attachment (e.g., a social preference to connect with those who are already well connected) and transitivity (e.g., a social preference to connect with friends of friends). Findings inform nonprofit leaders about how to bridge to a board interlock network by recruiting well-connected board members serving on multiple boards.
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How are political elites embedded in both civil and political domains? I studied 246 Chinese political elites who also served on nonprofit foundations’ boards from 2011 to 2015 and conceptualized a framework to understand the state-nonprofit relationship before 2015. The political elites can build horizontal connections with foundations, helping the party-state reach nonprofit actors. They can also build vertical connections with political groups, helping foundations access political resources. The dual-role elites’ connectedness with foundations and in the polity varies by their primary positions in the political system. Effective communication between the state and nonprofit actors requires elites to have strong connections in both the civil and political domains, but the situation in China is far from ideal—those embedded in foundations are disconnected from the polity, and those connected in the polity are marginalized in foundations.
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This commentary focuses on teaching philanthropy using an innovative pedagogy known as experiential philanthropy. Experiential philanthropy allows students to study social issues and nonprofit organizations and then make decisions about awarding funds to nonprofits working to address the social issues they learned about. The pedagogy is considered to be transformative for students across a variety of disciplines (e.g., business administration, marketing, public administration, and social work). In this commentary, I raise an important consideration for those who teach philanthropy using this pedagogy and I conclude by issuing a call to action.
Chapter
Cultural not-for-profit organizations can be split into operating and grant-making foundations. Both of them support restoration, recovery, and resilience of culture and creativity. For this goal, they can mix the operating and the grant-making roles.Big organizations like National Trust (NT) in UK and FAI (Fondo Ambiente Italiano) in Italy collect memory of tangible and intangible heritages, which are restored, renovated, and given back to communities after disruptive events, from death of the founder to pandemic emergency. Their fundraising gets on into grant-making to heritages, whose management is fully operating thanks to NT and FAI managers.Their philanthropy, their leading roles, and their reputation are founded on virtuous underlying vision, strategy, or set of principles, grassroots approach, dedication, and professionalism. This is empowered by the communication, traditional, and online, where the former contributes to the capillary dissemination and gathering of information.The aim of this paper is to compare performances of NT and FAI. These performances concern the range of revenues and costs of these big and leading organizations, together with the growth of visitors and members.The methodology includes regression analysis of 2014–2019 NT and FAI data, together with a qualitative analysis of strategies during pandemic times. The magnitude of the philanthropy of these foundations will be highlighted with a multiple regression for total revenues being function of operating and fundraising costs.KeywordsPhilanthropyHeritageMemoryFoundationEconomics
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We answer the call that governance research should focus more on processes outside the boundaries of boards, especially for nonprofit organizations. In particular, we suggest and elaborate concrete steps with respect to the advantages of a leadership coalition perspective to focus more on the behavioral and informal aspects of governance. Through a comparative case analysis of five nonprofit organizations, we explore contingencies between characteristics of nonprofit leadership coalitions and governance quality. We identify two dimensions to classify leadership coalitions: centralized versus diffused influence and specific versus holistic influence. These dimensions are subsequently related with observed governance quality. We frame our finding in the existing literature on group faultlines, which are socially constructed dividing lines within groups, and we discuss the importance of establishing a balanced coalition between a weak or nonexisting and a strong dominant coalition to ensure high governance quality. We also present propositions on how governance quality and its various sub-dimensions can be studied as a complex, nonlinear intermediate concept between coalitional aspects of leadership groups and nonprofit organizational performance. Finally, we discuss concrete avenues for further testing and verification of our theoretical interpretation.
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In this unique longitudinal examination of the "third sector" of the economy, the authors explore why, in a major U. S. metropolitan area, some nonprofit organizations grew while others shrank during the 14-year period of the study. The authors' striking conclusions contribute to an understanding of how organizations juggle commitments to donors, grantmakers, members, and service populations, while trying to keep costs down and worker morale high. In the face of these often conflicting tasks, the study demonstrates that it is ultimately an organization's coping strategies that keep it afloat.
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The role of the board of trustees of nonprofits (NPs) is to legitimize the nonprofit by signaling to consumers that the nonprofit can be trusted and is able to supply the services it offers. Therefore, nonprofits invite people with appropriate attributes such as reputation and wealth to endorse the organization by lending their names to it. Such people provide their reputations to NPs as collateral. It is the exposure of trustees to the potential loss of this collateral that enhances consumer and donor trust in NPs. This article expands these ideas and yields several results on the attributes of desirable and willing trustees.
