Public & Nonprofit Orgs

Flying under the radar? The state and the enforcement of labor laws in Brazil

Flying under the radar? The state and the enforcement of labor laws in Brazil
Oxford Development Studies

Coslovsky, Salo
09/16/2013

In recent years, developing countries have deregulated, privatized and liberalized their economies. Surprisingly, they have also retained or even strengthened their labor regulations. These contrasting policy orientations create a novel challenge without obvious solutions. To understand how developing country states can ensure reasonable levels of labor standards without compromising the ability of domestic firms to compete, this paper examines how labor inspectors and prosecutors intervened in four troublesome industries in Brazil. It finds that regulatory enforcement agents use their discretion and legal powers to realign incentives, reshape interests, and redistribute the risks, costs and benefits of compliance across a tailor-made assemblage of public, private and non-profit agents adjacent to the violations. By fulfilling this role, these agents become the foot-soldiers of a post-neoliberal or neo-developmental state.

Beyond Foundation Funding: Revenue-Generating Strategies for Sustainable Social Change

Beyond Foundation Funding: Revenue-Generating Strategies for Sustainable Social Change
RCLA Report; February 2013

Jennifer Dodge, Amparo Hofmann-Pinilla, Angela Beard and Caitlin Murphy
02/05/2013

As social change organizations diversify their funding to be less reliant on foundations, they are finding creative ways to adapt traditional strategies and experiment with new ones. This report from RCLA and the Mertz Gilmore Foundation offers specific revenue-generation strategies and examples of nonprofits putting them into practice to offer immediate, actionable guidance for social change organizations, funders and technical assistance providers.

Employee Benefit Financing and Municipal Bankruptcy

Employee Benefit Financing and Municipal Bankruptcy
Journal of Government Financial Management 62(1): 12-19.

Ives, Martin and Thad Calabrese
01/01/2013

Five municipalities with populations over 100,000 have declared bankruptcy since 2008, as have some smaller ones, including Central Falls, RI, in 2011. The bankruptcies have unsettled citizens, current and retired employees, and creditors of the governments involved; further, the apparent increasing willingness of municipal officials to file for bankruptcy has raised concerns nationwide. Municipal bankruptcy is exceedingly rare. Only 650 US Bankruptcy Code Chapter 9 municipal bankruptcy cases were filed between 1937 and 2012; by contrast, 2009 alone saw more than 11,000 Chapter 11 corporate reorganization filings. The bankruptcy of Central Falls shows what can happen when systematic underfunding of employee benefit promises runs into a weak, declining economy. Central Falls is a relatively poor municipality. The consequences of bankruptcy can be severe for citizens, employees and creditors. As the current bankruptcy filings unfold in the courts, there is growing alarm among those concerned with government finances regarding the impact of bankruptcy on future borrowing costs and on the safety of employee benefit promises.

Running on Empty: The Operating Reserves of US Nonprofit Organizations

Running on Empty: The Operating Reserves of US Nonprofit Organizations
Nonprofit Management & Leadership 23(3): 281-302.

Calabrese, Thad.
01/01/2013

Operating reserves allow nonprofit organizations to smooth out imbalances between revenues and expenses, helping to maintain program output in the presence of fiscal shocks. We know surprisingly little about why nonprofits might save operating reserves and what factors explain variation between organizations' savings behavior. Findings suggest that operating reserves are reduced in the presence of concentrated public funds, access to debt, fixed assets, and endowment. However, size is not an important predictor, indicating that the lack of reserves is not limited to small nonprofit organizations but is instead a sectorwide issue. Significant numbers of nonprofits maintain no operating reserves at all. One potential explanation is that organizations discount the benefits of reserves because they are evaluated on spending, focusing instead on the “benefits of costs.” This preference for spending over reserving may also help explain the general lack of liquidity in the sector beyond operating reserves alone.

Do Federally Assisted Households Have Access to High Performing Public Schools?

Do Federally Assisted Households Have Access to High Performing Public Schools?
Poverty & Race Research Action Council

Ellen, Ingrid Gould and Horn, Keren Mertens.
11/01/2012

A family’s housing unit provides more than simply shelter. It also provides a set of neighborhood amenities and a package of local public services, including, most critically, a local school. Yet housing and education policymakers rarely coordinate their efforts, and there has been little examination of the schools that voucher holders or other assisted households actually reach. In this project we describe the elementary schools nearest to households receiving four different forms of housing assistance in the country as a whole, in each of the 50 states, and in the 100 largest metropolitan areas.We compare the characteristics of these schools to those accessible to other comparable households. We pay particular attention to whether voucher holders are able to reach neighborhoods with higher performing schools than other low-income households in the same geographic area.

 

In brief, we find that assisted households as a whole are more likely to live near low-performing schools than other households. Surprisingly, Housing Choice Voucher holders do not generally live near higher performing schools than households receiving other forms of housing assistance, even though the voucher program was created, in part, to help low-income households reach a broader range of neighborhoods and schools. While voucher holders typically live near schools that are higher performing than those nearest to public housing tenants, they also typically live near schools that are slightly lower performing than those nearest to households living in Low Income Housing Tax Credit (LIHTC) and Projectbased Section 8 developments and lower performing than those nearest to other poor households.

Performance Measurement and Evaluation Systems: Institutionalizing Accountability for Governmental Results in Latin America

Performance Measurement and Evaluation Systems: Institutionalizing Accountability for Governmental Results in Latin America
In S. Kushner & E. Rotondo (Eds.), Evaluation voices from Latin America. New Directions for Evaluation, 134, 77–91.

