Nonprofits’ Long-Term Sustainability in the UK

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Abstract

This paper examines the issue of long term sustainability for nonprofit organizations (NPOs) within the U.K. and how new operational models and methods of funding are needed in order to ensure the viability of such organizations in the long run. What was seen was that while the current operational models of U.K. based nonprofit organizations were capable of addressing the needs of the various population sets that they were providing aide to, numerous inside sources within such organizations, as well as relevant literature on the issue, reveal that due to the currently constrained nature of global financial markets as a result of a variety of external issues (i.e. low U.S. consumer demand, the European debt crisis, the general slowdown of the global economy etc.) sources of funding have been harder to come by.

As a result, this has hampered the ability of such organizations to continue to utilize the full gamut of their services due to the necessity of having to maintain even basic operations. Further examination into U.K. based NPOs reveals that while they have embraced internet-based technology in branding efforts (i.e. Facebook, Twitter, having their own website etc.) and “spreading the word” so to speak, they have neglected to take into consideration new methods of internet-based crowd-sourced funding from which they could possibly derive new charitable donations. This particular aspect was revealed through the various interviews conducted by the researcher in which methods of funding and how operations are conducted were revealed. It was noted that while NPOs were cutting back on particular services and personnel they were not doing so in a way that conformed to the concepts of sufficient leadership, adaptability and program capacity wherein the prevailing notion of “the old ways are best” was endemic within the industry.

Introduction

The 2008 financial crisis and the current economic recession brought about by the European debt crisis, low consumer spending from the U.S. and volatility within financial markets has created a situation that has made the issue of sustainability all the more relevant for nonprofit organizations. From the point of view of Pyper (2007 p. 10), nonprofits are just like any other organization that wrestles with the concept of funding and continuing to improve their services, however, unlike “for-profit” companies and organizations, nonprofits, as indicated by their namesake, work under an operational model that eschews the concept of profit for the sake of providing specific products or services to particular population sets (ex: helping the urban poor, providing free medical care and counselling services, watchdog organizations etc. (Pyper 2007, p. 10). The inherent problem with this operational model, as indicated by Weerawardena, McDonald & Mort (2010 pp. 346-356), is that it does not result in financial stability for the organization in question (Weerawardena, McDonald & Mort 2010, pp. 346-356).

This results in cases where the provision of particular goods and services are intermittent with the question of organizational stability and sustainability always on the horizon. While there are instances where particular nonprofit organizations can achieve a modicum of financial stability (i.e. the Red Cross, the Blue Cross and various religion-based organizations) most of these organizations gain funding through methods that are normally not available to other types of nonprofits (i.e. government funding, funding from a religious organization, better brand acknowledgement etc.) (Simon 2011, p. 43). It is based on this that various analysts such as Hartley (2008 p. 94) state that nonprofit organizations that lack government funding do not have sizable initial endowments or are not connected to particular religious organizations are inherently unsustainable in the long run given that a consistent flow of monetary resources is needed in order to keep the organization in operation (Hartley 2008, p. 94).

This is of particular concern given that nonprofit organizations have a recognized social benefit which enables the provision of particular goods and services to societal sectors that are not encompassed by already established government programs (Wenli, Denison, & Butler 2009, pp. 47-67). When taking such factors into consideration, it thus becomes necessary to establish some way of identifying the sustainability issues faced by such organizations and develop various strategies and methods of operation in order to mitigate such issues and establish some form of long term stability. By doing so, this creates a platform that can be followed by a variety of nonprofit organization which would in effect ensure that their socially beneficial activities are done so in a manner that is sustainable in the long term. It is the assumption of this study that the current methods of operational sustainability for nonprofit organizations within the U.K. neglects to take into consideration new ways in which financing can be obtained through online social networking and also utilizes practices that are not in line with aspects related to sufficient leadership, adaptability and program capacity, all three of which are necessary towards implementing sustainable operations for nonprofit organizations.

Background of the Study

There are three distinct problems which are endemic within the U.K. nonprofit sector, these consist of problems in capacity building, founder’s syndrome and ineffective resource mismanagement (Bugg-Levine, Kogut & Kulatilaka 2012, pp. 118-123). The concept of the capacity building refers to the approach utilized by various organizations (public or private) wherein through an understanding of the factors that inhibit their growth and development they are able to realize new solutions which enables them to overcome such difficulties and create sustainable results in their operational processes (Weerawardena & Mort 2012, pp. 91-101). Unfortunately, in the case of NPOs while their main obstacle towards implementing better services and operations has been identified (namely their reliance on external sources of funding) there is actually very little that they can do to resolve this particular issue. What you have to understand is that most NPOs within the U.K. rely almost exclusively on external funding in order to maintain internal operations and provision their various services (Hopkins 2001, 23 – 48) (Szper & Prakash 2011, pp. 112-141).

