Five Oaks Consulting

When nonprofits conform to common financial management norms, they may sacrifice as much as half of their impact

Photo by Andrea Piacquadio from Pexels

By George Mitchell, Associate Professor of Nonprofit Management at the City University of New York. He reports on recently published research, conducted together with Thad Calabrese, Associate Professor of Public and Nonprofit Financial Management, at New York University. (George, Hans Peter Schmitz, and Tosca are the co-authors of the book ‘Between Power and Irrelevance: the Future of Transnational NGOs’, and have collaborated for close to 20 years.)

Charities that conform to common nonprofit financial management norms may be sacrificing more than half of their mission impact over a decade. This is the conclusion of our recently published research on a large population of US registered nonprofits and NGOs (domestic and international ones).

As charitable organizations, NGOs have long been under pressure to make themselves look financially trustworthy by following practices like:

  • minimizing overhead
  • being fiscally lean
  • diversifying revenue sources; and
  • avoiding significant debt.

Many funders, watchdogs, and other stakeholders routinely evaluate NGOs based on their conformity to norms like these. But how does following these norms actually affect organizational performance? My co-author Thad Calabrese and I analyzed data from thousands of US charities over several decades to find the answer. Read more (short article) at The Conversation.

Or check out our original research here  (open access/no paywall) or here (paywall).

Let us know how you react to this — perhaps counterintuitive — research outcome! Email me at george.mitchell@baruch.cuny.edu, or leave a comment.

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