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Directors on boards of nonprofit organizations can have additional director positions in other nonprofit organizations. When several of these interlocking directors exist for a group of nonprofit organizations, a board network is formed. We investigate to what extent similarity between organizations in terms of size, funding structure and operational activities relates to the presence of shared board members between organizations. For a network of 610 organizations we test and confirm that board networks are not formed at random, but that similarity of organizational characteristics explains interlocking behaviour, and that clusters of similar organizations exist within the overall nonprofit sector. Given this observation we propose three areas for further research. In particular we discuss opportunities regarding potential effects of network clustering, the causal direction of the relationship found, and the complementarity of the board network to other social networks in the nonprofit sector.
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For the past ten years the authors have conducted a concentrated research program on the dimensions and impact of the hollow state. The hollow state is a metaphor for the increasing use of third parties, often nonprofits, to deliver social services and generally act in the name of the state. The types of structures, incentives, and mechanisms used to control third-party providers have been the focus of this research. The empirical thrust of this research is on how effective various types of mechanisms, structures, and incentives are at promoting the effectiveness of contracted services. The normative question this research has raised, but not answered, is, What effect does government contracting with third-party providers have on the perceived legitimacy of the state? This article is a summary of the theoretical development and the empirical findings from the authors' research on the dimensions and impact of the hollow state in the domain of health and human services contracting. Elements of this article have appeared previously in this journal and in many others as well. The article's purpose is to integrate the authors' research on the hollow state. This is a summative article that seeks to bring together in one place what the authors have learned. In addition, new directions are explored for future research on the hollow state.
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Widespread government contracting for nonprofit social service delivery has resulted in extensive reliance on networks of service providers, which involve complicated accountability dynamics. The literature has tended to emphasize formal aspects of accountability in contract relationships, focusing on the specification of contract terms, performance measures, reporting relationships, and stipulated consequences. Far less attention has been focused on the interorganizational and interpersonal behaviors that reflect informal accountability. This article examines the informal norms, expectations, and behaviors that facilitate collective action and promote informal accountability among nonprofit network actors. The data are based on in-depth interviews with nonprofit senior administrators in four major metropolitan areas. Based on this research, the authors propose a preliminary theory of informal accountability that links (1) the shared norms and facilitative behaviors that foster informal accountability for collective outcomes, (2) the informal system of rewards and sanctions used to promote and reinforce behavioral expectations, and (3) the challenges that may undermine informal accountability.
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Public management scholars are interested in the ways that public managers can improve the performance of their organizations and, by extension, public service outcomes. However, public sector outcomes are increasingly being produced by nonprofit organizations. Nonprofits have encountered increased pressures to improve effectiveness in recent years, both from their funding entities and from the public. A growing body of public management research has shown that managerial networking can pay dividends for organizational effectiveness, yet no studies to date have considered the effects of managerial networking on nonprofit effectiveness. This is the first study to apply the basic elements of Meier and O'Toole's model to the nonprofit sector. Using survey data from a random sample of 314 nonprofit human service organizations in 16 U.S. states, the authors explore the frequency of various networking relationships on organizational and advocacy effectiveness. The findings reveal that political networking increases advocacy effectiveness and community networking increases organizational effectiveness.
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The paper examined the effects of nonprofit organizations' network ties over time on growth. Donative non-profits, which relied heavily on contributions and volunteers, grew at a faster rate if they had high status, more ties to urban elites, and greater interorganizational network centrality. In contrast, commercial nonprofits, which depended on fees and/or sales and employees, grew at faster rates if they had fewer ties to other nonprofits and local elites. Also, as nonprofits became more dependent on fees and/or sales, they moved to the periphery of the interorganizational resource exchange network. The findings contribute to the social capital literature by suggesting that networks are more beneficial to organizations that depend on donations and gifts than on earned income.
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Whether accounting measures of administrative efficiency affect donations is an important issue for nonprofit managers. Prior research is inconclusive. Some studies find a significant negative relation, whereas others find no significant relation. The authors investigate a variety of reasons for the prior divergent results. The evidence is consistent with donors reducing contributions to organizations reporting higher administrative expense ratios when the ratios are presumably most relevant and reliable. The authors suggest that certain prior studies failed to find significant associations largely because their samples contained many organizations for which the administrative ratios were unreliable or not helpful for donor needs. Model specification issues also affect prior studies but are less critical than sample composition. When the authors replicate prior studies on samples containing established, donation-dependent organizations with nontrivial amounts of fund-raising and administrative expenses, they generally detect a significant negative association.