Such methods of funding (whether from the public or private sector) are unfortunately far from reliable or even predictable given that they increase or decrease depending on the strength of the local economy which is similarly affected by the health of the global economy (Larson 2012, pp. 80-82). Even though various academic sources have stated that the economic recession that followed the 2008 financial crisis has “passed” there is a still a significant downturn in the strength of the global economy which is further worsened by the current European debt crisis (Valentinov 2011, pp. 901-916). When combining such factors, this has resulted in a significant decrease in fund allotment to NPOs with current estimates placing it at 27% to 60% in some cases due to the source of such funds often being connected to the performance of corporate stocks and mutual funds.

It is also unfortunate to note that studies such as those by Armsworth (2012 p. 271) have indicated that one of the main problems regarding funding sources for U.K. based nonprofit organizations is the fact that they have failed to diversify their source of funds and continue to utilize a system of external funding that is far too vulnerable to changes which result in unreliable nature of NPOs from actually being able to perform daily operations (Armsworth 2012, p. 271). This is in stark contrast to NPOs within the U.S. who have utilized social networking as a new way in which people can become more aware of the stance of such organizations and can thus contribute through the group’s online payment tool (Hoffmann 2011, pp. 93-111). One example of this is the group “Doctors without Borders” (a nonprofit organization based in Geneva, Switzerland which focuses on providing medical care and assistance to the poor in various countries ravaged by conflict or disease) who have diversified their revenue portfolio to include not only external revenue sources through charitable organizations and the Swiss government but also includes online methods of monetary donation as well as corporate and private institution sponsorships resulting in $400 million in annual funding. This and other such examples around the world shows that alternatives to traditional external funding schemes do exist and that it is all a matter of developing an effective funding strategy.

The second problem mentioned earlier that is endemic within several of the U.K.’s nonprofit organizations is “Founder’s syndrome”. This particular aspect encapsulates the behaviour of the founder of an NPO which results in the perpetuation of maladaptive practices within the organization as a direct result of the founder of the entity wishing to dominate all decision-making processes which as a result detracts from the ability of the organization in question to actually progress beyond its initial operational model (Bratt 2012, pp. 438-456). English & Peters (2012, pp.103-119) notes that in cases where founder’s syndrome occurs within nonprofit organizations this often results in the exclusion of the talents and prowess of newcomers due to the desire of the founder to dominate all aspects of the decision-making process (English & Peters 2012, pp.103-119).

This results in an organization being static rather than dynamic in its method of operations which leaves it vulnerable to external changes which its original operational model did not take into consideration or cannot handle (i.e. the loss of particular sources of funds etc.) (Public & Nonprofit Conference Paper Abstracts 2010, pp. 1-29). Not only that, founder’s syndrome within the U.K. at times results in nepotism/ cronyism wherein only family and friends of the founder are part of the board (Harrison & Murray 2012, 411-437).

This is particularly troubling since instead of leading the organization towards improving itself, a board that has come about as a direct result of founder’s syndrome actually acts as an “enabling mechanism” (i.e. a cheerleading section) which supports all the decisions of the founder and the model of operations he/she has chosen despite the fact that such methods may, in fact, be detrimental in the long run (Kaplan & Grossman 2010, pp. 110-118). It is based on this that it can be seen that through founder’s syndrome operational stagnation occurs within the U.K. based nonprofit organizations wherein no new ideas are entertained, traditional sources of funding are emphasized, and methods of operations become maladaptive to the changing economic landscape (Crews, & Stitt-Gohdes 2012, 76-79). This all results in the inevitable long term dissolution of an NPO since it is only through effective leadership and adaptation to changing environments that enable an NPO to exist in the long term (Orwig, 2011, pp. 313-329).