Cunill-Grau, N., & Ospina, S. M.
06/08/2012

Results-based performance measurement and evaluation (PME) systems are part of a global current in public administration. In the Latin American context, this trend is also a reflection of the broader processes of reform of the latter half of the 20th century, including the modernization of public administration, as well as broad processes of decentralization and democratization, both of which are dimensions of development in Latin America, regardless of the political and ideological orientation of specific governments. This chapter documents the development of such evaluative approaches to organizational quality and raises some issues for further discussion.

Debt, Donors, and the Decision to Give

Debt, Donors, and the Decision to Give
Journal of Public Budgeting, Accounting, and Financial Management, volume 24, no. 2: 221-254

Calabrese, Thad, Grizzle, C.
06/01/2012

There has been a significant amount of work done on the private funding of nonprofits. Yet, despite the enormous size of the nonprofit sector as a whole, the importance of private donations to the sector, and the significance of the sector to public finances, there has been very little empirical research done on the capital structure of nonprofit organizations, and none has examined the potential effects of borrowing on individual contributions. Debt might affect donations because programmatic expansion might “crowd-in” additional donors, the use of debt might “crowd-out” current donors since expansion is undertaken at the behest of the organization (and not due to donor demand for increased output), donors might have a preference for funding current output rather than past output, or because of concerns that the nonprofit will be unable to maintain future programmatic output. These potential effects of debt on giving by individuals have not been the focus of research to date. The primary data for this paper come from the “The National Center on Charitable Statistics (NCCS)-GuideStar National Nonprofit Research Database” that covers fiscal years 1998 through 2003. The digitized data cover all public charities required to file the Form 990. The final sample contains 460,577 observations for 105,273 nonprofit entities. The results for the full sample support a “crowding-out” effect. The analysis is repeated on a subsample of nonprofits more dependent upon donations, following Tinkelman and Mankaney (2007). The restricted sample contains 121,507 observations for 36,595 nonprofit organizations. The results for the subsample are more ambiguous: secured debt has little or no effect, while unsecured debt has a positive effect. The empirical analysis is then expanded to test whether nonprofits with higher than average debt levels have different results than nonprofits with below average debt levels. The results suggest that donors do remove future donations when a nonprofit is more highly leveraged compared to similar organizations.
Nonprofits may fear that the use of debt signals mismanagement or bad governance, worrying that donors will punish the organization by removing future donations. The results presented here suggest a more complicated relationship between nonprofit leverage and donations from individuals than this simple calculus. On the one hand, increases in secured debt ratios (from mortgages and bonds) seems to reduce future contributions, possibly because donors are wary of government or lender intervention in the nonprofit’s management, or possibly because of the lack of flexibility inherent in repaying such rigid debt. On the other hand, unsecured debt, while more expensive, seems to crowd-in donations, even at increasingly higher levels when compared to similar organizations. There are at least two important conclusions from this analysis. First, during times of fiscal stress, nonprofits are often tempted to use restricted funds in ways inconsistent with donor intent simply to ensure organizational survival. Rather than violate the trust of certain donors, the results here suggest that nonprofits would be better off utilizing unsecured (possibly short-term) borrowing to smooth out cash flow needs. This option, however, assumes that nonprofits have access to some type of borrowing which is not true for many organizations. A second conclusion one might draw, therefore, is that policy considerations should be made to expand access to debt for nonprofits. The results here suggest that certain types of unsecured debt might in fact draw in additional resources, allowing nonprofits to leverage these borrowings for additional resources. By encouraging this type of policy option, nonprofits would not only gain access to increased revenue sources, but might be able to maintain programmatic output during times of fiscal stress.

The Accumulation of Nonprofit Profits: A Dynamic Analysis.

The Accumulation of Nonprofit Profits: A Dynamic Analysis.
Nonprofit and Voluntary Sector Quarterly 41(2): 300-324

Calabrese, Thad.
04/15/2012

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.

Alternative Service Delivery: Does Nonprofit Financing Influence State Tax Burden?

Alternative Service Delivery: Does Nonprofit Financing Influence State Tax Burden?
The American Review of Public Administration March 2013 vol. 43 no. 2 200-220, doi: 10.1177/0275074012439745

Carroll, Deborah A. and Thad Calabrese.
04/12/2012

We analyze panel data of U.S. states to determine whether nonprofit contribution and program service revenues are correlated with state tax burden. State tax burden is modeled as a function of (a) state tax policy, (b) nontax policy factors that affect state income, and (c) other exogenous factors that are independent of state tax policy and do not directly induce income; regression results reveal correlations with variables in all three categories. Intergovernmental revenue (IGR) paid to local governments, debt burden, tax exporting, a tax revenue limitation, and nonprofit revenue are most consistently correlated with state tax burden. Financial support for nonprofits in the form of contributions helps to reduce state tax burden and does so at a meaningful level. This finding implies nonprofits provide goods and services that are supplementary to government provision. However, the supplementary nature of nonprofit service provision is not universal. Further analysis of contribution and program service revenues for nonprofits in particular service categories finds either no correlation with state tax burden, a reduction in state tax burden, or an increase in tax burden imposed on state residents over time. By controlling for factors influencing demand for service provision and state tax policy changes, the regression results also provide evidence that government acts as a free rider.

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