Public & Nonprofit Orgs
The Accumulation of Nonprofit Profits: A Dynamic Analysis.
Nonprofit and Voluntary Sector Quarterly 41(2): 300-324
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.
Testing Competing Capital Structure Theories of Nonprofit Organizations
Public Budgeting and Finance 31(3): 119-143
The static trade-off and pecking order capital structure theories are analyzed and applied to nonprofit organizations. In addition, this paper also considers how nonprofits adjust their leverage over time. The analyses consider the unique role of donor-restricted endowments in the decision to borrow, as well as different types of borrowing by nonprofits. The results indicate that nonprofit capital structure choices are best explained using the pecking order theory, in which internal funds are preferred over external borrowing. Further, nonprofit endowment is not found to increase leverage. Despite the unambiguous findings across varying definitions of leverage, the results also suggest that a “modified pecking order” is a more apt descriptor of nonprofit behavior.
On the folly of principals' power: Managerial psychology as a cause of bad incentives
Research in Organizational Behavior, 31, 25-41
Magee, Joe C., Gavin Kilduff, & Chip Heath.
Faulty and dysfunctional incentive systems have long interested, and frustrated, managers and organizational scholars alike. In this analysis, we pick up where Kerr (1975) left off and advance an explanation for why bad incentive systems are so prevalent in organizations. We propose that one contributing factor lies in the psychology of people who occupy managerial roles. Although designing effective incentive systems is a challenge wrought with perils for anyone, we believe the psychological consequences and correlates of higher rank within organizations make the challenge more severe for managers. Patterns of promotion and hiring typically yield managers that are more competent than their employees, and ascending to management positions increases individuals' workload and power. In turn, these factors make managers more egocentrically anchored and cognitively abstract, while also reducing their available cognitive capacity for any given task, all of which we argue limits their ability to design effective incentives for employees. Thus, ironically, those with the power to design incentives may be those least able to effectively do so. We discuss four specific types of bad incentive systems that can arise from these psychological tendencies in managers: those that over-emphasize compensation, generate weak motivation, offer perverse motivation, or are misaligned with organizational culture.
A Canary in the Mortgage Market? Why the recent FHA and GSE loan limit reductions deserve attention
Furman Center White Paper
Madar, J. & Willis, M.A.
On October 1, 2011, the maximum loan size eligible for Federal Housing Administration (FHA) insurance or a guarantee from Fannie Mae or Freddie Mac (known as "Government-Sponsored Enterprises" or "GSEs") dropped in dozens of metropolitan areas around the country. When this change took effect, a segment of the mortgage market in each of these areas instantly lost some or all federal backing. If enough borrowers seeking loans in this segment are unable to find financing, the result will be further downward pressure on the corresponding segment of the housing market. In this report, we use recent mortgage origination data to explore some of the possible implications of this policy change for the housing market and the U.S. mortgage finance system.
Climate Change Mitigation and Adaptation in North American Cities
Available on line January 7, 2011, Current Opinion in Environmental Sustainability, Vol. 3, 2011, pp. 181-187 doi:10.1016/j.cosust.2010.12.004
R. Zimmerman and C. Faris.
Climate change mitigation and adaptation action plans are developing at a rapid pace, being driven by both local initiatives and emerging alliances and support organizations that cut across multiple jurisdictions. These plans include a broad range of approaches, many of which are evolving into best or leading practices and which will be increasingly used as a model for the plans of other locales. This paper draws attention to several best practices in both mitigation and adaptation for North American cities, and also highlights many of the supporting alliances and groups that disseminate key practices and drive potential synergies. Additionally, it is noted that despite the increasing rate of plan development, a continuing need exists for increased attention to adaptation at the local level.
Microfinance and Social Investment
Financial Access Initiative, 2011
Conning, J. & Morduch, J.
This paper puts a corporate finance lens on microfinance. Microfinance aims to democratize global financial markets through new contracts, organizations, and technology. We explain the roles that government agencies and socially-minded investors play in supporting the entry and expansion of private intermediaries in the sector, and we disentangle debates about competing social and commercial firm goals. We frame the analysis with theory that explains why microfinance institutions serving lower-income communities charge high interest rates, face high costs, monitor customers relatively intensively, and have limited ability to lever assets. The analysis blurs traditional dividing lines between non-profits and for-profits and places focus on the relationship between target market, ownership rights and access to external capital.