The last problem found within nonprofit organizations within the U.K. is ineffective resource management resulting in endemic wastefulness within several levels of the organization. As described by Robinson Irmak, & Jayachandran (2012, pp. 126-139) the cause of this wastefulness within the U.K. NPO sector is the organizational culture within such establishments that lack the strict resource controls often found in for-profit companies (Robinson Irmak, & Jayachandran 2012, pp. 126-139). Robinson Irmak, & Jayachandran (2012, pp. 126-139) presents the assumption that it is the “for-profit” nature of various companies that results in the almost instinctive implementation of proper methods of resource utilization while it is the “not for profit” aspect of NPOs that results and even at times encourages resource wastefulness (Robinson Irmak, & Jayachandran (2012, pp. 126-139).

Not only that, resources are often mismanaged in a way that neglects to take into consideration long term plans for operational implementation (Yancey 2012, p. 56). For example, it was often seen in the various U.K. based NPOs that the original programs they developed for solving various social concerns, while impressive from a socio-cultural standpoint, are actually ineffective in the long term since such programs often lack a sufficient examination of program capacity in actually being implemented on a repetitive basis for several years (Lovejoy, Waters, & Saxton 2012, pp. 313-318). What occurs instead is the creation of programs that create significant degrees of initial applause and fanfare but fail to deliver when on long term promises of implementation due to a lack of sufficient funding or the program head finding out that the plan had bloated beyond the capacity of the NPO to actually fund or sustain (Ozdemir, Altinkemer, De, & Ozcelik 2010, pp. 213-242). Taking this into consideration it becomes obvious that strategies involving effective resource management need to be implemented so as to address such concerns and enable the development of programs that take into consideration long term viability instead of short term popularity.

Aim

The aim of this study is to investigate the U.K. nonprofit sector and determine what specific strategies and practices can be used to achieve sustainability.

Objectives

There are several objectives to this study:

The first is the necessity to analyze the current relevant practices involving nonprofit sustainability as described by academic literature.
The second is the need to determine the extent to which or if such practices are being implemented with various nonprofit organizations within the U.K.
Lastly, this study will need to develop strategies in relation to improving current operational models in the U.K. nonprofit sector so as to make them more sustainable in the long term.

Overall, this study can have significant implications for NPO managers since its findings can tell whether current strategies are effective and how they can be improved.

Problem Statement

When examining the current case of nonprofit organizations (NPOs) it can be seen that the main issue they have at present is in developing methods of long term sustainability in the face of a contracting economy. Within the past few years, the U.K. has experienced gradual declines in economic activity due to a distinct lack of consumer demand brought about by a variety of international economic issues. Excluding schools and government-sponsored nonprofit organizations; other groups within this same segment are experiencing considerable declines in funding which, as a result, has seriously affected their ability to operate at even a modicum of their original capacity. It is based on this that new methods of organizational sustainability need to be developed in order to address the issue of long term viability of NPOs, especially in cases involving a distinct lack of sufficient funding. The current operational model of such organizations is insufficiently capable of addressing the present-day concerns of NPOs, and as such, it is necessary to develop new ways in which NPOs can obtain funding as well as operate within periods of economic constraint.

Purpose

The main purpose of this research project is to determine the current operational problems involving long term sustainability found within U.K. based nonprofit organizations and to develop a means in which such issues can be addressed in order to ensure that such institutions can sustain the positive social impact of their operations. By the end of this study, the researcher will utilize the accumulated data in order to make specific policy and operational recommendations to address any perceived problems and to attempt to predict how nonprofit organizations will evolve given the correlated data. It is expected that this research should have a profound impact on how NPOs will operate in the future.

Assumptions

The primary assumption of this study lies in its assumption that institutional theory plays an important role in orienting nonprofit organizations to continue to stick to their current method of operations despite the fact that they are not sustainable in the long term. The institutional theory assumes that individuals tend to stick to particular institutions or methods of operations out of the belief that since a particular institution or method of operation has been around for an extended period of time, then it is thus the most viable and correct way of accomplishing a certain task or reaching a particular goal. This is despite the fact that better and more efficient institutions or methods of operation are already in existence. When taking institutional theory into consideration, it can thus be assumed that one of the reasons behind the continued unsustainable methods employed by nonprofit organizations within the U.K. is that they have been so used to doing things in a particular fashion that they are neglecting to take into consideration other avenues of approach related to funding and operations that would be far more effective and efficient than what they have in the present.

Research Question and Hypothesis

It is the hypothesis of this study that the current methods of operational sustainability for nonprofit organizations within the U.K. neglects to take into consideration new ways in which financing can be obtained through online social networking. Not only that, but they also utilize practices that are not in line with aspects related to sufficient leadership, adaptability and program capacity, all three of which are necessary towards implementing sustainable operations. Qualitative questioning will address the following question: are current practices within the U.K. nonprofit sector sustainable in the long run given a constrained economic system which results in fewer sources of funds?

