Walden University ScholarWorks Walden Dissertations and Doctoral Studies Walden Dissertations and Doctoral Studies Collection 2020 Unfunded Stakeholder Mandates and Nonprofit Performance Impacts Courtney Lyn Coe Walden University Follow this and additional works at: https://scholarworks.edu/dissertations Part of the Business Commons, Public Administration Commons, and the Public Policy Commons This Dissertation is brought to you for free and open access by the Walden Dissertations and Doctoral Studies Collection at ScholarWorks. It has been accepted for inclusion in Walden Dissertations and Doctoral Studies by an authorized administrator of ScholarWorks. For more information, please contact ScholarWorks@waldenu. Walden University College of Social and Behavioral Sciences This is to certify that the doctoral dissertation by Courtney L.
Coe has been found to be complete and satisfactory in all respects, and that any and all revisions required by the review committee have been made. Review Committee Dr. Gary Kelsey, Committee Chairperson, Public Policy and Administration Faculty Dr. Mary Brown, Committee Member, Public Policy and Administration Faculty Dr.
Victoria Landu-Adams, University Reviewer, Public Policy and Administration Faculty Chief Academic Officer and Provost Sue Subocz, Ph. Walden University 2020 Abstract Unfunded Stakeholder Mandates and Nonprofit Performance Impacts by Courtney L. Coe MA, Norwich University, 2005 BS, Saint Joseph’s College, 2001 Project Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy Public Policy and Administration Walden University January 2020 Abstract Small nonprofit organizations, with annual budgets of $500,000 or less, are assigned many obligations by external stakeholders while conducting their mission-related work. However, little is known about the impact of these obligations or mandates being received from their external stakeholders, which rarely have funding allocated to minimize any capacity impact they create.
The purpose of this study was to learn about whether, and how, the organizational capacity of small nonprofit organizations is impacted by unfunded mandates. Applying the theoretical framework of rational choice theory, the patterns revealed by the data allow the ability to draw conclusions based upon the lived experiences of study participants familiar with this phenomenon. Through a qualitative study, semi-structured interviews were conducted with 15 nonprofit executive directors, selected using a maximum variation (heterogeneity) purposeful sampling strategy. Analysis of the interview data was completed using focused manual coding and secondary coding by NVivo software.
Upon completion of the data analysis, the results illustrated a complex impact upon organizational capacity, trending in both negative and positive fashions. These results may be of use for stakeholders to create positive social change by better informing all nonprofit industry participants about the impacts unfunded mandates are shown to create. These impacts may then reveal where restructuring practices within the nonprofit industry could negate the need for some of the more common unfunded mandates in the future. Unfunded Stakeholder Mandates and Nonprofit Performance Impacts by Courtney L.
Coe MA, Norwich University, 2005 BS, Saint Joseph’s College, 2001 Project Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy Public Policy and Administration Walden University January 2020 Acknowledgments I would like to acknowledge the amazing support and persistence of my Committee Chairman Dr. Gary Kelsey and Committee Member Dr. Without their insight, support, candor, knowledge, and amazingly diverse backgrounds, this study would not have come to fruition. They never let me feel that I was chasing the unobtainable or that my topic was unworthy of research.
In addition, I would like to acknowledge the love and unconditional support of my family and friends. Everyone has cheered me on tirelessly throughout this process, even at the points where I was not sure what to do next. I only hope that I am as positive an influence in their lives as they have been in mine. Finally, I would like to thank each of the executive directors I interviewed in this study.
I know the topic was a veritable unknown (as described) and yet you trusted me with taking you through it anyway. I hope this helps advance the field of knowledge for your organizations and proves useful as you continue to achieve your goals of positive social change. Table of Contents Chapter 1: Introduction to the Study.8 Scope, Delimitations, & Limitations .9 Scope and Delimitations. 9 Significance of the Study .12 Chapter 2: Literature Review .15 Literature Search Strategy.18 Nonprofit Organizational Mandates .21 Unfunded Nonprofit Organizational Mandates.
29 Nonprofit Organizational Capacity .34 Chapter 3: Research Plan .36 Introduction: Purpose of the Research .36 Research Design and Rationale .36 Role of the Researcher .40 Procedures for Data Collection .42 Data Analysis Plan .45 Issues of Trustworthiness .50 Introduction: Purpose of the Research .50 ii Research Question .54 Evidence of Trustworthiness. 62 Lack of Resources .74 Chapter 5: Discussion, Conclusions, and Recommendations .76 Interpretation of the Findings.77 Limitations of the Study.84 Appendix A: Interest Survey, Invitation, Informed Consent, and Interview Guide .99 Appendix C: Interview Guide: .102 Appendix D: Closing Statement: .103 iv 1 Chapter 1: Introduction to the Study Introduction Small nonprofit organizations, those defined as nonprofit organizations with annual operating budgets of $500,000 or less, are assigned many administrative obligations for completion. These are assigned by their external stakeholders and need to be accomplished while the nonprofit organizations are also conducting their mission- related work. However, too little is known about the organizational capacity impact of these unfunded obligations or unfunded mandates which are being assigned by the organization’s external stakeholders.
These mandates are known as unfunded mandates because they are additional tasks the organization is required to undertake without any offer or availability of additional funding to cover the expenses related to completing such mandates. Examples of such unfunded mandates can include additional registration requirements, new organizational infrastructure, additional organizational reporting, or other similar tasks. Due to the lack of additional funding to address these unfunded mandates, the nonprofit organizations can lose important capacity capabilities such as staff time, funding which they are required to redirect toward new overhead costs such as new infrastructure or registrations, or the ability to expand their mission-related activities. The purpose of this qualitative study was to explore how unfunded stakeholder mandates impact the organizational capacity of nonprofit organizations with an operating budget of $500,000 or less, in the Front Range Region of Colorado.