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Philanthropic funders play an important role in human services--they support policy research and community services--but little is known about how they structure their funding or select grant recipients. Using personal interviews with Chicago-area foundation officials, this article documents how four types of philanthropic funders approach these decisions. The article shows that the grant process is constrained by how funders obtain their resources and govern themselves. It is also constrained by ongoing relationships between funders and grant recipients, reflecting pervasive task ambiguity and weakly institutionalized norms. The result is a grant award system that resembles a two-stage competitive process.
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This analysis of state social service contracts identifies sources of system instability and explores the impacts of instability on service delivery networks. The authors examine social welfare service contracts explicitly as networks and assess the effects of network instability on the management of contracts, contract effectiveness, the performance of network organizations, and clients. They offer observable patterns and detailed examples that indicate that instability imposes significant costs on service delivery networks—costs that impair organizational and network performance and that divert resources from services for vulnerable clients. The high costs associated with instability undermine arguments for more market-based service delivery.
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The term governance has been used in a variety of ways, but is most often presented as an attempt to improve coordination between relatively dependent actors for the purpose of solving societal problems. It involves the horizontal steering of relations across networks, and can certainly be viewed as a “growth industry”. This article describes the most important traditions in European governance network literature in the last 10 years, and highlights the different foci within the field, particularly between European and American researchers. Finally, the article outlines important research areas that are likely to dominate the field in the future.
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In the past decade, nonprofits scholars have given increased attention to the topic of vulnerability and organizational demise. An early contribution to this literature was Tuckman and Chang’s elaboration of four financial ratios that they believe could be used to predict financial vulnerability. These measures have largely escaped empirical tests. This research note describes a test of the Tuckman-Chang financial vulnerability measures among a population of nonprofit arts organizations. The article concludes that although the Tuckman-Chang measures do not have utility for all types of arts nonprofits, the measures nonetheless show substantial promise for predicting the closure of some nonprofit organizations.
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In this paper, I attempt to advance the concept of embeddedness beyond the level of a programmatic statement by developing a formulation that specifies how embeddedness and network structure affect economic action. On the basis of existing theory and original ethnographies of 23 apparel firms, I develop a systematic scheme that more fully demarcates the unique features, functions, and sources of embeddedness. From this scheme, I derive a set of refutable implications and test their plausibility, using another data set on the network ties of all better dress apparel firms in the New York apparel economy. Results reveal that embeddedness is an exchange system with unique opportunities relative to markets and that firms organized in networks have higher survival chances than do firms which maintain arm's-length market relationships. The positive effect of embeddedness reaches a threshold, however, after which point the positive effect reverses itself.
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Coordinating organizational activity across different sectors is crucial in disaster management. We analysed the response of 291 aid workers to the Haiti earthquake in 2010 and found that common incentives and a high degree of equality among aid organizations positively affected perceived network coordination. Large and public organizations were more likely to take leadership roles and high numbers of public organizations involved in the disaster response network led to improved network coordination. These results indicate the need for mechanisms that enable smaller and non-profit organizations to participate in network coordination and leadership.
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Network-focused research in public administration has expanded rapidly over the past two decades. This rapid growth has created come confusion about terminology and approaches to research in the field. We organize the network literature in public administration using compact citation networks to identify coherent subdomains focused on (1) policy formation, (2) governance and (3) policy implementation. We trace how these domains differ in their approach to defining the role of networks, relationships and actors and to what extent the articles apply formal network analysis techniques. Based on a subsequent content analysis of the sample articles, we identify promising research avenues focused on the wider adoption of methods derived from social network analysis and the conditions under which networks actually deliver improved results.
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In this book chapter we review and refine three important contributions on the assessment of small world characteristics for the particular context of board-director networks. Particularly, we deal with the importance of (1) network components, (2) degree distribution, and (3) reference assumptions for a proper small world interpretation of board-director networks. By discussing these network characteristics in the context of board-of-director networks, we better integrate methodological procedures with theoretical interpretations. We exemplify our methodological and theoretical suggestions with a sample of Belgian health care organizations.
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Notwithstanding its importance as an internal source of financing, no analysis has examined why nonprofits choose to retain unrestricted net assets. As restricted net assets might not be used as desired by the nonprofit manager, unrestricted net assets are a more accurate definition of available internal resources than total net assets. This article tests several theories that might motivate nonprofit accumulation of unrestricted net assets. Furthermore, the empirical strategy employed allows an analysis of unrestricted net asset accumulation over time and overcomes several significant statistical estimation issues. The results suggest that nonprofits target profits and seek their accumulation over time, although targets may be set at very low levels. Furthermore, the results suggest that the low levels of profits accumulated annually are for the purpose of reducing organizational financial vulnerability. The results also suggest that many nonprofits behave as if leverage and unrestricted net assets are substitutes.
