Academic journal article Public Administration Review

Organizational Characteristics and Funding Environments: A Study of a Population of United Way-Affiliated Nonprofits

Academic journal article Public Administration Review

Organizational Characteristics and Funding Environments: A Study of a Population of United Way-Affiliated Nonprofits

Article excerpt

In recent decades, we have witnessed dramatic changes in the institutional configuration of human-service provision in the United States (Kramer 1981; Salamon 1995). While government and nonprofit organizations share deep historical roots (Hall 1987; Salamon 1995; Smith and Lipsky 1993), these two sectors operated relatively autonomously prior to the mid-1960s: A large public system supported by tax revenues provided basic human services to the needy, and a smaller private system supported by philanthropic donations delivered services to more specialized populations. Today, however, the majority of human services are provided by private organizations, most of which are nonprofits for whom government funds have become the principal source of revenues (Salamon 1995). This transformation has dominated recent scholarly discourse on the welfare state. Researchers have introduced new terms such as "third-party govemment" (Salamon 1987), "enabling state" (Gilbert and Gilbert 1989), "the shadow state" (Wolch 1990) and the "contracting regime" (Smith and Lipsky 1993) to capture manifestations of the institutional shift toward publicly funded but privately delivered human services.

The substantial transformation of social-welfare policy that is currently under way in the United States, as well as the devolution of government responsibilities to local levels and more general downsizing, is having profound effects on the funding environments in which human-service organizations are embedded (Gronbjerg 1993; Salamon 1995). The purpose of our research is to more fully understand interactions between funding environments and particular organizational characteristics. While research has examined the effects of heightened interdependence between public agencies and nonprofit organizations (see Bernstein 1991; Gronbjerg 1993; Harlan and Saidel 1994; Hartogs and Weber 1978; Kramer 1981; Saidel 1991; Smith and Lipsky 1993; Stone 1996), the present study extends the inquiry in several ways:

* The study tests hypotheses generated by previous research on relationships between certain characteristics of nonprofit organizations and the extent of government funding; unlike much of the prior research, however, it includes in its population nonprofits that receive very little or no government funding;

* The study analyzes the extent to which different organizational characteristics are indicators of higher proportions of revenues from government and from the United Way;

* The study explores associations between organizational characteristics that have received little systematic attention, including the pursuit of commercial income and the racial diversity of organizational members, and government and United Way funding.

In particular, the research examines nonprofits operating in Massachusetts, a state that increased outlays for the purchase of human services from private providers from $25 million in 1971 to more than $1.6 billion in 1993 (DeNucci 1994). The study population comprises nearly 200 nonprofits that were members of the United Way of Massachusetts Bay in 1994. The study assesses United Way-affiliated nonprofits, not human-service nonprofits generally. The United Way, however, provides a particularly provocative site for this research, as it could be an important player, reluctant bystander, or extinct institutional form, given changes in the funding environments of human-service nonprofit organizations.

Within this population, we find much support for the findings of previous research on the relationship between government funding and nonprofit characteristics, with one notable exception--less administrative complexity is associated with higher percentages of government funding. The study also finds differences in organizational characteristics between nonprofits with higher proportions of government funding and those with higher proportions of United Way funding. Nonprofits with higher proportions of funding from government sources were larger, had smaller boards, less administrative complexity, used fewer volunteers, received less commercial income, and had more racially diverse boards and staff. …

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