Research Design

The research design for this study will primarily be qualitative, wherein the research will compare current academic literature involving nonprofit sustainability with the practices currently in place within the U.K. nonprofit sector. In order to obtain such data, it would be necessary to contact various nonprofit organizations and arrange for a short interview with an employee in order to ask about their current practices involving operational sustainability. According to various research guides, a survey/ interview technique is used when the researcher is principally interested in descriptive, explanatory or exploratory appraisal, as is the case in this study. The justification for choosing a questionnaire/ interview approach for this particular study is grounded on the fact that participants will have the ability to respond to the data collection tool by way of self-report. Thus, this project will utilize a self-administered questionnaire/ interview schedule for the purposes of data collection. An analysis of related literature will also be used to compare the study findings in order to develop a succinct method of analysis regarding current sustainability practices utilized by nonprofit organizations.

Justification for Utilizing Questionnaires/ Interviews

It was determined by the researcher that utilizing a combination of academic literature and interviews was the most appropriate method to obtain firsthand accounts of the current sustainability plans utilized by nonprofit organizations within the U.K. By doing so this ensures that the aggregate data originates directly from the source and ensures that it is a viable and most importantly an academically sound way of evaluating the current processes utilized.

Strengths and Weaknesses of the Study

Overall, the main weakness of this study is in its reliance on interview results as the primary source of data in order to determine the general opinion of nonprofit employees regarding current practices involving sustainability. There is always the possibility that the responses could be false or that the managers in question really do not know anything at all regarding the various methods involving talent management and job satisfaction improvement that will be indicated within the questionnaire. While this can be resolved by backing up the data with relevant literature, it still presents itself as a problem that cannot be easily remedied.

Research Constraints

It must be noted that the time constraint for this particular study only allows structured interviews/ questionnaire distribution with an unrepresentative number of people and also limited flexibility when conducting the interviews/ distributing the questionnaires. A general overview of multiple organizations is, therefore, not possible.

Variables

The independent variable in this study consists of the academic literature that will be gathered by the researcher for the literature review while the dependent variable will consist of the responses gained from the various research subjects that will be recruited for this study. It is anticipated that through a correlation between the researched methods of sustainability data and the responses of the research participants, the researchers will in effect be able to make a logical connection regarding appropriate/inappropriate practices currently conducted by nonprofits within the U.K. and make the appropriate type of strategy recommendations in order.

Limitations

This study will primarily isolate itself to an examination of the sustainable operation practices of the U.K. nonprofit sector and will not delve into creating a comparative multi-level study involving numerous non-profit organizations located in other countries around the world. The reason behind this is quite simple; such an undertaking would require a considerable amount of time, research and resources which are not currently available to the researcher. As such, due to these constraints, the most viable solution would be an examination of local nonprofit organizations.

Study Delimitations

Overall, the data collection process is expected to be uneventful; however, some challenges may be present in collecting data involving current sustainability practices utilized by nonprofit organizations that are to be utilized in this study. Such issues, though, can be resolved through access to online academic resources such as EBSCO hub, Academic Search Premier, Master FILE Premier, Newspaper Source Plus, and AP News Monitor Collection. Other databases consulted for this topic include Emerald Insight, Academic OneFile, Expanded Academic ASAP, General OneFile, Global Issues in Context, Newsstand, Opposing Views in Context, Popular Magazines as well as other such online databases which should have the necessary information. Relevant books were also included in the review. Furthermore, websites that have several online articles which contain snippets of information should be able to help steer the study towards acquiring the necessary sources needed to justify asserted arguments.

Significance of the Study

The significance of the study lies in the possibility of it identifying current endemic problems involving methods of operation within the U.K. nonprofit sector and developing new methods which can address such adverse practices. By doing so, this would result in a better and far more efficient way of conducting daily operations by such organizations which as a result should significantly benefit various sectors within the society of the U.K. who have come to rely on the services of nonprofit organizations. Overall, it is expected that should this study be able to fulfil its objectives it will undoubtedly be the basis for a future framework of operations that a variety of NPOs within the U.K. will base their operational structure on.

