Association for Public Policy Analysis & Management

Panel: Using Evidence-Based Management and Policy to Improve Not-for-Profit Financial Operations

(Public and Non-Profit Management and Finance)

U.S. governments rely upon public managers to implement policies shaped and approved by the democratic process. However, outside this state sphere, a vigorous and robust sector composed of private not-for-profit organizations carries out many functions that resemble or complement the public space. Importantly, not-for-profits in many cases implement public policies (Sandfordt, 1999) shaped by governments. When researchers and practitioners discuss evidence-based policy, however, the not-for-profit sector is routinely excluded or, at best, considered an afterthought. Yet successful evidence-based policy implementation is oftentimes dependent upon these not-for-profit organizations. The papers in this panel address many of the most important challenges facing not-for-profit managers, and how we can improve decision making through empirical research. All four papers address areas that are crucial to the long-term financial sustainability of the not-for-profit sector, albeit areas that lack much if any research that can inform management. The first paper examines the key area of not-for-profit transparency, which can enhance organizations’ credibility and is often seen as a valuable and worthwhile endeavor to stakeholders. It is assumed that more transparency is better than less, yet we know little about whether such transparency – which has real costs to the organization – has any payoff to the not-for-profit. This paper begins to fill this gap by examining the factors that may influence transparency and tests the effects of transparency on organizations’ donation and grant income. Not-for-profits, even more so than governments, mobilize resources for a variety of areas that profoundly impact individuals, families, and communities, such as disaster relief and recovery efforts. The second paper analyzes how donors respond to disasters. More importantly, this paper develops a technique for analyzing donor attention. As attention to a disaster event subsides, disaster-related donations are expected to decrease and giving to return to pre-disaster equilibrium. In the wake of predictions of future increases in the frequency and severity of disasters, it is important to begin to understand how disasters mobilize public support. The vast majority of the not-for-profit sector is constituted by small organizations, but this subgroup has been vastly underexamined and under-theorized . The third paper in this panel addresses the gap in nonprofit financial management research concerning the uniqueness of these small and new organizations. Specifically, this study presents evidence-based practices for small and young not-for-profits on navigating through the hazards of financial stress. The final paper notes that financial management theory unambiguously finds operating reserves necessary for prudent management, and yet a large plurality of not-for-profits fails to hold any reserves at all. No empirical research exists testing this theory. This paper analyzes the implications of holding or not holding reserves for not-for-profits, with a research question of whether or not operating reserves even matter for the financial health and longevity of not-for-profit organizations. Reference Sandfordt, J. R. (1999). The Structural Impediments to Front-Line Human Service Collaboration: Examining Welfare Reform at the Front-Lines. Social Service Review 73:314-339.