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BY-NC-ND 3.0 license Open Access Published by De Gruyter September 11, 2014

How Competition and Specialization Shape Nonprofit Engagement in Policy Advocacy

Heather MacIndoe EMAIL logo
From the journal Nonprofit Policy Forum

Abstract

This paper extends research on nonprofit advocacy by exploring the relationship between competition, nonprofit mission, and policy advocacy. Previous research indicates that charitable nonprofits serving specialized populations, such as immigrants or veterans, often engage in policy advocacy. This could benefit marginalized populations whose interests are articulated by nonprofit organizations. However, population ecology theory in organizational sociology predicts that generalist organizations will outperform specialists in uncertain environments. At the very times when nonprofits serving specialized constituencies should focus on advocacy the most – for example to protect funding in competitive policy environments – they may be least able to do so. Drawing on survey data from charitable nonprofits in Boston, Massachusetts, we find that competition and specialization have direct positive effects on nonprofit engagement in advocacy and the use of formal and grassroots tactics. However, the effect of competition is weakened by nonprofit specialization. Nonprofit specialists that report higher competition for resources are less likely to participate in policy advocacy and use fewer formal and grassroots tactics. Specialists that report higher service delivery competition use fewer formal advocacy tactics. These findings suggest that we should be cautious in looking to the nonprofit sector, particularly organizations serving specialized populations, to provide constituent representation through policy advocacy in competitive environments.

Arguably, the most important public policies we have in the United States have come from nonprofit organizations lobbying for their causes... [because they] knew that direct service alone would not change the flawed or missing public policies that contributed to the problems their organizations were trying to alleviate.

(Arons 2002, 369)

Introduction

Charitable nonprofit organizations often serve constituencies that have a limited voice in the policy process (LeRoux 2007; Strolovitch 2007). Although service provision is their primary activity, nonprofits encounter a variety of motivations to participate in public policy (Smith and Pekkanen 2012). Nonprofits may seek to protect organizational resources, to promote the interests of service populations, or to weigh in on regulations concerning service implementation and evaluation. Policy advocacy includes activities aimed at promoting, or preventing, changes in policies that directly impact nonprofits and their constituents (Andrews and Edwards 2004; Boris and Mosher-Williams 1998). Lobbying, or direct contact with policymakers in order to influence legislative outcomes, is the tactic most associated with nonprofit advocacy (Berry and Arons 2003). However, policy advocacy encompasses a variety of strategies that require different organizational resources and expertise (Guo and Saxton 2010; Mosley 2010). Scholars differentiate “insider” strategies that target political elites who are positioned to directly influence public policy and “outsider” strategies that mobilize other social actors to influence political elites (Gormley and Cymrot 2006; Hoefer 2000; Mosley 2011). Outsider tactics are sometimes referred to as “grassroots” tactics, emphasizing their non-elite origins.

A growing body of research considers how charitable nonprofits participate in advocacy. Although competition over resources and policy prescriptions often drives engagement in the policy process, few studies consider how competition for resources and service delivery influences nonprofit policy advocacy (e.g. LeRoux and Goerdel 2009; Suárez and Hwang 2008). Resource competition includes contests for funding (e.g. donations, contracts, or fees) and personnel (e.g. staff, board members, or volunteers) (Tuckman 1998). Nonprofits also compete in the marketplace with for-profits, public agencies, and other nonprofits to provide services (Marwell and McInerney 2005). While competition may shape policy advocacy, nonprofits operate in distinct policy environments related to their charitable missions (Sandfort 2010). Thus it is important to consider the relationship between competition and mission when examining nonprofit advocacy.

This research investigates how nonprofits’ perceptions of competition and specialization of nonprofit mission impact the incidence and form of nonprofit involvement in policy advocacy. How does competition for resources and service delivery influence nonprofit engagement in advocacy? Does specialization impact nonprofit advocacy? Finally, does specialization mitigate the effect of competition on the incidence and form of nonprofit policy advocacy? Drawing on survey data from charitable nonprofits in Boston, Massachusetts, we find that competition and specialization have direct positive effects on nonprofit engagement in advocacy and the use of formal and grassroots tactics. However, the effect of competition is weakened by nonprofit specialization.

This research makes theoretical and empirical contributions to the study of nonprofit advocacy. The analysis, drawing on insights from population ecology theory, shows that competition and specialization enhance nonprofit involvement in policy advocacy and reveals that these effects are weakened when nonprofit specialists experience competition. In competitive environments, nonprofits serving specialized populations are less likely to engage in policy advocacy and use fewer formal and grassroots strategies. Empirically, the analysis offers a more nuanced way to measure how nonprofit mission (specialization) influences nonprofit political engagement, explains how the interaction of specialization and competition impacts nonprofit advocacy, and highlights the importance of including the 501(h) election in analyses of nonprofit policy advocacy. Our findings suggest caution in looking to nonprofits serving specialized populations to provide representation for their constituencies through policy advocacy in uncertain economic times.