Literature Review

Introduction to Literature

This section reviews and evaluates literature and theories on the use of talent management in order to attain a competitive advantage. The literature in this review is drawn from the following EBSCO databases: Academic Search Premier, MasterFILE Premier, Global Events, ERIC, and Professional Development Collection. Other sources of information utilized in this section are drawn from various online resources such as The Economist.com well as various news media websites. Keywords used either individually or in conjunction include employee retention, performance, motivation, managerial practices, mentoring, training programs and sustainability formula.

Developing the “Sustainability Formula”

Based on the work of Modi (2012, pp. 55-67), the concept of the “sustainability formula was developed as a means of addressing the inadequacies found in the nonprofit sector involving the long term sustainability of such organizations. The sustainability formula is comprised of 4 distinct factors: namely leadership, financial adaptability, program capacity and program adaptability ((Modi 2012, pp. 55-67). These factors were meant to address a problem related to developing sufficient sources of funding, addressing the issue of founder’s syndrome, preventing resource mismanagement and ensuring that nonprofit organizations are oriented towards long term sustainability.

Leadership

The first aspect of this formula is the concept of leadership; this aspect focuses on the development of both internal and external stakeholders in the creation of the operational planning process of the company involving long term and short term strategies (Sabeti 2011, 98-104). The concept of leadership in this particular instance does not place sole authority on the founder of the organization but rather divests it amongst multiple individuals who are capable of making decisions that are anchored on the concepts of cost-effectiveness, financial and operational accountability, clarifying the purpose and progress of particular projects and the development of strategic plans that focus on ensuring that the organization will thrive in the future (Sabeti 2011, 98-104).

This aspect of the sustainability formula also acknowledges the necessity of developing a “vision” for the NPO and as such emphasizes on the active implementation of vision and mission goals in order to further motivate employees and volunteers within the organization (Melton, & Hicks 2011, 494-504). By doing so, this ensures that people within the NPO are motivated not out of the necessity of accomplishing what their job requirements entail, but rather work towards a shared, collected vision which ensures higher standards of efficiency and higher levels of employee retention. (Melton, & Hicks 2011, 494-504)

Financial Adaptability

The concept of financial adaptability in this particular case takes the form of informed data collection wherein the NPO in question observes funding trends in local, national and global NPO sectors and develops new funding strategies that it deems more effective than the current processes utilized (Kirby & Koschmann 2012, pp. 133-138). In other words, this method of NPO financing eschews the concept of relying on traditional methods of gaining funds in favour of adapting to new trends within the global NPO sector (Jaskyte 2012, 439-459). By doing so, this creates a distinct form of diversity in the way in which organizations are able to fund particular operations and ensures that should one avenue of funding dry up due to some inexplicable reason other avenues continue to remain open which should be able to keep the NPO running. Aside from following trends in funding, this particular aspect of the sustainability formula also places emphasis on the development of sophisticated management practices centred around the development of cost effective strategies for particular programs (Epstein & McFarlan 2011, pp. 27-34).

This means that when a program is initially conceptualized, prior to implementation it must pass numerous checks in terms of its long term financial viability in order to ensure that not only can it be repeated in the future but it can actually be sustained within the annual budget of the organization (Epstein & McFarlan 2011, pp. 27-34). By implementing this particular methodology during the conceptualization process, this ensures that only programs that have a high degree of long term success are implemented thus ensuring that the NPO becomes oriented towards providing services to the local community in the long term which is far more prudent and valuable as compared to “one-shot” programs that have little in the way of a significant long term impacts (Ridder, Piening, & Baluch 2012, pp. 605-635). Lastly, this particular aspect of the sustainability formula places a distinct emphasis on the development of long term relationships with various grant makers, community leaders and even institutional funders in order to ensure a stable “traditional” source of funds for the organization (Moeller & Valentinov 2012, pp. 365-370). By implementing all the different operational strategies emphasized by this section on financial adaptability this would ensure that an organization would be able to deal with a wide array of possible funding problems that would emerge as a direct result of a turbulent global economy.

Program Capacity

The third aspect of the sustainability formula is the concept of program capacity, under this notion a program for an NPO is created to run efficiently and staffed adequately in order to effectively run without wasteful spending. An examination of various reports examining the state of a variety of U.K. based NPO programs showed that while such endeavors did provide a distinct level of social “good” they in effect were either understaffed with only a modicum of necessary individuals in order to run it or such programs were overstaffed with a glut of volunteers and employees hampering the ability of the program to function within an efficient amount of expenditure Vis-à-vis the impact that such a program is suppose to have (Petrovits, Shakespeare, & Shih 2011, pp. 325-357).