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This is a review of argument and evidence on the connection between social networks and social capital. My summary points are three: (1) Research and theory will better cumulate across studies if we focus on the network mechanisms responsible for social capital effects rather than trying to integrate across metaphors of social capital loosely tied to distant empirical indicators. (2) There is an impressive diversity of empirical evidence showing that social capital is more a function of brokerage across structural holes than closure within a network, but there are contingency factors. (3) The two leading network mechanisms can be brought together in a productive way within a more general model of social capital. Structural holes are the source of value added, but network closure can be essential to realizing the value buried in the holes.
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To examine whether corporate giving had changed during the 1980s, I studied charitable contributions in Minneapolis-St. Paul, Minnesota in 1979-81 and 1987-89. There was no support for hypotheses that charitable contributions had decreased, became more tightly coupled to market position, or were less influenced by chief executive officers' social networks. In neither period did the percent of sales to consumers affect contributions; labor intensities had a weak negative effect in 1979-81 and a strong negative effect in 1987-89; and in both periods social network ties to local philanthropic leaders, company performance, and size were positively related to giving, while CEO ownership had a negative effect. Only when firms came under the control of a large outside investor was the effect of network position on contributions significantly weakened.
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Key Points · Using a broad group of family and independent foundations from a representative sample of Georgia foundations, the authors examined differences in giving patterns between family and independent foundations. · Findings confirm the result of previous work that studied large foundations. · There are no substantial differences between family and independent foundations’ preferences even when controlling for a nonprofit’s location and size. · These findings are relevant for discussions about the role of non-family members on boards.
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Key Points · Risk has not been treated in a systematic way that allows for a rich understanding of the extent to which foundations are, or should be, incorporating or evaluating risk in philanthropy. · In this article, we conceptualize and develop a tool to evaluate the levels of philanthropic risk that foundations maintain through their grant portfolios. · We create an index of aggregated risk at the portfolio level using several financial indicators based on previous theory and literature. Then, we test the index on a sample of foundations and their grantees in the state of Georgia and compare risk levels across community, corporate, family, independent, and operating foundations. · Our results show small differences in philanthropic risk levels when measured by financially oriented proxies between foundation types.
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Although public sector organizations have long been seen as driving the institutionalization of business firms and nonprofit organizations, government agencies themselves have only occasionally been studied as subjects of institutional pressures. This research examines whether public sector organizations, when compared with organizations in the business and nonprofit sectors, are more or less as susceptible to mimetic, normative, and coercive pressures. Using data from the National Organizations Study, we discover that governmental organizations are in fact more vulnerable to all three types of institutional forces than other organizations, whereas the effect of institutional variables on for-profits and nonprofits is more sporadic. The susceptibility of public sector organizations to institutional pressures raises important questions for the field of public administration and has consequences for nonprofits and business firms, which are funded and regulated by government.
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Boards of directors serve two important functions for organizations: monitoring management on behalf of shareholders and providing resources. Agency theorists assert that effective monitoring is a function of a board's incentives, whereas resource dependence theorists contend that the provision of resources is a function of board capital. We combine the two perspectives and argue that board capital affects both board monitoring and the provision of resources and that board incentives moderate these relationships.
The literature on nonprofit boards of directors is rich with prescriptive advice about the kinds of activities that should occupy the board's time and attention. Using organizational theory that has dominated the empirical investigation of private sector board behavior (agency, resource dependence, and institutional), this article contributes to the literature on nonprofit board governance in three important ways. First, it provides a link between theory and practice by identifying the theoretical assumptions that have served as the foundation for the "best practice" literature. Second, the article presents a theory-based framework of board behavior that identifies the environmental conditions and board/organizational considerations that are likely to affect board behavior. And finally, it offers a set of hypotheses that can be used in future empirical investigations that seeks to understand the conditions under which a nonprofit board might assume certain roles and responsibilities over others.
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This article divides financial issues into capacity and sustainability in two time frames: long and short. Long term emphasizes maintaining services; short term emphasizes resiliency. An organization's long-term financial capacity is sustainable if its rate of change is sufficient to maintain assets at their replacement cost. A key contribution of this study is a sustainability principle that gives managers short-term budget surplus targets needed to achieve this objective. The formulas are applied to national data to give a picture of the sector and establish benchmarks for “normal” practice. “Ordinary nonprofits” are active public charities without endowments that are not primarily membership associations or grant makers.