Nonprofit specialist and generalist responses to competition

Previous studies find a reliable association between nonprofit mission and participation in policy advocacy (Child and Grønbjerg 2007; MacIndoe and Whalen 2013). In particular, nonprofits serving specialized populations such as immigrants, the homeless, or the mentally ill, are more likely to engage in policy advocacy (De Graauw 2008; Mosley 2013; Vaughan and Arsneault 2008). This could be interpreted as an antidote to government or market failure to provide particular services (Weisbrod 1988). Through policy advocacy, the nonprofit sector can incorporate underrepresented voices into the policy process (LeRoux 2007; Strolovitch 2007). However, the theory of population ecology in organizational sociology offers a perspective on specialists and generalists that interjects a note of caution into such optimistic assessments of nonprofit advocacy (Hannan and Freeman 1977).

Nonprofit scholars apply the theory of population ecology to examine survival, death, and change in nonprofit populations (e.g. Bielefeld 1994; Tucker, Singh, and Meinhard 1990; Twombly 2003). Organizational survival is linked to the fit between organizations and their resource environment or niche (Freeman and Hannan 1983; Hannan and Freeman 1977). In order to survive, organizations typically pursue one of two strategies in their struggle for resources – specialization or generalization – which determine their organizational form (Daft 2009). Specialists occupy a narrow resource niche and serve a narrow market providing a smaller range of goods or services. Generalists occupy a wide resource niche, serve a broad market, and offer an expansive range of goods or services (Freeman and Hannan 1983). The breadth of the generalist’s niche protects it from environmental change: “Because of the diversity of its products, services, and customers, generalists are able to reallocate resources internally to adapt to a changing environment, whereas specialists are not” (Daft 2009, 187). In uncertain environments, population ecology predicts that generalist organizations will outperform specialists (Freeman and Hannan 1983; Hannan and Freeman 1977).

While the ecological perspective is a selection model, in which the environment selects organizations for survival, many researchers combine selection and adaptation perspectives on organizational change (e.g. Galaskiewicz and Bielefeld 1998; Singh, House, and Tucker 1986). Nonprofits may employ a variety of adaptive strategies in the face of environmental uncertainty. A recent Urban Institute study of nonprofit-government contracting found that nonprofits respond to reduced revenues in several ways including cutting services, laying off staff, and pursuing additional sources of income (Boris et al. 2010). Other research examines nonprofit policy involvement as a response to increased environmental uncertainty, notably resource competition. For example, in her study of public and nonprofit organizations involved in the fight against AIDS in New York City, Chambré describes how organizations “join with other groups to engage in advocacy to publicize the fact that their activities are crucial” (1996, 162). She argues that a shared “rhetoric of scarcity” provided the basis for joint advocacy by organizations that are increasingly reliant on government funding. Advocacy was an important part of ensuring the survival of nonprofits working against the AIDS epidemic.

Policy advocacy furthers organizational survival by bringing nonprofit leaders into routine contact with public managers responsible for funding decisions. For example, in a study of homeless service nonprofits in Chicago, Mosley (2012) describes how nonprofit managers more often engage in advocacy to obtain resources and promote their organizations, rather than pursuing policy change on behalf of clients. She finds that nonprofits that depend on government funding view advocacy as “beneficial for the organization in the long run” (2012, 861).

This study builds on the notion that nonprofit policy advocacy is an adaptive strategy that can further nonprofit survival in uncertain environments. Nonprofit organizations face many sources of environmental uncertainty including economic downturns which can result in funding cutbacks, changes in funder priorities which can lead to decreased financial support, and the emergence of new performance expectations that require nonprofits to expend resources on evaluation at the expense of service delivery. Nonprofit participation in policy advocacy is difficult, but arguably most necessary, when facing such challenges. Population ecology suggests that nonprofits serving specialized populations may be less able to redirect resources from service provision to advocacy in uncertain environments when all available resources must be directed to core service missions. This study conceptualizes environmental uncertainty as competition for resources and service delivery. The following discussion develops hypotheses about the influence of competition, specialization, capacity, and resource dependence on nonprofit policy advocacy.

Resource and service delivery competition and nonprofit policy advocacy

A large body of research examines nonprofit resource competition, particularly for public and private funding (e.g. Bielefeld 1994; Galaskiewicz and Bielefeld 1998; Thornton 2006). Tuckman (1998) expands resource competition to include customers, board members, and volunteers. As their numbers grow, nonprofits are challenged to differentiate themselves from other nonprofits, for-profit firms, and government agencies (Barman 2002; Frumkin and Kim 2001). Welfare reforms in the late 1990s granted states the authority to award service contracts to private entities. This led to the emergence of large for-profit firms in markets where human service nonprofits traditionally thrived (Frumkin and Andre-Clark 2000). Marwell and McInerney (2005) argue that service delivery competition could produce a “displaced” market in which nonprofits are replaced by for-profit firms, or a “defended” market in which nonprofits successfully compete with private firms. To compete for service contracts, nonprofits must implement competitive strategies. Nonprofits use “fundraising, regulatory, legitimacy, or other tools of defense” to contend with competitors (Marwell and McInerney 2005, 12). As the resource environment becomes more competitive, nonprofits may be more likely to strategically engage in policy advocacy (LeRoux and Goerdel 2009).