It must also be noted that under the concept of program capacity it is not just the amount of staff present within a particular program that is a cause for concern but rather what must also be taken into consideration is the overall quality of the staff that are hired (Lichtsteiner & Lutz 2012, pp. 483-506). For example, Melton & Hicks (2011 pp. 494-504) notes that it was often the case in various U.K. based organizations that while there were plenty of volunteers for particular programs few of them possessed the necessary abilities to actually accomplish the goals indicated by the program (Melton & Hicks 2011, pp. 494-504). This meant that such endeavors were often overstaffed, wasted valuable resources and were actually inefficient in being able to provision the necessary services since the NPO staff within the program did not know what they were doing (Ellett 2011, p. 54). It is due to factors such as these that various studies recommend that when an NPO program is created the concept of program capacity must be implemented at each level of the design process in order to ensure that only the right kind and amount of people are within a program so as to ensure that it runs smoothly and above all efficiently which results in considerable financial savings in the long run.

Program Adaptability

The last aspect of the sustainability formula is the concept of program adaptability. When it comes to this part of the sustainability formula, a particular focus is implemented on developing internal methods of evaluation for a particular program so as to ensure that it is able to develop and change based on external factors. This can come as a result of any number of potential outcomes such as changes in funding sources, management change or any number of other possible outcomes that come about as a direct result of daily operations within a company. Overall, the focus of this particular aspect of the formula is to ensure that a program is able to respond to any manner of possible situation and adapt accordingly.

Crowd Funding

Crowd funding or Crowd sourced funding refers to the way in which funding for a particular venture is done through the collective efforts of a variety of individuals through a network wherein resources are pooled together in order to support a wide range of activities ranging from startup company funding, the development of particular types of free software products and even its utilization in funding the work of certain nonprofit organizations. The premise behind this method of funding specific projects or ventures lies in the assumption that while individually, people within a specific locality are not able to donate significant sums due to a variety of reasons, globally though these individual insignificant sums can result in large amount of resources which can give rise to significant endeavors. Crowd funding denominations are usually set at different specific intervals (i.e. $1, $5, $10, $50, $100 etc.) with each escalation of the donation being equivalent to a particular service or transaction outcome. It is usually the case that $1 merits a thank you on the organization’s website while amounts of $50 or more usually results in either the person being given a product by the startup, a t-shirt, or even dinner with the head of the organization for amounts equivalent to $20,000 or more.

This particular method of funding has become immensely popular with the collective “might” so to speak of the internet resulting in the creation of hundreds of new startup companies, the release of several free software applications for the public to enjoy as well as several million dollars in donations being given to a variety of charitable organizations within the U.S. The obvious main advantage of this particular means of funding over the traditional methods currently employed by NPOs within the U.K. stems from the fact that through social networking initiatives and viral advertisement strategies an organization can in effect access potentially billions of individuals online. Even if only 1/3rd of those contacted are willing to donate that still represents millions of dollars in potential funds that can be utilized for any manner of potential ventures as seen in the case of theoatmeal.com that started an Indiegogo campaign (indiegogo.com is a crowd funding site meant to fund a variety of independent ventures and charitable donations) to raise money for a Nicholas Tesla website raising $200,000 within the span of 20 hours. Not only that, recently an elderly woman was given $635,000 when a video of her being bullied by grade school kids while she was on a bus was released to the general public via the internet. The result was a campaign to give her a vacation for $5,000 but ended up with a significant outpouring by the internet masses resulting in the raising of the aforementioned significant sum. All of this is evidence of the effectiveness and reach of crowd funding and as such shows the potential implications that this particular method of funding could have for nonprofit funding within the U.K.

Methodology

Introduction to Methodology

This section aims to provide information on how the study will be conducted and the rationale behind employing the discussed methodologies and techniques towards augmenting the study’s validity. In addition to describing the research design, and the population and sample size that will be used in this study, this section will also elaborate on instrumentation and data collection techniques, validity and reliability, data analysis, and pertinent ethical issues that may emerge in the course of undertaking this study.

Role of the Researcher

The role of researcher in this particular study is primarily that of a recruiter and aggregator of data. This takes the form of the researcher being the primary point of contact when it comes to negotiating with the appropriate nonprofit organizations etc. in order to obtain the necessary amount of subject data from the various individuals within the areas where recruitment and direct face to face interviews will occur.