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Local governments do not stand alone-they find themselves in new relationships not only with state and federal government, but often with a widening spectrum of other public and private organizations as well. The result of this re-forming of local governments calls for new collaborations and managerial responses that occur in addition to governmental and bureaucratic processes-as-usual, bringing locally generated strategies or what the authors call "jurisdiction-based management" into play.
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We describe a methodology to examine bipartite relational data structures as exemplified in networks of corporate interlocking. These structures can be represented as bipartite graphs of directors and companies, but direct comparison of empirical datasets is often problematic because graphs have different numbers of nodes and different densities. We compare empirical bipartite graphs to simulated random graph distributions conditional on constraints implicit in the observed datasets. We examine bipartite graphs directly, rather than simply converting them to two 1-mode graphs, allowing investigation of bipartite statistics important to connection redundancy and bipartite connectivity. We introduce a new bipartite clustering coefficient that measures tendencies for localized bipartite cycles. This coefficient can be interpreted as an indicator of inter-company and inter-director closeness; but high levels of bipartite clustering have a cost for long range connectivity. We also investigate degree distributions, path lengths, and counts of localized subgraphs. Using this new approach, we compare global structural properties of US and Australian interlocking company directors. By comparing observed statistics against those from the simulations, we assess how the observed graphs are structured, and make comparisons between them relative to the simulated graph distributions. We conclude that the two networks share many similarities and some differences. Notably, both structures tend to be influenced by the clustering of directors on boards, more than by the accumulation of board seats by individual directors; that shared multiple board memberships (multiple interlocks) are an important feature of both infrastructures, detracting from global connectivity (but more so in the Australian case); and that company structural power may be relatively more diffuse in the US structure than in Australia.
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Government has come to rely on nonprofit organizations to deliver publicly funded human and cultural services, and it has become a significant donor to the nonprofit sector. When government agencies make grants to nonprofit organizations, administrative cost ratios are often requested, but it is not clear whether or how these ratios influence allocation decisions. Theoretical perspectives alternatively frame the administrative cost ratio as an indicator of price, with negative effects on allocations, or as an indicator of quality, with positive effects on allocations. The authors test these hypotheses using original state-level grants data from the state of Georgia. The results offer inconclusive evidence about whether the price or quality hypothesis explains government's use of administrative cost ratios in decisions regarding the amount of grant allocations. What drives government grant-making decisions remains an open and more complex question that involves a range of other variables that are independent of price and quality. The authors address this question in terms of policy and management implications and a future research agenda.
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This study examines structural embeddedness of political executives as an antecedent of policy isomorphism in municipalities. Surprisingly, little public management research investigates the institutional and structural backgrounds for decision making and action. This article argues that the social network of political executives constitutes a conduit in which information as well as expectations and pressures flow. The study uses rare full relational network data of Danish mayors to analyze expenditure allocation similarity, policy isomorphism, in municipalities. Results of quantitative analyses show that mayor network centrality is positively associated with municipal policy isomorphism. The effect is amplified when mayors have more political power or come from rural municipalities or ones with a smaller bureaucracy and fewer administrative professionals. The study contributes to public management literature with a multilevel framework showing how individual level networks of political executives can shape decision making and action in public organizations. The Author 2011. Published by Oxford University Press on behalf of the Journal of Public Administration Research and Theory, Inc. All rights reserved. For permissions, please e-mail: [email protected] /* */ © The Author 2011. Published by Oxford University Press on behalf of the Journal of Public Administration Research and Theory, Inc. All rights reserved. For permissions, please e-mail: [email protected] /* */
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In an era of privatization, government-nonprofit relations largely determine the face of social provision. Yet, little is known about the organizational factors that influence the receipt of government allocations by nonprofit human service organizations. This study examines how the institutional and ecological environments under which nonprofit human services operate along with the political and economic actions they take shape receipt of government funding. Using a probability sample of nonprofit human service organizations in Los Angeles County that were surveyed in 2002, hypotheses are tested with probit regression analyses. Results suggest that ecological factors and strategic actions play a role in receipt of government funding. Implications of the findings for issues of access to and availability of government resources are discussed.