Previous research offers some insight into the relationship between competition and nonprofit advocacy. Suárez and Hwang’s (2008) study of California nonprofits indicates that lobbying is a common practice for nonprofits like hospitals that experience cross-sector competition. However, they find that cross-sector competition does not influence lobbying in the larger organizational field (e.g. health nonprofits). LeRoux and Goerdel’s (2009) study of political advocacy among Michigan nonprofits indicates that increased competition for resources is associated with nonprofit involvement in a wider array of political activities.

Hypothesis 1: Competition for resources and service delivery will positively influence nonprofit participation in policy advocacy and be associated with a wider array of tactics.

Nonprofit mission, specialization, and policy advocacy

Common sense suggests that nonprofit engagement in the policy process is “mostly mission driven” (Bass et al. 2007, 167). Some nonprofits have organizational objectives that more easily encompass advocacy work (Smith and Pekkanen 2012). For example, environmental nonprofits may engage in the policy process to influence government regulation (Child and Grønbjerg 2007). Nonprofit mission is typically operationalized using the National Taxonomy of Exempt Entities (NTEE), the national standard for classifying nonprofit organizations by their primary tax-exempt purpose (Sumariwalla 1986).[1] Given the presence of a well-developed measure of nonprofit mission, the treatment of mission in empirical studies of nonprofit advocacy is surprisingly varied. Some researchers examine large heterogeneous samples of nonprofit organizations and account for mission using major NTEE categories such as arts, education, environment, health, human service, public benefit, and religion (Child and Grønbjerg 2007; Guo and Saxton 2010; MacIndoe & Whalen 2013). These studies find that environmental and public benefit nonprofits are more likely to engage in advocacy. Other studies analyze heterogeneous samples of nonprofits, but include limited indicators for mission, typically environmental and public benefit nonprofits, following previous research (e.g. Donaldson 2007; Mellinger and Kolomer 2013; Suárez and Hwang 2008). Finally, some researchers focus on particular nonprofit subsectors, such as human services, and do not include any measures of mission in their analyses despite the diversity that exists within NTEE categories (e.g. Mosley 2010; Nicholson-Crotty 2007; Schmid, Bar, and Nirel 2008).[2]

The theory of population ecology in organizational sociology suggests an additional way to account for variation in nonprofit mission: defining whether nonprofits are specialists or generalists (Freeman and Hannan 1983; Hannan and Freeman 1977). Nonprofit researchers distinguish specialists and generalists in a variety of ways. For some scholars, the distinction is related to aspects of service provision, such as the geographic scope of services. In their study of community foundation performance, Guo and Brown (2006) defined specialist foundations with respect to the range of their funding area; specialists served a smaller geographic area than generalists. Other researchers examine nonprofits resources to differentiate specialists and generalists. For example, in a study of Minnesota nonprofits, Galaskiewicz and Bielefeld (1998) define specialists as drawing on fewer revenue sources than generalists. Some researchers examine attributes of nonprofits’ members to distinguish specialists and generalists. In their study of homogeneity in voluntary association membership, Popielarz and McPherson (1995) describe organizations with heterogeneous members (e.g. diverse educational attainment) as generalists, and groups with more similar members as specialists.

Finally, some nonprofit studies distinguish between specialist and generalist nonprofits according to characteristics of their service populations. For example, Archibald’s study of self-help groups defined specialists as organizations focused on “those experiencing the focal condition”: people with substance abuse problems (2007, 607). In contrast, generalists are self-help organizations oriented toward a broader range of “collateral participants, such as caregivers, families and professionals” (Archibald 2007, 607). In a study of social service nonprofits in Toronto, Tucker, Singh, and Meinhard use survey and secondary source data to distinguish specialists and generalists by the “number of domains in which they provide services” (Tucker, Singh, and Meinhard 1990, 160). Specialists serve a narrower population, while generalists serve a broader population.

Hypothesis 2: Nonprofit specialists will be more likely to engage in policy advocacy and to use a broader array of formal and informal tactics.

Effect of nonprofit specialization on competition

In the nonprofit literature, environmental uncertainty is frequently conceptualized as competition (e.g. Galaskiewicz and Bielefeld 1998). Population ecology suggests that the relationship between environmental uncertainty (competition) and nonprofit specialization may lead to an organization’s demise. Nonprofit generalists that serve a wider population, or provide a broader array of programs, can more quickly reallocate existing organizational resources when faced with greater competition for funding. For example, in a changing resource environment when funder preferences shift – a foundation changes its focus or government funding is not renewed – a generalist, that serves a broad population, can reposition itself, focusing on populations and programs that are still funded. In contrast, specialists, focusing on narrower service populations, are at greater risk in turbulent environments. In uncertain environments, specialist organizations have fewer slack resources to devote to activities like policy advocacy and are likely to focus all their efforts on ensuring the continuing viability of their primary service mission.

Hypothesis 3: Specialization will weaken the effect of competition on nonprofit policy advocacy and reduce the range of advocacy tactics.