Study Concerns

This methodology exposes the participants to an assortment of risks that need to be taken into consideration during the research process. The main risk the participants will encounter is if any of their answers that criticize or indicate dissatisfaction with they way in which their organization works leaks. This may have consequences on the attitude and opinion of managers and various officials towards them and can result in victimization or in the worst case termination from the organization. To eliminate this risk, the responses will be kept in an anonymous location. This way, the only way to access the information will be through a procedure that involves the researcher. The project thus observes research ethics in sampling as well as during the data collection process.

Research Design

The research design for this study will primarily be qualitative wherein the research will compare current academic literature involving nonprofit sustainability with the practices currently in place within the U.K. nonprofit sector. In order to obtain such data it would be necessary to contact various nonprofit organizations and arrange for a short interview with an employee in order to ask about their current practices involving operational sustainability. According to various research guides, a survey/ interview technique is used when the researcher is principally interested in descriptive, explanatory or exploratory appraisal, as is the case in this study. The justification for choosing a questionnaire/ interview approach for this particular study is grounded on the fact that participants will have the ability to respond to the data collection tool by way of self-report, thus, this project will utilize a self-administered questionnaire/ interview schedule for the purposes of data collection. An analysis of related literature will also be used to compare the study findings in order to develop a succinct method of analysis regarding current sustainability practices utilized by nonprofit organizations.

Deciding on the Questions to be used in the Interviews

The questions for the interviews were based on an evaluation of the research questions and the data and arguments presented in the literature review section. The aim of the researcher was to develop the questions in such a way that they build up on the material utilized in the literature review. Thus, the questions place a heavy emphasis on confirming the data in the literature review, reveal the current state of the nonprofit sector from the perspective of employees and managers and determining what factors influence the financing strategies of NPOs.

Interview Questions

As explained earlier, the methodology that will be utilized within this particular study will be comprised of an evaluation of questionnaire results given to a variety of employees from locally based nonprofit organizations within the U.K. in order to determine the various nuances they experience on a daily basis when it comes to the sustainability of their organization’s operations. The following questions were created based on an assessment of the research question, the data that the researcher would need and how pertinent they would be in terms of the participants actually being able to answer them.

What are the current operational strategies involving the long term sustainability of your nonprofit organization?
Do you believe that such processes are viable in the long run?
In what way has your organization attempted to increase operational efficiency while reducing costs?
Do you believe that being a nonprofit organization without direct government or religious organization support causes you to operate less efficiently than other NPOs with access to such resources?
In terms of strategic development with an eye towards long term survivability, how would rank the current operational processes utilized by your NPO?
In your own words would you say that with the way things are that your NPO will continue to exist 50 years from now?
Has there been a decline in the amount of funds obtained by your NPO ever since the 2008 financial crisis?
What are the problems you encounter annually when it comes to funding your NPO?
Have such problems been increasing or decreasing since the establishment of your organization?
What are the current methods of funding utilized by your organization?
Do you believe that alternative methods of funding will be necessary for your NPO to survive in the long term?
Has your organization ever utilized social networking as a means of obtaining funds?
Do you believe that social networking can be used as a way of gaining new funds for your organization?
How long have you relied on the current operational strategies utilized by your NPO?

Data Collection Process

Anderson (2004) notes that research that is performed in a rigorous manner can lead to more effective practices than decisions based mainly on intuition, personal preferences, or common sense. It is based on this that the researcher will utilize the views garnered through the interviews that will be conducted along with sustainability data in order to develop a sufficient platform from which effective and above all accurate conclusions can be developed. The interviews will be conducted individually to ensure its alignment with the aforementioned anonymity of the study results. It will also be necessary to assure the participants of the safe storage of information before the interview begins to encourage them to give genuine answers. It was determined by the researcher that responses will be more favorable if the interview is conducted privately. This approach will mitigate accommodation costs thus making the project more cost effective.

Reliability and Validity

Handley (2005) noted reliability in any research process implies that the same set of data would have been collected each time in repeat examinations of the same variable or phenomenon, otherwise referred to as consistency of measurement. To realize reliability of the study findings, the researcher will certify that items incorporated in the survey schedule will only capture data that are of interest to the broader objectives of the study. The range of measurement of the sets of the survey schedules will also be adjusted upwards to enhance internal consistency of the study findings. In addition, the researcher will utilize multiple indicators to ensure the collection of objective unabridged data.

