This research analyzes the concept of financial vulnerability of nonprofits in depth. We review the definitions given by the prior literature, concluding that none of them is complete. We propose a definition in which financial vulnerability consists of three dimensions: operational (variation of net assets over time), leverage (relationship between total assets and debt), and liquidity (ratio of current assets to short-term debt). We use a sample of 212 Non-Governmental Development Organizations (NGDOs) from the United Kingdom to analyze these measures, observing a limited number of nonprofits simultaneously classified as vulnerable according to the different traditional concepts. Applying our proposed multidimensional model, we find that 6 % of the sample is highly financially vulnerable according to the three dimensions, and a high proportion (18 %) of nonprofits is simultaneously vulnerable in leverage and liquidity dimensions. Finally, we compare the obtained results using traditional variables and those derived from our model.

Taking a unified approach to studying nonprofit financial health, this research tackles a key question that has remained unexplored in the literature: “What lies at the intersection of the two key dimensions of financial health–financial stability and financial growth?” Specifically, we identify and compare nonprofits that exhibit high levels of financial stability and growth (high financially performing) to those that exhibit low levels (low financially performing)? Overall, we find that high financial performers (HFPs) tend to be older and larger organizations (in terms of unrestricted net assets and total revenue). HFPs are also more likely to report capital assets, and report high levels of compensation. Finally, HFPs tend to contain their overhead spending by exercising efficiency by investing in talented officers (paying more than the rest), but limiting the share of officer compensation, administrative, and fundraising expenses, as a percentage of total expenses. The results of the study should be informative to stakeholders attempting to understand the profile of an organization that is successfully able to achieve both capacity growth and financial stability.

The majority of studies discussed the existence of a trade-off between financial performance and outreach, pointing out those MFIs that look for higher profits lead to lower outreach. Another stream of research discussed the phenomena of mission drift, which see MFIs leave from their social mission, which is to provide micro financial services to break the cycle of poverty by reducing financial exclusion and move away from the traditional microcredit business model by three different ways. The paper contribute to the debate focussing the impact of mission drift phenomena on both financial performance and outreach of MFIs. This paper uses a dataset of 194 microfinance institutions (MFIs), 788 annual ratings from 2001 to 2010, collected by MicroFinanza Rating, an international MFIs’ rating agency, to study and test three hypotheses on the relationship between mission drift, financial performance and outreach of MFIs. Data analysed with mixed effect regressions shows that a trade-off exist between financial performance and outreach. Results show that mission drift positively impacts on financial performance but it reduces outreach. MFIs should be encouraged to clearly define if their main aim is to assure remuneration of shareholders or if they want to contribute to the outreach of poor.

The article takes an in-depth look at the experiences Australia and Canada have had dealing with issues related to the funding and financial regulation of the third or ‘private, non-profit’ sector of broadcasting. Through the analysis of these experiences, recommendations are extracted aimed at providing policy makers and stakeholders from other jurisdictions guidance regarding how to deal with these issues.

Research on the determinants of foreign aid tends to focus on the relationship between donor country priorities and recipient state characteristics, but donors also make decisions about which organizations and programs within countries will receive assistance. Although NGOs increasingly have been recipients of foreign aid, few data are available to investigate which organizations within a given country receive that funding. Donors may prioritize structural characteristics of NGOs or their local ties—or they may seek a combination that blends concern about efficiency and accountability with an interest in developing national civil society. We use original data from Cambodia to explore whether aid is likely to go to managerial organizations (professionalized NGOs and NGOs that utilize modern management tools) or to organizations that are embedded in the domestic context. We argue that managerialism provides legitimacy for NGOs by signaling capacity and accountability to donors, increasing the likelihood of government funding. We argue that local embeddedness also confers legitimacy by aligning community ties and networks to rights-based development, increasing the likelihood of government funding. We find general support for the managerialism argument, but donor agencies do not prioritize direct funding for “indigenous” NGOs—not even among those with high levels of managerialism.

This article explores how fundraising efficiency is affected by changes in diversification of revenues in non-profit organizations. It uses random effect regression and Arellano–Bond models to study this phenomenon in a sample of 10358 US non-profits during the 1997–2007 period. We find a negative impact on fundraising efficiency when NPOs alter their locus of dependence and change their pattern of diversification. This effect is impacted by organizational size and industry. Previous studies have suggested that income heterogeneity is associated with organizational stability and financial strength. Using a change (versus level) model of funding diversity, our work shows that increased diversification leads to a higher operational inefficiency that could be penalized by potential donors.