Nonprofit advocacy capacity

In their seminal study, Berry and Arons (2003) found a great deal of confusion about legal regulations concerning nonprofit advocacy. They join others (Child and Grønbjerg 2007; Kerlin and Reid 2010) in concluding that nonprofits may avoid advocacy because they fear losing their tax-exempt status and their ability to raise tax-deductible donations. Charitable nonprofits can lose tax-exemption if they violate IRS regulations restricting nonprofits from attempting to influence legislation as a “substantial part” of their activities. This ambiguous guideline regarding lobbying expenses is often cited as having a chilling effect on nonprofit advocacy (e.g. Bass et al. 2007). In 1976, the IRS established the “501(h) election” a set of specific expenditure guidelines for nonprofit lobbying. Nonprofits can easily opt-in to these guidelines. Taking the 501(h) election does not cost anything and can be easily revoked (Freemont-Smith 2004). The election indicates an understanding of regulations involving nonprofit lobbying that may facilitate participation in advocacy (Bass et al. 2007).[3] Nonprofit professionalization and formalization may also result in greater capacity for advocacy (Hwang and Powell 2009; Mosley 2010, 2013). Nonprofits with a full-time staff are more likely to engage in advocacy (Berry and Arons 2003; Guo and Saxton 2010). However, not all types of advocacy require full-time personnel, funding, or expertise. For example, electronic/online advocacy can be inexpensive (McNutt and Boland 1999; Miller-Stevens and Gable 2013).

Hypothesis 4: Advocacy capacity, measured as taking the 501(h) election and having a full-time staff, will be positively related to nonprofit participation in policy advocacy and to the use of a wider array of both formal and informal advocacy tactics.

Resource dependence and nonprofit advocacy

Nonprofits depend on many organizational actors for resources and attempt to manage uncertainties that arise as a result (Pfeffer and Salancik 1978). According to Bass and his colleagues: “the more money an organization has, and from more different sources, the more likely it can employ policy staff and be heavily engaged in advocacy” (2007, 196). While most nonprofits have revenues concentrated in a few funding sources (Grønbjerg 1993), nonprofits that are able to diversify their revenues may be freer to engage in policy advocacy and less beholden to dominant funders.

Government funding is a vital component of nonprofit budgets, particularly human service nonprofits (Mosley 2012; Smith and Lipsky 1993). Studies examining how government funding influences nonprofit advocacy reach conflicting results (Nicholson-Crotty 2009). Some find that dependence on government funding decreases nonprofit advocacy (Guo and Saxton 2010; Kerlin and Reid 2010; Schmid, Bar, and Nirel 2008). Nonprofits that rely on government funding may avoid advocacy because they fear losing public funding or tax-exemption (Berry and Arons 2003). Alternatively, other scholars find that dependence on government funding increases nonprofit advocacy (Chaves, Stephens, and Galaskiewicz 2004; Donaldson 2007; LeRoux 2007; Mosley 2010, 2012). Nonprofits may proactively engage in advocacy to safeguard existing funding or to identify new sources of public support.

A recent national study of nonprofit advocacy finds that foundation funding is not a barrier to nonprofit advocacy (Bass et al. 2007). However, previous research suggests that foundations tend to support more moderate causes and mechanisms for social change. For example, foundations selectively fund nonprofit advocacy, supporting social change efforts like environmental certification and education reform (Bartley 2007; McKersie 1997). In their study of the US civil rights movement, Jenkins and Eckert (1986) found that foundation patronage professionalized the movement, “channeling” funding to more moderate social movement organizations. When relying on government or foundation support, nonprofit managers must carefully consider how policy advocacy could influence these vital funding streams.

Hypothesis 5: Nonprofit revenue diversification will be positively related to engagement in policy advocacy.

Hypothesis 6: Nonprofit dependence on government funding will influence the incidence and form of nonprofit policy advocacy.

Hypothesis 7: Nonprofit dependence on foundation funding will influence the incidence and form of nonprofit policy advocacy.

Methods and data

Data and sample

Survey data from nonprofit executive directors in Boston, Massachusetts, are used to examine the effect of competition and specialization on nonprofit policy advocacy. Executive directors were asked if their nonprofits engage in policy advocacy and which formal and informal strategies they use. The sample, stratified by mission, size, and geographic location, comes from the Business Master File maintained by the National Center for Charitable Statistics (NCCS) at the Urban Institute. The study focused on service providing charitable nonprofits and excluded mutual benefit organizations which only provide services to members and religious nonprofits that are not required to file tax returns. Aside from these exclusions, the sample distribution of mission and size is comparable to nonprofits across Massachusetts (MacIndoe and Barman 2009). The University of Chicago Survey Lab administered the online survey between September 2008 and February 2009 and achieved a 63% response rate (N=379). See Tables 1 and 2 for descriptive statistics and correlations.