Handley (2005) determined validity is a measurement that is used to describe a measure or instrument that correctly reflects the variable or phenomena it is intended to evaluate, thus reinforcing the conclusions, assumptions, and propositions made from the analysis of data. Internal validity, which denotes the soundness of a study or investigation, will be achieved through the establishment of a framework for the application of effective sampling techniques and employing a validated and reliable survey schedule for the propose of data collection. The same procedures in combination with the recruitment of a representative sample size will be used to achieve external validity, thus ensuring that the study findings can be generalized to other settings.

Ethical Considerations

Possible ethical considerations that may arise through this study consist of the following:

The potential for unintentional plagiarism through verbatim lifting of information, arguments and points of view from researched source material.
The use of unsubstantiated information taken from unverifiable or nonacademic resources (ex: internet articles).
The use of a biased viewpoint on issues which may inadvertently result in an alteration of the questionnaire results.
Presentation of data without sufficient corroborating evidence or a lack of citation.
Falsifying the results of the research for the benefit of the initial assumptions of the study.
Using views and ideas without giving due credit to the original source.

According to Saunders et al. (2000), “Ethics refers to the appropriateness of your behavior in relation to the rights of those who become the subject of your work, or are affected by it” (p. 130). In addition to seeking approval from a thesis advisor, a letter of consent will be sent to the head of the nonprofit organization to request individual indulgence and approval in conducting the study. Further communication will proceed between those who agree to take part in the survey and the researcher via email to ensure that all individuals understand the requirements for the study. The researcher will also take time to elaborate the rights of participants during the study process, including the right to informed consent and the right to confidentiality. By addressing these concerns through guidelines on proper ethics and research, it is expected that there will be few ethical concerns that will need to be addressed.

Research Results

After contacting the necessary personnel at the various nonprofit organizations (which shall remain anonymous for the sake of protecting the respondents due to the nature of their answers) the following internal problems were noted across the 15 NPOs that were examined. The first was that nearly all the respondents indicated that the NPOs that they worked for relied almost exclusively on traditional sources of funding and it was only 4 out of the 15 respondents who indicated that their NPO was even considering the use of crowd sourced funding opportunities. The second notable response from the various respondents indicated that while many of the NPOs were well aware of internet based methods of funding and had in fact used them on occasion, relatively few even thought of utilizing social networking as a means of attracting funds for the organization.

As the respondents indicated, social networking was normally utilized as a means of “getting the word out” about particular events and updates regarding the organization and was not utilized in the least in any form of funding opportunity. When asked about problems related to funding sufficient funds, all of the respondents agreed that as a result of the 2008 financial crisis there has been a considerable decline in funding opportunities with various NPOs finding it harder every year to obtain adequate funds to maintain operations. It was almost universally agreed by the respondents involved in the study that the traditional methods by which various NPOs have come to rely on for funds are simply not working the way they should and that some alternative means of funding must be devised in order to supplement funds obtained through traditional sources.

Further questioning of the research participants confirmed the information within the literature review involving founder’s syndrome being endemic within the U.K. nonprofit sector wherein many of the respondents admitted that their respective organizations suffered from practices that were stuck in “dark ages” so to speak due to the desire of the founder to retain operations as they were. This has resulted in a reliance on antiquated methods of operation and significant levels of nepotism within the office which many of the respondents agreed held back the performance of the organization as a whole rather than improved on it. As for resource management, oddly enough the responses of the research subject actually differed from the content of literature since many indicated that numerous cost cutting measures have actually been implemented within their respective NPOs in order to reduce the cost of operations. In fact many of them agreed that as a direct result of the financial crisis the various managers within their organizations have placed a greater emphasis on cost cutting measures.

Discussion

It is based on the results presented from the interview process as well as the literature review that this paper recommends the following solution in order to resolve the issues presented involving the U.K. nonprofit sector. First and foremost, it is recommended that sustainability formula indicated within the literature review be utilized. By doing so this ensures that NPOs within the U.K. would follow a operational strategy that emphasizes financial stability, program adaptability and above all the removal of founder’s syndrome which in the end would enable a far more effective and efficient program to exist. Lastly, U.K. based NPOs should attempt to utilize online social networking in an attempt to develop methods of crowd funding. By doing so this will enable such organizations to in effect gain access to potentially millions of dollars in funds through internet users.

Conclusion

It is expected that should all the strategies mentioned within this paper be implemented this will in effect transform the U.K. nonprofit sector for the better.

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