A representative sampling: highlights of the latest research being conducted on the nonprofit sector.

WHEN YOU WANT TO DETERMINE YOUR MEMBERS' NEEDS AND WANTS, YOU PROBABLY SEND THEM A survey, summarize and analyze the results, and issue a report. Such market research can help your association design effective, meaningful programs and services, assess its public image, and identify marketplace trends.

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With the possible exceptions of industry research and salary surveys, however, the research conducted by one association generally doesn't have a broader applicability. Academic research, on the other hand, may have implications for a wide range of associations.

Today, only a few academics are focusing their research efforts exclusively on associations. However, numerous scholars--most affiliated with academic centers, think tanks, or the more than 240 degree or certificate programs in nonprofit management offered throughout the United States--are studying the nonprofit sector. A good portion of their academic research touches on--and can be applied to--the real world of association management.

Say, for example, your association is considering implementing a new governance model. Reviewing the results of solid, academic research on the effectiveness of various governance models and theories may help your organization avoid costly errors (and might give you the ammunition to either implement or stay away from a particular model).

Fascinating findings

So what is being studied or researched about the nonprofit sector? In a word: Everything. Here is a small sampling of recent studies, along with the implications of their findings for associations:

Board training and development. Many association governing bodies engage in training and development activities. Are these types of programs effective? That's one of the questions asked by Thomas P. Holland and Douglas K. Jackson of the University of Georgia, Athens, who studied 10 boards with three-year board development programs and 14 boards with no development programs.

Perhaps not surprisingly, Holland and Jackson found that the boards employing developmental training improved their effectiveness significantly. The competencies that a board specifically targeted for attention showed the most improvement.

For board development to work, however, it must be considered a long-term investment, and it should not be forced. This study implies that, before investing in board training, an association must view development as an ongoing activity, not a one-time event; target specific competencies for improvement (such as strategic thinking or finance); and ensure that board members actually want to participate in the training.

Source: "Strengthening Board Performance: Findings and Lessons From Demonstration Projects," by Thomas P. Holland and Douglas K. Jackson, Nonprofit Management and Leadership, Winter 1998.

Board governance. In her doctoral dissertation for the University of Georgia, Patricia Dautel Nobbie examined the Carver Policy Governance model to determine its effectiveness in organizations that employed it.

Nobbie collected data from 243 board members from 32 organizations that had fully implemented the Carver model and thoroughly understood it. For comparison she also used two control groups: one not using any formal governance model and one using a model other than Carver.

Nobbie found that the boards of those organizations using the Carver model perceived that they operated more effectively. She noted, however, that no evidence supported the idea that performance under the Carver model is higher than any other governance model. However, CEO job satisfaction seemed higher under Carver's Policy Governance model. Basically CEOs like the model because it clarifies roles and grants them autonomy in managing the organization.

Moreover, she found that the effectiveness of the governance model depends on the training of board members and how long the model has been in use. In other words, an organization needs to understand a governance model before implementing it, and leaders must realize that not all models are suitable for every organization.

Another researcher, Mel Gill of the Institute on Governance in Ottawa, studied 20 different nonprofit organizations in Canada to determine the effectiveness of their governance practices. Gill found that most organizations used a hybrid of governance models, rather than following the exact guidelines of any one model.

His research also identified signs of a board in trouble. Those include "excessive turnover of CEOs or board members, difficulty recruiting credible board members, rapid depletion of reserve funds, chronic unplanned or unmanaged deficits, role confusion between board and CEO, low attendance or participation in meetings, poor management of meetings, factionalism, underground communication, unresolved conflicts, failure to address conflicts of interest, decision deadlock, disrespect for organizational norms and policy, and poor communication with funders and other key stakeholders."

Sources: "Testing the Implementation, Board Performance, and Organizational Effectiveness of the Policy Governance Model in Nonprofit Boards of Directors," by Patricia Dautel Nobbie and Jeffrey L. Brudney, Nonprofit and Voluntary Sector Quarterly, December 2003; "Building Effective Approaches to Governance," by Mel Gill, The Nonprofit Quarterly, Summer 2002; and "Governance Do's and Don'ts: Lessons From Case Studies on 20 Canadian Nonprofits," by Mel Gill, Institute on Governance, April 2001.

Executive transitions. Much of the recent interest in succession planning was likely precipitated by a research study published in 1999, "Leadership Lost: A Study of Executive Director Tenure and Experience," conducted by CompassPoint Nonprofit Services, San Francisco. In an article for Nonprofit Management and Leadership, Michael Allison, director of the consulting and research group at CompassPoint, details that early study of 137 executive directors in the San Francisco Bay area as well as the group's subsequent work with 28 501(c)(3) organizations going through executive transitions.

According to Allison, boards of directors dramatically underestimate the risk of bad hires and are "woefully unprepared for the task" of hiring. This finding is particularly alarming given the significant turnover rate within 501(c)(3) nonprofit organizations, as documented in the "Leadership Lost" study, which found that executive directors tended to stay with their organizations for an average of three years, and many did not go on to hold another executive director position. Allison's article also notes that boards tended to spend as little money as possible on the executive search, viewing the process as an "unwelcome and troubling burden" rather than an opportunity to move the organization in a different direction.