Table 1:

Descriptive Statistics

Variables1MeanSDOperationalization
Dependent variable
Participation in Policy Advocacy0.490.50Does your organization work to support positions on policy issues or on issues related to the interests of certain groups?
Participation in Formal Advocacy22.581.52Scale comprised of formal advocacy activities: lobbying, administrative lobbying, coalition building, judicial advocacy, expert testimony
Participation in Grassroots Advocacy22.051.42Scale comprised of grassroots advocacy activities: grassroots lobbying, public events, public education, voter registration, media advocacy
Independent variables
Competition for resources3
Public Funding1.060.90Competition for public funding (with NPO, FPO, or GVT)
Private Funding1.240.81Competition for private funding (with NPO, FPO, or GVT)
Personnel (Staff/Volunteers)1.381.03Competition for staff/volunteers (with NPO, FPO, or GVT)
Service competition3
Programs/Services1.051.01Program/service competition (with NPO, FPO, or GVT)
Specialization index30.410.39Normalized calculation of number of populations nonprofit serves
Interactions Specialist * Competition3
Specialists * Public Funding0.420.64Interaction term Specialization × Competition for Public Funding
Specialists * Private Funding0.460.63Interaction term Specialization × Competition for Private Funding
Specialists * Personnel0.540.78Interaction term Specialization × Competition for Personnel
Specialists * Programs/Services0.390.66Interaction term Specialization × Program/Service Competition
Advocacy Capacity
501(h) Election40.060.24Nonprofit takes 501(h) election to report advocacy expenses
Full-Time Staff0.780.41Nonprofit has paid full-time staff
Resource Dependence
Revenue Diversification50.480.36HHI, higher value: more concentrated
Government Funding0.350.48Government funding is a primary source of support
Foundation Funding0.420.49Foundation funding is a primary source of support
Commercial Revenue0.330.47Commercial revenue is a primary source of support
Organizational Characteristics3
Age2318.70Age in 2009 based on IRS rule date
Size13.221.79Natural log of annual expenses
Enivronment60.050.22e.g. environmental preservation, environmental cleanup
Public Benefit60.250.43e.g. neighborhood associations, rights organizations
Table 2:

Correlations

Variable123456789101112131415
1 Competition: Public Funding
2 Competition: Private Funding0.48***
3 Competition: Personnel (Staff)0.30***0.29***
4 Competition: Programs/Services0.37***0.38***0.41***
5 Specialist Orientation–0.04–0.12**–0.05–0.10*
6 Specialists * Public Funding0.54***0.18***0.15***0.11**0.62***
7 Specialists * Private Funding0.21***0.41***0.11**0.09*0.69***0.67***
8 Specialists * Personnel0.14**0.080.50***0.10**0.66***0.59***0.62***
9 Specialists * Services/Programs0.17***0.13**0.17***0.48***0.57***0.56***0.60***0.58***
10 501(h) Election–0.05–0.040.02–0.070.04–0.030.000.02–0.01
11 Full-Time Staff0.23***0.23***0.32***0.25***0.09*0.18***0.19***0.16***0.20***0.00
12 Revenue Diversification–0.05–0.060.03–0.10**–0.01–0.06–0.050.01–0.060.06–0.07
13 Government Funding0.37***0.19***0.09*0.11**0.030.25***0.10*0.050.10**–0.010.32***0.03
14 Foundation Funding0.020.09*0.040.03–0.01–0.020.020.02–0.02–0.030.17***0.13**0.17***
15 Commercial Revenue–0.04–0.020.070.13**–0.22***–0.14**–0.15***–0.14**–0.07–0.020.07–0.36***–0.23***–0.24***
16 Age0.030.020.09*0.13**–0.010.04–0.030.010.030.09*0.23***–0.18***0.02–0.12**0.13**
17 Size0.13**0.12**0.30***0.22***0.14**0.20***0.18***0.22***0.25***0.16***0.55***–0.13**0.14**–0.13**0.02
18 Environment–0.16***–0.07–0.04–0.07–0.18***–0.15***–0.13**–0.14***–0.13**0.04–0.020.13**–0.09*0.00–0.03
19 Public Benefit–0.060.000.01–0.09*0.05–0.040.020.04–0.040.10**–0.010.11**0.060.17***–0.04

Dependent variables

Participation in policy advocacy

A dichotomous dependent variable measures nonprofit participation in policy advocacy with the survey question: “Does your organization engage in policy advocacy by officially supporting certain positions on policy issues or on issues related to the interests of certain groups?” About half (49%) of nonprofits answered yes.

Involvement in formal and grassroots advocacy

Count variables measure the use of formal and grassroots strategies using responses to the question: “Nonprofits employ a number of different strategies in their efforts to work for policy change. Please indicate whether your organization uses each of the following advocacy strategies. (Check all that apply.)” Respondents chose from a list of ten tactics representing both formal (insider) and grassroots (outsider) ways of engaging with the policy process. Formal advocacy is an additive scale including: direct lobbying, administrative lobbying, coalition building, judicial advocacy, and expert testimony. On average, nonprofits used 2.58 formal tactics. Grassroots advocacy is an additive scale including: grassroots lobbying, public events, public education, voter registration, and media advocacy. On average, nonprofits used 2.05 grassroots tactics. Cronbach’s alpha coefficients of 0.73 (formal) and 0.79 (grassroots) suggested a high degree of internal consistency for the measures.[4] In addition, confirmatory factor analyses produced a single factor (eigenvalue=2.45 (formal), eigenvalue=2.72 (grassroots)) on which all items loaded at 0.55 (formal) and 0.54 (grassroots) or more.[5]

Independent variables

Competition

Competition is measured using nonprofit reports of resource competition (public funding, private funding, and personnel) and program/service delivery competition with other nonprofits, for-profit firms, or government agencies. The variable ranges from zero to three depending on the number of competitors a nonprofit identified.