The influence of the state policy agenda though a neo-liberal contracted funding environment is redefining the boundaries of the third sector through a process of hybridisation. Hybridised organisations adapt to possess characteristics and logics of multiple sectors (public, private or community). Increasing hybridity within the New Zealand community and voluntary sector has resulted in a perceived dichotomy separating organisations that adapt to these challenges from those that resist. In this paper, we apply a hybridity lens to seven community development organisations, who have predominantly resisted marketisation and alignment with the state policy agenda, to assess the extent of their hybridity and how this has impacted on their place in the community and voluntary sector and access to funding opportunities available from the state.

In order to assess the accuracy of the figures reported in NPOs’ financial statements, I perform a digital analysis on Belgian non-profit organizations’ financial statements for accounting years 2007 up to 2012. Specifically, I compare observed frequencies for digits in the second-from-the-left position with expected frequencies based on Benford’s Law. Results based on the full sample indicate that observed frequencies strongly conform to Benford’s Law (and thus suggest a high degree of accuracy of the figures reported in NPOs’ financial statements). Nevertheless, I note statistically significant deviations from Benford’s Law (both for the entire distribution and at the individual digit level). The largest deviation is noted for zeroes in the second position (i.e., a significantly positive deviation), which can be explained based on humans’ reliance upon so-called cognitive reference points. Considering different sub-samples, I note that observed deviations from Benford’s Law are largest for the smallest non-profits and those non-profits that rely most heavily on grants and/or donations.

This review surveys the state of research on nonprofit communication and collects and summarizes the resulting advice for nonprofit communication practice. The citations of research papers since 2000 were collected from standard bibliographic databases and selected bibliographies. The resulting collection of papers was summarized and synthesized into relevant themes and organized into five broad categories: (1) strategic planning, (2) management, (3) development, (4) outreach, and (5) accountability. From these broad themes, comparisons and contrasts arise between the research and current practice of nonprofit communications.

The proliferation of nongovernmental organizations (NGOs) since the 1970s has generated a wealth of research as to the causes and implications of the rise of this sector. Public awareness of NGOs and their activities has grown as well, at least in part due to increased media coverage of the organizations and the situations to which they respond. Although NGOs are not new to global polity, media attention to them as a sector only really began to take off in the 1990s. Using quantitative and qualitative analysis of two international newspapers from 1985-2010, this study explores the legitimation process of NGOs and examines the role of categorization and labeling in this process. The results show that the establishment of a distinct label in the media served to propel cognitive recognition of NGOs, and that media coverage reflects changes in cognitive legitimacy over time.

In recent years, INGO legitimacy has been subject to growing scrutiny from analysts and practitioners alike. Critics have highlighted a backlash against INGOs in the Global South, a growing mismatch between INGO capacities and contemporary global challenges, and diminishing support for norms such as democracy and human rights that underpin INGOs’ work. Although these problems have attracted significant attention within the academic literature, this article argues that existing explorations of INGO legitimacy have broadly conformed either to a top-down approach focused on global norms and institutions or a bottom-up approach focused on the local dynamics surrounding states and populations in the Global South. We suggest that this divide is unhelpful for understanding the current predicament and propose a new approach, which pays closer attention to the interaction between bottom-up and top-down dimensions, and to historical context. This new approach can provide important insights into current debates about the future roles and internal structures of INGOs.

This study examined how 43 nonprofit leaders across 15 U.S. states make sense of organizational crises in nonprofit contexts, as well as what they think effective leadership is during crises. Findings revealed perceived nonprofit organizational crises emerging from disasters, disruption of mission delivery, internal stakeholder challenges, and unanticipated occurrences, while six major characteristics of effective crisis leadership emerged including being a team player, being strategic, being transparent with stakeholders, being quick to respond, being self-composed, and being prepared. Comparisons to previous empirical investigations of nonprofit leadership and crisis response yielded additional insights into effective crisis leader sensemaking in nonprofit contexts—most notably that nonprofit crisis leaders leverage sensegiving frameworks of instrumental knowledge, normalcy, and dynamic learning. Further analysis demonstrated these diagnostic and prognostic sensegiving activities to be more clearly observed than motivational sensegiving activities across crisis leaders in nonprofit contexts.