Leading Change Step-by-Step: Tactics, Tools, and Tales
San Francisco: Jossey-Bass, Inc., January 2011.
Leading Change Step-by-Step offers a comprehensive and practical guide for leaders. This field-tested approach has been used successfully bot more than a decade in a wide variety of organizations including nonprofits, schools and districts, universities, public, and international agencies. The book is filled with proven tactics for implementing change successfully, with tools to put the tactics into practice, and common mistakes to avoid. Also included are stories of struggle and success that show how this approach has been used effectively in 22 states and internationally. The approach helps guide leaders through analyzing situations, ideitifying stakeholders, and working with them effectively to bring about the desired results.
Brandraising: How Nonprofits Raise Visibility and Money Through Smart Communications
In the current economic climate, nonprofits need to focus on ways to stand out from the crowd, win charitable dollars, and survive the downturn. Effective, mission-focused communications can help organizations build strong identities, heightened reputations, and increased fundraising capability. Brandraising outlines a mission-driven approach to communications and marketing, specifically designed to boost fundraising efforts. This book provides tools and guidance for nonprofits seeking to transform their communications and marketing through smart positioning, branding, campaigns, and materials that leverage solid strategy and great creative, with a unique focus on the intersection of communications and fundraising.
Pockets of Abundance: Building Leadership Capital for Social Change
Ospina, S., Dodge, J., El Hadidy, W., Foldy. E.G., Hofmann-Panilla, A. & Su, C.
Re-creating Street Level Practice: The Role of Routines, Work Groups and Team Learning
Journal of Public Administration Research and Theory
Foldy, E.G. & Buckley, T.R.
Ample research documents the ubiquity of routines in street-level practice. Some individual-level and organizational-level research has explored how to break street-level routines, but little has looked at the work group level. Our study observed teams of state child welfare workers over 2.5 years, documenting whether they discarded old routines and learned new ones. Results suggest that team characteristics such as clear direction and reflective behaviors had greater influence on team learning than individual characteristics such as stress level, tenure, and educational level. We suggest that group-level factors be included in future models of what enables the re-creation of street-level practice.
Microfinance Meets the Market
February Journal of Economic Perspectives 23(1), Winter: 167-192.
Morduch, J., Cull, R. & Demirguc-Kunt, A.
In this paper, we examine the economic logic behind microfinance institutions and consider the movement from socially oriented nonprofit microfinance institutions to for-profit microfinance. Drawing on a large dataset that includes most of the world's leading microfinance institutions, we explore eight questions about the microfinance "industry": Who are the lenders? How widespread is profitability? Are loans in fact repaid at the high rates advertised? Who are the customers? Why are interest rates so high? Are profits high enough to attract profit-maximizing investors? How important are subsidies? The evidence suggests that investors seeking pure profits would have little interest in most of the institutions we see that are now serving poorer customers. We will suggest that the future of microfinance is unlikely to follow a single path. The recent clash between supporters of profit-driven Banco Compartamos and of the Grameen Bank with its "social business" model offers us a false choice. Commercial investment is necessary to fund the continued expansion of microfinance, but institutions with strong social missions, many taking advantage of subsidies, remain best placed to reach and serve the poorest customers, and some are doing so at a massive scale. The market is a powerful force, but it cannot fill all gaps.
The Stafford Act and Priorities for Reform
Journal of Homeland Security and Emergency Management. Berkeley Electronic Press, Vol. 6, issue 1: Article 13
Moss, M., Schellhamer, C. & David A Berman.
