The purpose of this paper is to explore the democratic anchorage contributed by nonprofits that enter into governance arrangements with private lenders to pursue community reinvestment objectives.  Conceptions of governance networks raise a number of questions about accountability, for what and to whom, and to a large extent these concerns have predominantly focused on concerns related to efficiency or effectiveness at the exclusion of understanding democratic accountability. Studies that have focused on democratic accountability often focus on measures related to the public sector, and less attention is given to the concerns of nonprofit representation.  To fill this gap, the central research question of concern in this paper is what organizational factors suggest evidence of the democratic anchorage provided by nonprofits in community reinvestment agreements? And, what can we learn about the democratic anchorage provided based on the organizational factors that predict entrance into these agreements?

            The significance of the paper is that it extends previous models to identify observable organization factors that can be used to understand the democratic anchorage contributed by nonprofits in community reinvestment arrangements. Torfing, Sorensen and Fotel (2009) observed that there remains a need for additional empirical evidence of the structural and contingency factors influencing democratic anchorage in governance arrangements.  The findings suggest that factors such as the professionalized nature of the nonprofit, political purpose, and location in an area of high need, drive CRA mobilization and provide insight on the democratic anchorage contributed. 

            The governance arrangements of interest in this paper are negotiated community reinvestment agreements between nonprofit organizations and lenders from 2000-2009. The Community Reinvestment Act (CRA) of 1977 is a federal Act designed to encourage lenders to meet the reinvestment needs of their community. The design of the CRA legislation provides flexibility to lenders and nonprofit organizations to develop self-governing arrangements to meet local community reinvestment needs.  Although the public sector still plays a pivotal role in regulating lenders under CRA, the case of agreements provides an opportunity to consider the empirical factors that predict the mobilization of nonprofits, a more ambiguous sector in its source of accountability, to enter into self-governing arrangements with lenders to pursue CRA objectives. 

            Logistic regression tests the relationships between political purpose, professionalization, political advocacy and location in areas of need and the presence of  a negotiated agreement. Data on the nonprofits engaged in community reinvestment agreements were obtained through a Freedom of Information Act (FOIA), yielding a list of over 300 nonprofit organizations with negotiated agreements during 2000-2009 in the largest 100 metropolitan areas in the United States.   Data on the characteristics of these nonprofits were obtained from the National Center for Charitable Statistics (NCCS). NCCS data was also used to obtain a random sample of nonprofit organizations without agreements for analysis purposes.  Metropolitan level socioeconomic and demographic characteristics from the American Community Survey (ACS) were used to construct measures of need and control for other factors. Metropolitan level data on lender characteristics from the Summary of Deposits (SOD) were used to control for the lending environment.