Specialization

Specialists and generalists are distinguished by the range of a nonprofit’s service population (Archibald 2007; Tucker, Singh, and Meinhard 1990). A specialization index is constructed from responses to two survey questions: (1) “Does your organization serve the general population? (yes/no)” (2) “Please indicate which groups your organization specifically aims to serve through its programs and activities.” Respondents were asked to “check all that apply” from the following list: “children, disabled, families, GLBT, immigrants, mentally ill, minorities, seniors, veterans, women, youth/adolescents, and other.” An examination of nonprofit websites supplemented the survey descriptions of nonprofit service populations. The specialization index was calculated as follows: Specialization index=1– [(Number of service populations selected)/(Count of all service populations identified)]. The index was coded 0 if nonprofits indicated that they serve the general population. As the index increases from 0 to 1, nonprofits become more specialized, serving fewer populations.[6]Table 3 shows the distribution of mean values of the specialization index by nonprofit mission. ANOVA confirms statistically significant variation for several nonprofit mission categories.

Table 3:

Means and standard deviations of specialization index

Mission1N%Specialization index(mean)2Standard deviation
Public Benefit9424.80.440.41
Human Services**9224.30.520.33
Arts & Culture **7920.80.100.28
Education***7519.80.620.36
Health205.30.370.45
Environment**195.00.100.30
Total379100.00.410.39

Interaction between specialization and competition

Four interaction terms are used to examine the hypothesis that specialization moderates the impact of competition on nonprofit advocacy. Interaction terms are calculated by multiplying the nonprofit specialization index by the four measures of competition. The interaction terms and their constituent variables are mean centered in order to facilitate interpretation (Brambor, Clark, and Golder 2006).

Advocacy capacity

Information about whether a nonprofit took the 501(h) election (6% of the sample) comes from nonprofit tax returns on Guidestar.org. The presence of a full-time staff (78% of the sample) comes from the survey data.

Resource dependence

Resource diversification is calculated using Hirschman–Herfindahl Index (HHI) which takes on values between 0 and 1. Higher values indicate that nonprofit revenue is more concentrated in fewer sources. The HHI measure incorporates six types of nonprofit revenue from the NCCS data (contributions, program revenues, dues, investment income, special event income, and other income) (Frumkin and Keating 2011). The mean HHI value is 0.48. Additional measures of resource dependence reflect survey responses about the importance of government, foundation, and commercial revenue to nonprofit budgets.

Organizational characteristics

Organizational age in 2009 is calculated using the year of IRS registration. Size is measured as the natural log of organizational expenses in 2009. The analysis also includes variables for environmental and public benefit missions.

Analytic strategy

To investigate the influence of competition and specialization on the incidence and form of nonprofit advocacy, we estimate three regression models. A logistic regression (Table 4, Model A) is used to examine whether a nonprofit organization engaged in policy advocacy.[7] Separate Poisson regressions (Table 4, Models B and C) investigate the form of nonprofit advocacy with dependent variables measuring counts of participation in formal and grassroots advocacy.[8]Table 4 presents the regression models.

Table 4:

Regression models predicting nonprofit engagement in and form of policy advocacy

Independent variable(A) Participation in policy advocacy(B) Use of formal advocacy tactics(C) Use of grassroots advocacy tactics
Regression modelLogistic1Poisson2Poisson2
Competition for resources3
Public Funding1.46*0.070.06
Private Funding0.970.040.12
Personnel (Staff/Volunteers)1.45*0.120.14**
Service competition3
Programs/Services0.920.13*0.04
Specialization index33.89**0.63**0.78***
Interactions Specialist*Competition3
Specialists * Public Funding1.320.07–0.03
Specialists * Private Funding0.75**0.15–0.23
Specialists * Personnel0.40–0.24*–0.25**
Specialists * Programs/Services1.40–0.34**–0.13
Advocacy capacity
501(h) Election6.35***0.99***0.68***
Full-Time Staff1.98***0.34***0.30***
Resource dependence
Revenue Diversification0.71–0.03–0.09
Government Funding1.95**0.34***0.25**
Foundation Funding0.940.28**0.31***
Commercial Revenue0.760.12–0.14
Organizational characteristics
Age1.000.000.00
Size0.85*0.020.00
Environment3.46**0.74***0.62***
Public Benefit3.45***0.56***0.49***
Constant–1.84***–0.89**
N379185185
Goodness of Fit
Vuong Test4–0.01–0.02
LR Chi-square92.51***197.25***173.75***

Findings and discussion

Competition and specialization increase advocacy and the use of formal and grassroots tactics

Competition has a direct positive influence on the incidence and form of nonprofit policy advocacy, but resource and service delivery competition have different impacts. Increased nonprofit participation in policy advocacy is solely influenced by the perception of greater resource competition. Perceived competition for service delivery does not influence participation in advocacy. Hypothesis 1 is partially supported. Competition influences the use of advocacy tactics. Nonprofits that experience greater service delivery competition use more formal tactics (Model B). Nonprofits that experience greater resource competition (for personnel) use more grassroots tactics (Model C). These results hold given average levels of specialization.[9] The positive influence of competition on the use of formal advocacy is consistent with previous research that suggests nonprofit managers participate in the policy process for a variety of reasons including maintaining relationships with important funders and weighing in on regulations impacting service delivery (Child and Grønbjerg 2007; Mosley 2013; Smith and Lipsky 1993).