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This study describes the interlocking networks of corporate directors serving on publicly listed corporate boards and those on the boards of nonprofit organizations in Western Australia in 2006. When this study was undertaken, the state was the beneficiary of a booming economy in resource development prior to the global financial crisis, yielding a substantial number of resource companies with their headquarters in Perth, the capital city of Western Australia. Through social network analysis using NetDraw, we trace the extent of interpersonal connections of prominent individuals who serve on these boards in this relatively isolated state in Australia. The network figures demonstrate the inner circle of companies and nonprofits with their interlocking directorships that suggest the growing interpenetration among the state, the market, and civil society. As a result of reduced government funding during the last two decades in Western Australia, nonprofit organizations have had to use market strategies to increase their revenues, which is one factor that has led to this greater interdependence between previously separate groups. Thus, market forces have blurred the boundaries that once separated private companies from nonprofit organizations, increasing the interlocking nature of their board directors.
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Since public networks became widespread, doubts have arisen over how to make them succeed. Scholars have traditionally addressed the issue in different ways, thus variously shedding light on the network structure, mechanisms, or managers as predictors of the network performance. The aim of our article is to explore the possibility of an interaction effect between the abovementioned factors. Our results show that there may be a relationship between network structure, mechanisms, and managers that jointly affects network performance. Therefore, important suggestions can be made about how to manage public networks successfully: (1) ensure that your network mechanisms and managerial abilities are coherent with the structure of your network; and (2) if you are in a well-established and integrated network, allow yourself some flexibility. Data were collected through a multiple case study that focused on collaboration for joint provision of home care services in Switzerland.
Chapter
This is a review of argument and evidence on the connection between social networks and social capital. My summary points are three: (1) Research and theory will better cumulate across studies if we focus an the network mechanisms responsible for social capital effects rather than trying to integrate across metaphors of social capital loosely tied to distant empirical indicators. (2) There is an impressive diversity of empirical evidence showing that social capital is more a function of brokerage across structural holes than closure within a network, bur there are contingency factors. (3) The two leading network mechanisms can be brought together in a productive way within a more general model of social capital. Structural holes are the source of value added, but network closure can be essential to realizing the value buried in the holes.
Article
Nonprofit organizations produce a range of goods and services from the purely public to the purely private. Within the two extremes fall a majority of their outputs. This article explores the question of what determines a nonprofit's mix of goods. It first develops a method to measure the product mix of charitable nonprofit organi zations. A testable model is then offered and applied to a national database consisting of tax returns filed with Internal Revenue Service by tax-exempt charitable nonprofits. The results indicate that the output mix can be explained by institutional characteristics, types of activity, and community-based factors. The article concludes with a discussion of whether, given the evidence, public subsidies to charitable nonprofits should be based on the outputs these entities produce.
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In the search for sustainability and stability, a central tenet of social entrepreneurship holds that revenue diversification is desirable. Business and nonprofit researchers have long argued that by establishing and maintaining multiple streams of funding, including some combination of earned income, government contracts, foundation and corporate grants, and individual contributions, organizations are able to avoid excessive dependence on any single revenue source, stabilize their financial positions, and thereby reduce the risk of financial crises or interruptions in funding. By studying a large sample of nonprofit organizations in the US, this paper investigates whether this basic claim about the desirability of revenue diversification is both correct and complete. Against the dominant trend in the literature that focuses on the risks of revenue concentration, we find that nonprofit organizations that have highly concentrated and specialized forms of revenue actually experience some significant benefits, in the form of lower administrative and fund-raising expenses. However, these savings are associated with greater exposure to swings in an organization's financial position. Based on our study of the broader world of nonprofit organizations, we conclude that social entrepreneurs likely face a more complex set of choices about the composition of their revenue than previous research has suggested.
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This article presents an alternative to Robert Putnam's explanation for the decline of social capital in America. The author suggests that the complex impacts of economic transformations—in particular, the destabilization of communities that results when corporate ownership is disconnected from place—have been unfairly dismissed by Putnam in his determination to link the decline in social capital to television and generational effects. The author's argument begins at the level of elite leadership, presenting evidence from Atlanta and other cities that demonstrates declining rates of elite engagement. This decline is logically connected to corporate delocalization and decreasing incentives for elites to mobilize communities to enhance place-based development. The author offers some informed speculation that nationwide mergers in the banking and utility industries are likely to lead to a further deterioration of elite commitment to civic participation. It is also suggested that elite withdrawal will have cascading consequences on the philanthropic sector and the community's ability to sustain a dynamic associational life.
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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 liter- ature. As boundaries between nonprofit governance and public governance are increas- ingly 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.