During the past fifty years, federal disaster policy in the United States has been shaped by an ongoing conflict between proponents who favor federal intervention following a disaster and those who believe disaster response should be the responsibility of state and local governments and charity. This article explores the existing federal disaster policy landscape within the United States with a focus on the Stafford Act, the cultural and political forces that produced it, and how the current system is ill equipped to aid in the response and recovery from major catastrophes. The Stafford Act defines how federal disasters are declared, determines the types of assistance to be provided by the federal government, and establishes cost sharing arrangements among federal, state, and local governments. The Federal Emergency Management Agency (FEMA) carries out the provisions of the Stafford Act and distributes much of the assistance provided by the Act. With the establishment of the U.S. Department of Homeland Security, the threat of domestic terrorism, and large-scale natural disasters like Hurricane Katrina, the limits of the Stafford Act and FEMA have been shown. We look at several areas where the shortcomings of the Stafford Act have emerged and propose directions for reform.
Public Opinion toward Legislating for the Future: An Update
Policy Report for New York University's Brademas Center for the Study of Congress,
The past two years have been unsettled at best for Congress. Public approval toward Congress remains low, legislative debates have been contentious, polarization remains high, and Congress has a mixed record in dealing with major long-term issues such as Social Security and Medicare. The State Children's Health Insurance program has been delayed awaiting a compromise that might expand coverage, immigration reform has been waylaid by the intensity of opposition across the party lines, energy reform was diluted by ongoing disputes about how to reduce the nation's dependence on foreign oil, and the war in Iraq continues to dictate the pace of major legislative debates.
Looking a Gift Horse in the Mouth: Challenges in Managing Philanthropic Support for Public Services
Public Administration Review, Special Issue.
Brecher, C. & Wise, O.
Collaborations between nonprofit and public sector organizations have become an increasingly important phenomenon in state and local public service delivery since the publication of the Winter Commission report in 1993. This article focuses on one of the less studied types of public–nonprofit collaborations, those in which philanthropic support from nonprofit organizations supplements the resources and activities of public agencies. Drawing on the case of "nonprofit-as-supplement collaborations" that support park services in New York City, this article documents the benefits and drawbacks associated with such collaborations. While they can provide increased resources and encourage management innovations, they also can lead to inequities in the availability and quality of services, the preponderance of particularistic goals over the broader public interest, and the politicization of previously bureaucratic decision making. The authors offer two strategies for public managers to realize more effectively the benefits yet mitigate the shortcomings of these collaborations.
Idealist Guide to Nonprofit Careers for Sector Switchers
Contributor to Idealist Guide to Nonprofit Careers for Sector Switchers. By S. Pascal-Joiner and M. Busse. Action Without Borders.
Idealist Guide to Nonprofit Careers for First-time Job Seekers.
Contributor to Idealist Guide to Nonprofit Careers for First-time Job Seekers. By M. Busse and S. Pascal-Joiner. Action Without Borders.
Financial Management for Public, Health, and Not-for-Profit Organizations, 3rd Edition
Prentice Hall, Upper Saddle River, NJ.
The Measurement of Output Quality in US Nonprofit Organizations
Italian Statistical Association.
Italian Statistical Association, 1999.
Sustaining Innovation: Creating Nonprofit and Government Organizations that Innovate Naturally
Any organization can innovate once. The challenge is to innovate twice, thrice, and more?to make innovation a part of daily good practice. This book shows how nonprofit and government organizations can transform the single, occasional act of innovating into an everyday occurrence by forging a culture of natural innovation.
Filled with real success stories and practical lessons learned, Sustaining Innovation offers examples of how organizations can take the first step toward innovativeness, advice on how to survive the inevitable mistakes along the way, and tools for keeping the edge once the journey is complete.
Light also provides a set of simple suggestions for fitting the lessons to the different management pressures facing the government and nonprofit sector. Unlike the private sector, where innovation needs only to be profitable to be worth doing, government and nonprofit innovation must be about doing something worthwhile. It must challenge the prevailing wisdom and advance the public good. Sustaining Innovation gives nonprofit and government managers a coherent, easily understood model for making this kind of innovation a natural reality.
Some Reflections On A Few Of The Pitfalls In The World Of Foundation Grant Making
Health Affairs, Nov/Dec 2007, Vol. 26 Issue 6, p1772-1775, 4p.
This paper offers some reflections on the grant-making process from a former foundation executive. Some of the opportunities, challenges, and pitfalls inherent in the foundation world are described, and one approach to grant making, the "call for proposals," is examined as an example of the need for greater attention to and investment in the science of grant making itself, to maximize the potential return from philanthropy.