Nonprofits serving specialized populations are more likely to participate in the policy process, and to use a wider array of formal and informal strategies, than nonprofits serving the general population. Hypothesis 2 is confirmed. This finding concurs with previous studies that find nonprofit specialists are more likely to engage in advocacy (e.g. LeRoux and Goerdel 2009; MacIndoe and Whalen 2013). The analyses indicate that nonprofit specialists are more active in policy advocacy, given an average level of competition (Brambor, Clark, and Golder 2006). But what about when competition for resources and service delivery increases?

Specialization weakens the effect of competition on advocacy and reduces the use of formal and grassroots tactics

One implication of population ecology theory is that specialists have less organizational slack (Freeman and Hannan 1983). When nonprofit specialists experience increased competition, they have fewer organizational resources to expend on activities like advocacy, which are secondary to their core service missions. The analysis reveals that specialization weakens the effect of competition on nonprofit policy advocacy and decreases the use of formal and grassroots tactics. Hypothesis 3 is supported. Nonprofit specialists that experience greater resource competition (for private funding) are less likely to engage in advocacy (Model A).[10] Specialists that report greater resource competition (for personnel) are less likely to use both formal and grassroots tactics (Models B and C). These results support predictions drawn from population ecology. Interestingly, advocacy by nonprofit specialists is not impacted by increased competition for government funding. This may in part reflect recent research suggesting service contracting occurs in environments in which there are fewer service providers and low levels of competition (Van Slyke 2003).

Specialists that experience greater service delivery competition also use fewer formal advocacy tactics (Model B). Unlike generalists, specialists lack excess organizational slack to adjust to competitive environments. LeRoux and Goerdel describe a similar response to competition in their study of Michigan nonprofits: “Strategically prioritizing organizational tasks, nonprofits reduce their advocacy activities in the face of increasing competition as they turn their attention inward to focus on the core mission” (2009, 531). Such findings are cause for concern when looking to the nonprofit sector to provide constituent representation in competitive environments.

How can we reconcile these findings with research documenting intensive advocacy by nonprofit specialists (e.g. Mosley 2012; Vaughan and Arsneault 2008)? Nonprofits might make use of a wide range of collaborative arrangements that reduce the cost of advocacy (Balassiano and Chandler 2010; Kerlin and Reid 2010). Advocacy by nonprofit specialists could also be supported by the presence of allies including other nonprofits or sympathetic policymakers (Gormley and Cymrot 2006; Nicholson-Crotty 2007). Another alternative explanation, beyond the scope of this analysis, is that nonprofit specialists engage in less resource-intensive activities such as electronic advocacy when confronted with competitive resource environments (McNutt and Boland 1999). A further possibility is that the degree of competition matters. While LeRoux and Goerdel find that resource competition is associated with less nonprofit mobilization, they also note that when competition in the resource environment “approaches extremely high levels,” nonprofit mobilization increases (2009, 531).

Illustrating the impact of specialization on competition

Figure 1: Interaction effect of nonprofit specialization and program/service competition on engagement in formal advocacy
Figure 1:

Interaction effect of nonprofit specialization and program/service competition on engagement in formal advocacy

Figure 2: Changes in the marginal effect of service/program competition on nonprofit participation in formal advocacy
Figure 2:

Changes in the marginal effect of service/program competition on nonprofit participation in formal advocacy

Graphing the interaction effect of specialization and program/service competition illustrates the relationship between specialization and competition. The significant interaction terms for specialization and competition in Table 4 indicate that the effect of competition on nonprofit advocacy depends on the level of nonprofit specialization. Figure 1 depicts the impact of the interaction between specialization and service delivery competition on the predicted use of formal advocacy tactics. The lines in the graph show predicted use of formal advocacy tactics at increasing levels of specialization, from generalist nonprofits that serve a broad population (solid line) to nonprofits serving highly specialized populations (small dotted line). As nonprofits become more specialized (moving from the solid to the dotted line) and experience greater service competition (moving to the right on the x-axis), they use fewer formal advocacy tactics (lower levels on the y-axis). This is illustrated by the clockwise-pivot from the solid to the dotted lines graphing the interaction effect at various levels of specialization and competition.

Brambor, Clark, and Golder (2006) advise inspecting the marginal effects of multiplicative interaction terms to ensure that they are significant for all meaningful values of the variable of interest. Figure 2 shows how the marginal effect of competition on the expected level of formal advocacy (y-axis) varies with changes in nonprofit specialization (x-axis). The confidence intervals (dotted lines) indicate that the marginal effect is positive and statistically significant across all levels (low, medium, and high) of nonprofit specialization.[11]

Additional findings for advocacy capacity and resource dependence

Capacity is a strong positive predictor of nonprofit policy advocacy and is associated with greater use of formal and informal tactics. Hypothesis 4 is supported. Berry and Arons (2003) suggest that the 501(h) election indicates a greater understanding of federal regulations surrounding lobbying and increased comfort with advocacy work. Future studies of nonprofit advocacy should control for the 501(h) election. Revenue diversification is not associated with increased nonprofit advocacy and does not impact advocacy tactics. Hypothesis 5 is not supported.