This study explores which governance practices nonprofit leaders consider necessary to avoid organizational crises. Further, it explores whether these leadership mental models of crisis resistance depend on the organizational context. This helps determine whether practical learning points are organization specific or can be applied broadly. With a multilevel sample of 304 leaders from 44 Belgian nongovernmental development organizations, an exploratory path analysis reveals that nonprofit leaders consider continuous improvement, as a governance practice, particularly relevant for effective organizational crisis resistance. A multilevel analysis also shows that variations in leadership mental models cannot be explained by the organizational variables used in this study (organizational size, leadership group size, operational activities, and languages in the leadership group). This article concludes with a discussion of consequences for further research.

Managerialism is today a frequently applied concept in studies of how ideas and practices related to corporate management are diffused in society. Some assert that managerialism even is what mostly affects the development of contemporary civil society organizations. It is, however, far from clear how the concept of managerialism is used and defined across interest fields. The main conclusion in the present review, involving 105 peer-reviewed articles in civil society studies published between 1990 and 2014, is that the concept of managerialism is so broadly defined that it runs the risk of losing its analytical powers. To avoid this, the paper argues for a more precise conceptual use and suggests that the concept of managerialism should be applied to denote an ideology, the concept of management to capture managerial practices, and the concept of managerialization to describe an organizational change process.

Investments to build nonprofit organizational capacity have increased rapidly in recent years as both funders and nonprofits seek ways to improve performance. Yet, while research has elucidated the variety of capacity areas organizations generally depend on, we do not yet have a clear empirical understanding of which capacity areas are important to focus on developing or how these capacity needs vary across organizations. Using a life-cycle perspective and extensive data on 71 human service organizations, we examine the relative strength of ten capacity areas at different stages of the nonprofit life-cycle. Findings contribute greater empirical grounding for research on organizational capacity development and have implications for researchers, managers, and funders interested in nonprofit capacity building.

The purpose of this paper is to present and develop a firmer grasp of the underlying dimensions of organizational capacity in nonprofit human service organizations. The paper draws on the resource-based view of the organization (Barney et al. in Journal of Management 37:1299, 2011; Wernerfelt in Strategic Management Journal 5:171, 1984), which recognizes that organizational attributes and capabilities facilitate performance. Interviews were conducted with 66 executives in moderate sized, human service organizations to discuss factors that influence performance. Findings suggest that human, financial, and social capital all contribute to organizational performance. Executives emphasized the quality of people associated with the organization including the role of the board of directors in supporting performance. Many respondents also believed that maintaining healthy and dynamic external relationships was critical to success.

Using a multilevel analysis including 207 volunteers and paid workers nested within 51 nonprofit organizations (NPOs), this study examines the effect of individual and group attitudinal and behavioral commitment on their assessment of organizational effectiveness. Drawing on classical attitude theories, our results indicate that individuals with higher affective organizational commitment tend to assess their NPO’s effectiveness higher, while individuals staying because of the lack of alternatives assess it lower. However, in line with behavioral commitment theories, both relationships are mediated by the effect of teamwork behavioral commitment. We also found a negative effect of normative attitudinal commitment partially nested at the group level. Overall, our results suggest that encouraging volunteers and paid workers to participate in concrete teamwork behaviors on a daily basis constitutes a twofold benefit: it adds to the effect of affective attitudinal commitment at the individual level, while counter balancing the negative effects related to normative individual and collective resistances.

This study draws an economic model of the growth of nonprofit organizations by analyzing the behaviors of three major actors—nonprofit organizations, private donors, and governments—in making decisions on the allocation of limited resources for nonprofit services. Since decisions made by each actor affect resource allocation, it is important to understand what drives these decisions. The model was tested using an unbalanced, 463 panel dataset collected from 28 OECD countries over a 23-year period. The results indicated that macro- and micro-economic trends and government policies framed the decision premises of the three major actors, which led them to leverage the supply and demand for goods and services and, in turn, determined how they allocated limited resources for nonprofit services. This result implies that understanding the interdependencies of all sectors of the economy is critical to comprehending the size and development of the nonprofit sector. Effective management of micro-economic policies and macro-economic stability is necessary. More important, however, is understanding how a decision in one part of the economy will have intended and unintended effects on the nonprofit sector.