Use of Funds in a Nonprofit Organization As Predictor of Organizational Effectiveness and Efficiency
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Andrews University Digital Commons @ Andrews University Dissertations Graduate Research 2014 Use of Funds in a Nonprofit Organization as Predictor of Organizational Effectiveness and Efficiency Throstur B. Thordarson Andrews University Follow this and additional works at: https://digitalcommons.andrews.edu/dissertations Part of the Christian Denominations and Sects Commons, and the Nonprofit Administration and Management Commons Recommended Citation Thordarson, Throstur B., "Use of Funds in a Nonprofit Organization as Predictor of Organizational Effectiveness and Efficiency" (2014). Dissertations. 730. https://digitalcommons.andrews.edu/dissertations/730 This Dissertation is brought to you for free and open access by the Graduate Research at Digital Commons @ Andrews University. It has been accepted for inclusion in Dissertations by an authorized administrator of Digital Commons @ Andrews University. For more information, please contact [email protected]. Thank you for your interest in the Andrews University Digital Library of Dissertations and Theses. Please honor the copyright of this document by not duplicating or distributing additional copies in any form without the author’s express written permission. Thanks for your cooperation. ABSTRACT USE OF FUNDS IN A NONPROFIT ORGANIZATION AS PREDICTOR OF ORGANIZATIONAL EFFECTIVENESS AND EFFICIENCY by Throstur B. Thordarson Chair: Erich Baumgartner ABSTRACT OF GRADUATE STUDENT RESEARCH Dissertation Andrews University School of Education Title: USE OF FUNDS IN A NONPROFIT ORGANIZATION AS PREDICTOR OF ORGANIZATIONAL EFFECTIVENESS AND EFFICIENCY Name of researcher: Throstur B. Thordarson Name and degree of faculty chair: Erich Baumgartner, Ph.D. Date completed: May 2014 Purpose The purpose of this study is to explore predictive relationships between how funds are used in a religious not-for-profit organization (NPO) and member recruitment. Financial data, from Seventh-day Adventist conferences at the organizational level, were correlated with data on membership recruitment from these same conferences. Method This study used a linear time-series analysis where relationships between variables and past values were explored over a 12-year period. Financial data were collected from year-end audited statements and financial activity statements. Published statistical records were used to collect data on membership and member donations. Findings This study concludes that Seventh-day Adventist conferences in the United States are for the most part not effective in fulfilling a primary goal in their stated mission. Cash management was not found to be a significant predictor, while both debt management and member support provide mixed results as predictors of member recruitment. Furthermore, pastoral services demonstrated mixed results in predicting recruitment of new members, and funding of direct recruitment efforts had no predictive relationship to membership growth, indicating ineffectiveness of those efforts. Organizational level funding of education was not found to be effective, but may be explained in that only insufficient data were available for the study, even though it is aggregated and stored at a national databank. Administrative efforts also provided mixed significance as a predictor of recruitment success, but it was found to be negatively related to recruitment. Recommendation As NPOs are dependent on member support for their values and mission that can only be maintained with trust based on regular flow of information, I recommend that nonprofit organizations exercise greater transparency and provide researchers and the general public freer access to year-end financial reports, membership data, and other information that is related to the success of its mission. In addition, I recommend that nonprofit leaders and practitioners implement organizational changes that are based on effectiveness research which may provide robust results to their mission success. Andrews University School of Education USE OF FUNDS IN A NONPROFIT ORGANIZATION AS PREDICTOR OF ORGANIZATIONAL EFFECTIVENESS AND EFFICIENCY A Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy by Throstur B. Thordarson May 2014 © Copyright by Throstur B. Thordarson 2014 All Rights Reserved USE OF FUNDS IN A NONPROFIT ORGANIZATION AS PREDICTOR OF ORGANIZATIONAL EFFECTIVENESS AND EFFICIENCY A dissertation presented in partial fulfillment of the requirements for the degree Doctor of Philosophy by Throstur B. Thordarson APPROVAL BY THE COMMITTEE: _________________________________ ______________________________ Chair: Erich Baumgartner Dean, School of Education James R. Jeffery _________________________________ Member: Tevni Grajales _________________________________ Member: Sylvia Gonzales _________________________________ ______________________________ External: Stanley Patterson Date approved Dedicated to my best friend and dear wife, Jonina. Without her support and encouragement, I would never have completed this study. iii TABLE OF CONTENTS LIST OF TABLES .................................................................................................. vii LIST OF ABBREVIATIONS ................................................................................... ix ACKNOWLEDGMENTS ........................................................................................ x Chapter 1. INTRODUCTION ........................................................................................ 1 Measuring Effectiveness ......................................................................... 2 Religious Non-Profit Organizations ................................................... 2 The Mission of Non-Profit Organizations .......................................... 4 Effectiveness and Financial Resources ............................................... 5 Statement of the Problem ................................................................... 6 Purpose of Study ............................................................................... 7 Research Questions ........................................................................... 7 Rationale for Study ........................................................................... 9 Significance of Study ........................................................................ 11 Basic Assumptions .................................................................................. 12 Delimitations ..................................................................................... 12 Definition of Terms ........................................................................... 12 Summary ................................................................................................. 15 2. REVIEW OF LITERATURE ........................................................................ 17 Introduction ............................................................................................. 17 Organizational Effectiveness ................................................................... 17 Defining Not For Profit ........................................................................... 18 Not-for-Profit Organization ..................................................................... 20 Classification of Not-for-Profit Organizations ......................................... 22 NPO Effectiveness .................................................................................. 24 Goal Attainment ................................................................................ 26 Systems Resource Approach .............................................................. 27 Multidimensional Approach .............................................................. 28 New Approaches ............................................................................... 29 Inclusion of Finances ......................................................................... 30 Defining Effectiveness ............................................................................ 32 Confusion in Literature ...................................................................... 32 iv A Simple Definition of Effectiveness ................................................. 35 Requirements for Definition of NPO Effectiveness ............................ 36 Level of Measure .................................................................................... 37 Call for Empirical Research ..................................................................... 38 Seventh-day Adventist Church ................................................................ 41 Effectiveness Measures for the SDA church ...................................... 43 Mission Driven .................................................................................. 43 Standards for Comparison ................................................................. 44 Recruitment of New Members ........................................................... 45 Summary ................................................................................................. 47 3. METHODOLOGY ....................................................................................... 48 Introduction ............................................................................................. 48 Research Design ................................................................................ 48 Population ......................................................................................... 49 Purpose and Hypotheses ...................................................................