The implication: A board's shortsighted behavior can result in bad hires, which, in turn, can lead to lost opportunities for the organization (and, ultimately, to decreased revenue). Many nonprofit organizations still do not have a transition plan in place, nor do they take advantage of the transition when one occurs. If done well, however, an executive transition can be a time for a board to reflect on its strategic plan and possibly decide to move the organization in a different direction.

Source: "Into the Fire: Boards and Executive Transitions," by Michael Allison, Nonprofit Management and Leadership, Summer 2002.

Management techniques. In researching the techniques that spark innovation within organizations and companies, Robert I. Sutton of Stanford University's School of Business and Engineering, California, developed 11 1/2 "weird management techniques that work." Many of these can be applied to the nonprofit sector.

For example, Sutton's research indicated that one effective technique was hiring people who make you uncomfortable because this tends to spark innovation. He also found that leaders and managers should reward success and failure but punish inaction.

Sutton notes that good ideas are typically generated along with a number of "dumb ones." By rewarding only success, he concludes, managers discourage employees from making innovations because of their fear of failure. Rather than rewarding every failure, however, Sutton favors rewarding "smart" failures--those that show initiative and reflect competence.

Source: "Sparking Nonprofit Innovation: Weird Management Ideas That Work," by Robert I. Sutton, Stanford Social Innovation Review, Spring 2003.

Strategic planning. Need more proof that strategic planning is good? Julie I. Siciliano of Western New England College in Springfield, Massachusetts, conducted a study of YMCAs that engaged in strategic planning. Based on the results of 240 questionnaires and 66 telephone interviews, she concluded that the more formal the strategic planning process, the higher the organization's performance.

In particular, setting goals and objectives and establishing action plans were the activities linked to better organizational performance. Conducting a formal competitive analysis (such as an analysis of strengths, weaknesses, opportunities, and threats) was associated with better financial performance. Surprisingly, however, developing a unique mission statement was not associated with increased performance.

William F. Crittenden of Northeastern University in Boston did a similar study. He wanted to determine if a connection existed between the success of organizations and the degree to which they engage in strategic planning, have a financial orientation, emphasize marketing, and seek growth through increased client usage.

Crittenden's study, which consisted of surveys and case studies, focused on 31 social service agencies. The results showed that the most successful organizations had strong marketing and financial orientations. More precisely, these organizations evaluated sources and uses of funds, forecasted revenue and costs, and made detailed financial projections before making decisions. They focused on growing client usage levels and sought only targeted growth in new product or service offerings.

In contrast, the unsuccessful organizations were not especially focused and did not place much importance on marketing, the organization's legacy, financial issues, or the competitive environment. Instead, they spent time exploring new funding sources, developing new products and services, and reacting to pressures from the outside.

Sources: "The Relationship Between Formal Planning and Performance in Nonprofit Organizations," by Julie I. Siciliano, Nonprofit Management and Leadership, Summer 1997 and "Spinning Straw Into Gold: The Tenuous Strategy, Funding, and Financial Performance Linkage," by William F. Crittenden, Nonprofit and Voluntary Sector Quarterly, 2000 supplemental.

Philanthropy. A variety of studies have been conducted in the philanthropic arena in an attempt to better understand donors and their giving patterns. Perhaps the best known is Giving USA, a report produced annually by the American Association of Fundraising Counsel, Indianapolis. It analyzes the statistics for the previous year's giving, such as whether charitable giving has increased or decreased and what percentage of total giving comes from individuals, corporations, and foundations.

In 2002, for example, Giving USA reported that 76.3 percent of giving came from individuals, 11.2 percent from foundations, 7.5 percent from bequests, and 5.1 percent from corporations. Most 2002 giving supported religion (35%), followed by education (13.1%), foundations (9.1%), health (7.8%), human services (7.7%), arts and culture (5.1%), public-society benefit (4.8%), environment and animal welfare (2.7%), and international (1.9%). The remaining 12.6 percent was unallocated.

Source: Giving USA 2003, American Association of Fundraising Counsel, www.aafrc.org.

Much more to come

The studies summarized here represent a small portion of the research being conducted on the nonprofit sector. Other areas being investigated by researchers include employee incentive programs in nonprofit organizations, the relationship between CEO pay and organizational performance, nonprofit accountability, the demographics of volunteers, the relationship between volunteering and giving, and the effects of commercialization on the public's perception of nonprofit organizations, to name a few.

With the recent growth of master's and doctoral programs in nonprofit and association management, this list of research topics is sure to grow. For example, students in the Union Institute and University's doctoral program in association management, are studying the effects of changing demographics on associations, best practices for small associations, the executive transition process in professional associations, and how nominating committees can more effectively identify future leaders.

Make time to review research relating to the larger nonprofit sector, and I guarantee that you'll find some credible, informative, and interesting research that not only applies to your organization but also can help you become a more efficient and effective association leader.

Want more information on this topic? Check out the "Outtakes and Exclusives" and "Link to Learn" areas at www.amonline.org.

Katherine Mandusic Finley, CAE, a certified fundraising executive and a certified meeting professional, is executive director of the Association for Research on Nonprofit Organizations and Voluntary Action, Indianapolis. She is also a doctoral student in the association management program at Union Institute and University, Cincinnati. E-mail: [e-mail].

BY KATHERINE MANDUSIC FINLEY, CAE