Unfunded Stakeholder Mandates and Nonprofit Performance Impacts

Courtney Lyn Coe, Walden University

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.