Previously, there was minimal prior research that explored how unfunded mandates organizationally impact the capacity of smaller nonprofit organizations and none that explored such a phenomenon 2 across nonprofit subspecialties. A review of previous research showed that there was no conclusive information regarding whether nonprofit organizations operate out of compliance, whether mission-related work has been impacted - negatively or positively - with the focus on the professionalization and accountability requirements, or whether nonprofit organizations have decided to diversify or consolidate funding or activities differently because of certain stakeholders assigning additional, and typically unfunded, mandates. The major sections included within Chapter 1 detail the topical background related to the study that was conducted, the formal problem statement of the study, and the purpose of the study. This is followed by the formal research question that was studied, a definition of the theoretical framework applied during the study, and a detailed explanation regarding the nature of the study.
Also included is a definitions section, a description of study assumptions, scope and delimitations, limitations, and an explanation of the significance of the study. This is then all summarized before the Chapter 2 Literature Review, the explanation of the research plan as detailed in Chapter 3, the presentation of the results in Chapter 4, and finally the discussion, conclusion, and recommendations which are included in Chapter 5. Background It has become increasingly important to nonprofit organizational stakeholders to achieve the biggest impact possible using their existing resources. As a result, unfunded mandates have become a commonplace inclusion into the funding Agreements for governmental, foundation, and corporate stakeholders of many nonprofit organizations.
3 Examples of unfunded mandates can include, but are not limited to, charitable registration requirements, mandated organizational infrastructure, additional reporting, or other such tasks as assigned by external stakeholders. Specifically, improved effectiveness, stronger leadership, and greater accountability among nonprofit organizations have been several of the primary drivers behind such unfunded mandates, above and beyond existing best practices in the field and relevant across different types of stakeholders and nonprofits (Carnochan, Samples, Myers, & Austin, 2014; Doerfel, Atouba, & Harris, 2017; Harrison & Murray, 2012; Hoefer & Silva, 2014; Hwang & Powell, 2009; Lee & Clerkin, 2017; Owczarzak, Broaddus, & Pinkerton, 2016; Soteri- Proctor, 2010; Stewart & Faulk, 2014; Thomson, 2011). However, the majority of the research conducted previously has often been subspecialty specific to the type of nonprofit organization, which made it hard to determine whether the unfunded mandates that are assigned are similar for the entire nonprofit field, similar to just one kind of external stakeholder category, or unique to each organization exclusively. Research Problem Small nonprofit organizations are assigned many administrative obligations for completion by their external stakeholders which need to be accomplished while they are also busy conducting their mission-related work.
However, too little has formerly been known about the organizational capacity impact of these unfunded obligations or unfunded mandates when they are received from the nonprofit organization’s external stakeholders. These mandates are known as unfunded mandates because they are additional tasks the organization is required to undertake without any offer or availability 4 of additional funding to cover the expenses related to completing such mandates. Examples of some such unfunded mandates can include state charitable registration requirements, new organizational infrastructure, additional organizational reporting, or other similar tasks. Due to the lack of additional funding to address these unfunded mandates, the nonprofit organizations can end up with a documented loss of important organizational capacity capabilities such as staff time, funding which is then required to be redirected toward new overhead costs such as new infrastructure or registrations, or the ability to expand their mission-related activities, to name a few.
Keeping this in mind, this study explored the following: • Whether nonprofit organization leaders are recognizing all such unfunded mandates when received; and, if so, • How or if nonprofit leaders: • Track unfunded mandates and their potential capacity impact organizationally; • Assume a certain level of acceptable risk for noncompliance with the unfunded mandates received to conserve organizational capacity; • Accept negative organizational capacity effects to ensure compliance with unfunded stakeholder mandates; and/or, • See any positive organizational capacity effects related to compliance with unfunded mandates, already being of such a small organizational size. 5 During a review of the currently available literature regarding nonprofit organizational studies, where accountability requirements and funder mandates have been reviewed, it was apparent that these issues do currently impact nonprofit organizations and the organizations’ capacity to complete mission-related goals (Carnochan, et al., 2014; Despard, 2017; Doerfel, et al., 2017; Lee & Clerkin, 2017; Owczarzak, et al. However, within the current literature, most of the existing studies spoke only to one specific type or cause of impact related to unfunded mandates, not how that impacted the nonprofit organization’s capacity. As a result, it appeared that there was a lack of detail available for the nonprofit industry related to managing unfunded mandates and organizational behaviors to ensure both continued compliance and capacity, while also conducting ongoing mission-related work.
Purpose Statement The purpose of this qualitative phenomenological study was to explore how unfunded stakeholder mandates impact the organizational capacity of nonprofit organizations with an operating budget of $500,000 or less in the Front Range Region of Colorado. There has been minimal research which has explored how unfunded mandates have been organizationally impacting the capacity of smaller nonprofit organizations and none that appeared to explore such phenomenon across nonprofit subspecialties. Previously conducted research in the field showed that there was no conclusive information available regarding whether nonprofits are operating out of compliance, whether mission-related work is being impacted - negatively or positively - with the focus on the professionalization and effectiveness requirements, or whether nonprofits 6 have decided to diversify funding differently because of certain stakeholders assigning additional, and typically unfunded, mandates.