Within Source Diversification When the Going Gets Tough: Examining Alterations to Human Service Nonprofit Funding by Levels of Government

Government increasingly relies on nonprofit organizations to deliver public services, especially for human services. As such, human service nonprofits receive a substantial amount of revenue from government agencies via grants and contracts. Yet, times of crises result in greater demand for services, but often with fewer financial resources. As governments and nonprofits are tasked to do more with less, how does diversification within the government funding stream influence government-nonprofit funding relationships? More specifically, we ask: How do the number of different government partners and the type of government funder—federal, state, or local—influence whether nonprofits face alterations to government funding agreements? Drawing upon data from over 2,000 human service nonprofits in the United States, following the Great Recession, we find nonprofit organizations that only received funds from the federal government were less likely to experience funding alterations. This helps to illustrate the economic impact of the recession on state and local governments as well as the nonprofit organizations that partner with them.

Government-nonprofit funding relationships in human services: Differences in cost-reimbursement and fixed-cost agreements

Funding agreements are the legal foundation for government-nonprofit funding relations and specify the terms and expectations for both parties. Yet little attention focuses on the funding agreements themselves, which vary in structure, form, compensation arrangements, and amount of risk each party bears in the funding relationship. Using data on human service nonprofits in the U.S., we examine whether the type of funding agreement—cost-reimbursement versus fixed-cost—influence the reliability of government funding during the Great Recession and the level of engagement by nonprofit providers. We find those who bear the burden of the risk at the outset have less reliable funding during recessionary times and nonprofit providers with a flat amount agreement are less engaged with government funders. Findings have implications for public and nonprofit managers to carefully consider risks and relationships to implement effective funding agreements.

Conclusion

After summarizing the book’s main points and contributions, the concluding chapter proposes a way forward for achieving more just forms of sustainability. First, it reviews the three forms of environmental gentrification: green, industrial, and brown. Second, it recaps the book’s arguments about the paradoxes of nonprofit funding structures and participatory politics. Finally, it returns to post-Hurricane Sandy coalition-building. While this moment of middle-class precarity, political divisiveness and climate insecurity is giving rise to polarizing rhetoric and xenophobia, in everyday life, the increasing effects of climate change are also fostering new and surprisingly diverse political formations and solidarities. Rather than superficial and short-sighted sustainability initiatives, it is these kinds of coalitions, borne of crisis, that lie at the heart of our collective future.

“Democracy Has Left the Building”

Just as sustainability has come to serve as a euphemism for profit-minded redevelopment, public participation and community engagement have become a ritualized but ultimately empty performance of democracy and shared decision making. This chapter examines how environmental justice activists have navigated the nonprofit funding system and the constant pressure to participate in various forms of citizen engagement. These have included requests from academics wishing to further institutional missions that emphasize public engagement. They also included invitations to sit on steering committees, to attend countless public hearings, to submit public testimonies about new development projects, to participate in urban planning initiatives, and more. Activists have found that such activities drain their time and energy, siphoning it away from their long-term goals. Ultimately, rather than supporting democratic action, institutionalized forms of civic engagement have undermined democracy itself.

Controlling for Corporate Governance in Nonprofit Research

Using a large sample of nonprofit organizations in the United States reporting governance information on their IRS Forms 990, we develop and evaluate several different composite measures of nonprofit governance. These measures can be used to control for governance broadly in a variety of settings, including research that examines nonprofit funding, reporting quality, and executive compensation. Our results suggest that relatively basic indices perform as well as, and in some cases better than, more complex indices. In fact, when controlling for governance in the standard donations model, the collective evidence indicates that an index computed using the simple sum of five binary indicators (audit committee, majority independent board, no outsourcing, CEO salary review, and information available on website) performs best.

Conceptualizing the Active Audience: Rhetoric and Practice in “Engaged Journalism”

A constellation of journalistic tools, platforms, companies and nonprofit funding has recently emerged, promoting the idea that allowing the audience to contribute to the news agenda is a promising strategy to increase trust in journalism, create new revenue streams and foster community-building. Despite a growing body of research, however, two main issues remain currently unexplored: (1) the extent to which engaged journalism as a practice aligns with engaged journalism as a theoretical construct, and (2) the extent to which the audience assumptions underlying the pursuit of engaged journalism align with actual audience expectations and desires. This paper begins to address both of these issues by comparing how advocates of engaged journalism conceptualize the public’s interest in participating in journalism with observations of actual instances of that participation. We find that there is indeed a gap between engaged journalism theory and practice, which we attribute to a distinction between what engaged journalists believe audiences want from news and how those audiences actually behave. At the same time, we also find that institutional rigidity in newsrooms that leads to some reluctance with regard to making news production more collaborative.

Does Government Funding Make Nonprofits Administratively Inefficient? Revisiting the Link

There is widespread concern that government funding bureaucratizes nonprofits and causes them to be administratively inefficient. This study brings together contrasting streams of literature and hypothesizes a curvilinear relationship between government funding and nonprofits’ administrative efficiency. Using a longitudinal dataset of U.S. Agency for International Development (USAID)-registered nonprofits, we find evidence for this nonlinear effect. In particular, as the proportion of a nonprofit’s government funding increases, its reported administrative expense ratio will initially increase, but after the proportion reaches one third to two thirds of total revenue (depending on the estimation strategy used), further increases in government funding reduce the reported administrative expense ratio. Nonprofits may maintain a favorable level of operating efficiency with either a low level or a high level of dependence on government funding. Our work adds to the literature on government–nonprofit funding relationship and offers practical implications for nonprofit management.

Testing Nonprofit State Culture: Its Impact on the Health of the Nonprofit Sector

Government monitors, regulates, and funds nonprofit organizations, making it is a key player in the health of the nonprofit sector in the United States. However, not all states treat nonprofits similarly. Prior work identified three types of state nonprofit culture (Pettijohn, S. L., and E. T. Boris. 2017. State Nonprofit Culture: Assessing the Impact of State Regulation on the Government-Nonprofit Relationship. Grand Rapids, MI: ARNOVA Presentation.), or a unique set of attitudes and beliefs that shape the operating norms between state government and nonprofits. This article analyzes whether differences among state nonprofit culture are measureable in the government-nonprofit relationship. Using data from the Urban Institute’s 2013 Nonprofit-Government Contracting and Grants survey, we find there are significant differences in the government-nonprofit funding relationships, which means nonprofits operating in certain state nonprofit cultures face different types and degrees of risk to their organization’s overall health.