In accordance with previous studies, resource dependence on government funding is associated with increased engagement in policy advocacy (Table 4, Model A) and the use of more formal and grassroots tactics (Table 4, Models B and C) (e.g. Chaves, Stephens, and Galaskiewicz 2004; Donaldson 2007; LeRoux 2007; Mosley 2010, 2012). In addition, nonprofits that report increased competition for government funding are more likely to engage in advocacy (given an average level of specialization). Hypothesis 6 is confirmed. Nonprofit reliance on private sources of funding, such as foundation grants, does not impact nonprofit participation in advocacy, but does increase the range of both formal and grassroots advocacy tactics. Hypothesis 7 is confirmed.

Conclusion

The idea that nonprofit advocacy empowers marginalized groups in the policy process is an established part of the narrative about nonprofit advocacy (e.g. Bass et al. 2007; LeRoux and Goerdel 2009; Mosley 2012; Schmid, Bar, and Nirel 2008; Smith and Pekkanen 2012). In a national study of nonprofit advocacy, Bass and his colleagues (2007) found that nonprofit managers view policy advocacy as “giving voice to the powerless … the elderly, kids, and disabled people … which is as valuable as the policy change itself” (2007, 168). Since many nonprofits serve constituencies that have a limited voice in the policy process, it is important to improve our understanding of how environmental factors like competition influence nonprofit advocacy.

This study applied insights from population ecology theory to consider how specialization and competition individually and jointly influence nonprofit policy advocacy, an adaptive activity that can further nonprofit survival. A central finding of this research is that specialization mitigates the effect of competition on nonprofit policy advocacy. In competitive environments, when nonprofit specialists should arguably be more engaged in the policy process, they may be less able to do so. Freeman and Hannan explain “… the distinction between specialist and generalist organizations involves issues of slack or excess capacity … specialists commit most of their resources to a few tactics for dealing with the environment” (1983, 1120).

Limitations to this research suggest avenues for further study. It is possible that nonprofit specialists might respond to competitive environments by engaging in less expensive forms of advocacy including joint campaigns with other organizations. Freeman and Hannan state: “Environments vary in ways that make alternative solutions to the problem of survival more or less substitutable” (1983, 1120). Joint campaigns may substitute for more costly advocacy strategies in competitive environments. To some extent, this study accounts for nonprofit involvement in joint advocacy campaigns through the inclusion of coalition building in the measure of formal advocacy. However, it is beyond the scope of this paper to assess nonprofit participation in other sorts of organizational arrangements that facilitate nonprofit advocacy. These could include relationships with intermediary organizations like state membership associations of nonprofits (Balassiano and Chandler 2010) or arrangements with 501(c)4 social welfare organizations (Kerlin and Reid 2010). Additionally, the data in this study do not permit us to assess advocacy by smaller grassroots nonprofits that comprise an important part of the nonprofit sector (Smith 2000). Finally, while Boston, Massachusetts has a large and diverse nonprofit sector, this study’s focus on one city may limit its generalizability.

A further limitation of this research involves the operationalization of the specialist–generalist distinction which builds on previous research (e.g. Archibald 2007; Tucker, Singh, and Meinhard 1990). A strength of this measure is that the focus on service populations establishes a clear link to nonprofit mission which is related to advocacy. In addition, measuring specialization as an index captures significant variation across nonprofit subsectors (e.g. Table 3). However, since the measure relies on self-reported data, a nonprofit could identify several distinct populations (arguably being a generalist) yet the populations might share some characteristic (e.g. being low income) which makes the nonprofit behave more like a specialist serving one population (low-income people). Future research might consider additional ways to account for nonprofit specialization.

Nonprofit policy advocacy does not occur in a vacuum. Advocacy is often undertaken in competitive environments when resources and market position are at risk. This study indicates that specialization mitigates competition. Nonprofits serving specialized populations may be less able to redirect resources from service provision to advocacy in uncertain environments when all available resources must be directed to core service missions. This is an important finding which suggests that we should be cautious in looking to the nonprofit sector, particularly those organizations serving specialized populations, to provide representation for their constituencies through policy advocacy during uncertain times.

Acknowledgments

The author thanks the Symposium Editors, anonymous reviewers, Susan Chambré, Nicole Marwell, Stephen Morrison, Frank Porell, Amy Smith, and David Suárez for their comments and suggestions. The author acknowledges funding from The Boston Foundation, the University of Massachusetts Boston (John W. McCormack Graduate School of Policy and Global Studies), and the Kennedy School of Government (Hauser Center for Nonprofit Organizations and Rappaport Institute for Greater Boston). The author is solely responsible for the contents.

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Published Online: 2014-9-11
Published in Print: 2014-10-1

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